Indian federalism: Centre-State relations, the GST Council and the Governor - Indian Constitutional Law - New Challenges

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1. Is India federal? The theoretical debate
2. Legislative and administrative relations in brief
3. Fiscal federalism and the 101st Amendment
4. The Governor: agent of the Union or constitutional head?
5. Comparative perspective
6. Evaluation
How this is examined

Cases checked to exist. Read the judgment before quoting a holding.

Every case cited here has been checked to exist — the citation resolves and names the right parties. The propositions attributed to each case have not been verified line by line against the judgment. Case names link through to the full judgment: read it before quoting a holding in an examination answer, and never carry a proposition from notes into court on trust.

The examinable core. An LL.M. answer on federalism has to do three things: place India among the theories of federalism (Wheare, Austin, the “cooperative” and “competitive” models), show how the Union’s structural advantages have been checked by courts, and bring in the current disputes — the GST Council and Governors sitting on State Bills. These notes follow the KSLU LL.M. syllabus (2019–20) for this paper and the past papers.

1. Is India federal? The theoretical debate

K.C. Wheare, in Federal Government, defined the federal principle as a division of powers so that the general and regional governments are each, within a sphere, co-ordinate and independent. Judged by that test he called the Indian Constitution quasi-federal: a unitary State with subsidiary federal features rather than a federal State with unitary features. The reasons are familiar: residuary power with the Union (Article 248, Entry 97 List I), Parliament’s power to alter State boundaries (Article 3), Union predominance in the concurrent field (Article 254), All India Services (Article 312), Parliament’s power to legislate on State subjects in the national interest (Article 249) or during an emergency (Article 250), and the emergency provisions themselves.

Granville Austin, in his 1966 study of the making of the Indian Constitution, answered that the framers built cooperative federalism: a federation in which Union and States depend on each other, particularly in finance and administration, and in which the strong centre was a deliberate response to Partition and the integration of the princely States. Ambedkar told the Constituent Assembly that the Constitution could be both unitary and federal according to the needs of time and circumstance — a paraphrase of his defence, not a quotation.

The Supreme Court settled the doctrinal question in S.R. Bommai v. Union of India, 1994 INSC 111, (1994) 3 SCC 1: federalism is a basic feature of the Constitution, and States are not mere appendages of the Union. Within their sphere they are supreme. That proposition now does real work in later cases.

2. Legislative and administrative relations in brief

Distribution. Article 246 and the three Lists; pith and substance, incidental encroachment and colourable legislation decide which List a law falls under.
Repugnancy. Under Article 254(1) a Union law prevails over a State law on a concurrent subject; under Article 254(2) a State law reserved for and given Presidential assent prevails in that State until Parliament legislates again.
Administration. Articles 256 and 257 oblige States to comply with Union laws and directions; Article 365 lets the President treat non-compliance as a failure of the constitutional machinery. These are the hooks for Article 356 (see the note on emergency).
Union Territories. In Government of NCT of Delhi v. Union of India, 2023 INSC 635, a Constitution Bench held that the elected government of Delhi controls the services (other than public order, police and land), because a government accountable to the legislature must control its officers. Parliament reversed much of the practical effect by the Government of National Capital Territory of Delhi (Amendment) Act, 2023 — a good example of the court-legislature dialogue that LL.M. answers should notice.

3. Fiscal federalism and the 101st Amendment

The Constitution (One Hundred and First Amendment) Act, 2016 introduced the Goods and Services Tax. It inserted Article 246A, giving Parliament and the State legislatures a simultaneous power to tax the supply of goods and services (with Parliament alone taxing inter-State supplies), Article 269A on inter-State supply, and Article 279A, which creates the GST Council of the Union Finance Minister and the State Finance Ministers. Votes are weighted: the Union has one-third and the States together two-thirds of the votes cast, and a decision needs three-fourths of the weighted votes present and voting. Neither side can carry a decision alone.

Two readings competed. One said the States had surrendered fiscal autonomy to a body in which the Union holds a veto. The other said the Council was a model of cooperative federalism, a standing forum for bargaining. The Supreme Court addressed the question in Union of India v. Mohit Minerals Pvt. Ltd., 2022 INSC 596. It held that the recommendations of the GST Council are not binding on Parliament or the State legislatures; they have persuasive value. Article 246A treats the Union and the States as equal taxing units, and Indian federalism is a dialogue in which cooperative and uncooperative (contestatory) moves are both legitimate. The judgment drew on the idea that States may contest Union policy through constitutional means without being disloyal to the federation.

