Constitutional provisions :
All the enactments enacted by the Parliament should have its source in the Constitution of India. The power for enacting the laws is conferred on the Parliament and on the legislature of a State by Article 245 of the Constitution. The said Article states:
Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India, and the legislature of a State may make laws for the whole or any part of the state. No law made by the Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation.
Article 246 governs the subject matter of the laws made by the Parliament and by the legislature of states. The matters are listed in the seventh schedule to the Constitution.
The seventh schedule is classified into three lists as follows:
List I [referred as Union List]
This list enumerates the matters in respect of which the Parliament has an exclusive right to make laws.
List II [referred as State List]
This list enumerates the matters in respect of which the legislature of any state has an exclusive right to make laws.
List III [referred as the concurrent list]
This list enumerates the matters in respect of which both the Parliament and, subject to List I, legislature of any state, have powers to make laws.
Parliament has a further power to make any law for any part of India not comprised in a state, notwithstanding that such matter is included in the state list.
Some of the relevant entries in the lists referred to above are:-
- Union List
| Entry No. | Subject matter |
| 82 | Taxes on income other than agricultural income |
| 83 | Duties of Customs including Export duties |
| 84 | Duties of excise on tobacco and other goods manufactured or produced in India |
except:
(a) alcoholic liquors for human consumption
(b) opium, Indian hemp and other narcotic drugs and narcotics; but
including
medicinal and toilet preparations containing alcohol, or any substance stated before.
92A Taxes on the sale or purchase of goods other than newspapers where such sale or purchase takes place in the course of inter State Trade or Commerce.
- Concurrent List
| Entry No. | Subject matter |
| 35 | Mechanically propelled vehicles including the principles on which taxes on such vehicles are to be levied. |
| 44 | Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty. |
The Parliament is authorised by virtue of Article 271 to increase any of the taxes or duties by imposing a surcharge and the amount collected as such shall form part of the Consolidated Fund of India.