The debate to write up. After Mohit Minerals, is GST law at risk of fragmentation if a State departs from a Council recommendation? The Court’s answer was that the Council’s authority rests on consensus and political cost, not legal compulsion. Contrast the German Bundesrat, where the Länder sit in the federal legislature and their consent is legally required for laws affecting their finances; India has no such second chamber of State governments.

The other fiscal pillars belong in the next note on resources: the Finance Commission (Article 280), the sharing of Union taxes (Article 270), grants-in-aid (Article 275) and discretionary grants (Article 282).

4. The Governor: agent of the Union or constitutional head?

The Governor is appointed by the President and holds office during the President’s pleasure (Article 156). Under Article 163 the Governor acts on the aid and advice of the Council of Ministers save where the Constitution requires discretion. The Sarkaria Commission (1988) and the Punchhi Commission (2010) both criticised partisan Governors and recommended that Governors be detached figures, consulted on with the Chief Minister, and removed only for cause.

The case law has steadily narrowed discretion.

Nabam Rebia v. Deputy Speaker, 2016 INSC 526 (Arunachal Pradesh): the Governor cannot summon or advance the session of the Assembly, or set its agenda, on his own; discretion under Article 163 is confined to matters the Constitution expressly or by necessary implication assigns to it.
Subhash Desai v. Principal Secretary, Governor of Maharashtra, 2023 INSC 516: the Governor erred in calling for a floor test on material that did not show the government had lost the confidence of the House; a Governor may not enter intra-party disputes.
State of Punjab v. Principal Secretary to the Governor of Punjab, 2023 INSC 1017: under Article 200 a Governor who withholds assent must return the Bill to the legislature with a message; he cannot simply sit on it. If the legislature passes it again, the Governor must assent (unless the Bill is one to be reserved).
State of Tamil Nadu v. Governor of Tamil Nadu, 2025 INSC 481: a two-judge Bench held that withholding ten re-passed Bills was illegal, read time limits into Articles 200 and 201, and used Article 142 to treat the Bills as having received assent.
In re: Assent, Withholding or Reservation of Bills by the Governor and the President of India, 2025 INSC 1333: on a Presidential Reference under Article 143, a Constitution Bench advised that courts cannot impose fixed timelines on the Governor or the President, and that there is no “deemed assent” by judicial order, whether under Article 142 or otherwise. It accepted, however, that prolonged, unexplained and indefinite inaction is open to limited judicial scrutiny, and that the Governor’s options under Article 200 are those the Article lists.

Trap. An advisory opinion under Article 143 does not formally overrule a judgment delivered in a contentious case. Say that the 2025 Reference answers depart from the reasoning in the Tamil Nadu case on timelines and deemed assent, and that later Benches will follow the Reference as the view of a larger Bench. Do not write that the Tamil Nadu judgment was “set aside”.

5. Comparative perspective

System	Feature an Indian answer can contrast
United States	Residuary power with the States (Tenth Amendment); dual sovereignty; no Union power to redraw State boundaries without consent.
Canada	Residuary power with the federal Parliament, like India; a Lieutenant Governor appointed by the federal government, whose power to reserve Bills has fallen into disuse by convention.
Australia	Commonwealth Grants Commission and vertical fiscal imbalance, comparable to the Finance Commission.
Germany	Bundesrat representing the Länder governments; principle of federal comity (Bundestreue).

The Canadian comparison is the most useful on the Governor: a power the text keeps alive can be neutralised by convention. Indian courts have tried to do the same by interpretation, and the 2025 Reference shows the limits of that method.

6. Evaluation

The Indian design is asymmetric and centralising on paper, but federal practice has become more contested: coalition governments from 1989 to 2014, the GST bargain, and litigation by States under Article 131 and Article 32 against Governors. The best answers argue that Indian federalism is neither Wheare’s co-ordinate model nor a unitary one, but a negotiated arrangement whose balance moves with politics, and that the Supreme Court has used Bommai to keep the minimum federal guarantee justiciable.

How this is examined

Expect a 16-mark question such as “Examine the role of the Central Government in matters of resource sharing and inter-State disputes with reference to federal features” (January 2024 internal) — combine this note with the next. Other forms: “Indian federalism is cooperative federalism. Discuss”, “Critically examine the role of the Governor”, or a short note on the GST Council. Structure: theory, constitutional scheme, case law with the 2023–2025 Governor cases, comparative point, evaluation.