Territorial Nexus Doctrine

Territorial Nexus Doctrine

Article 245(1) of the Constitution says that 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, according to Article 245(2) no law made by Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation.

Thus, the Constitution confers the power to enact laws having extra-territorial operation only to the Union Parliament and not to the State legislature, and consequently and extra-territorial law enacted by any State is changeable unless the same is protected on the ground of territorial nexus.

If a State law has sufficient nexus or connection with the Subject-matter of that law, the state law is valid even when it has extra-territorial operation. It could, therefore, be said that a State Legislature is also empowered to enact a law having extra-territorial operation subject to the condition that even though the subjectmatter of that law is not located within the territorial limits of the State, there exists as sufficient nexus of connection between the two.

The area in which the principle of territorial nexus has been applied most in India is taxation. In State of Bombay Vs R.M.D. Chamarbangwala, a newspaper printed and published at Bangalore had wide circulation in the State of Bombay. Through this news paper the respondent conducted and ran prize competitions for which the entries were received from the State of Bombay through agents and depots established in the State to collect entry forms and fees for being forwarded to the head office at Bangalore.

The Bombay Legislature imposed a tax on the business of prize competitions in the state by enacting the Act of 1952 and amending the Bombay Lotteries and prize Competitions and Tax Act, 1948. The respondent contended that he was not bound to pay the said tax on the ground of extra-

territoriality. The Supreme Court ruled that when the validity of an act is called in question the first thing for the court to do is to examine as to whether the Act is called in question the first thing for the court to do is to examine as to whether the Act is a law with respect to a topic assigned to the particular legislature which enacted it because under the provisions conferring legislative powers on it such legislature can only make a law for its territory or any part thereof and its laws cannot, in the absence of a territorial nexus, have any extra-territorial operation.

For sufficiency of territorial connection, two elements were considered by the court, namely, (1) the connection must be real and not illusory, and (2) the liability sought to be imposed must be pertinent to that connection. It was held that all the activities which the competitor was ordinarily expected to undertake took place in the State of Bombay and there existed a sufficient territorial nexus to enable the Bombay Legislature to tax the respondent who was residing outside the state.

Some other example of cases:-

  1. Tata Iron and Steel Company Vs. State of Bihar, AIR 1958 SC 452
  2. State of Bihar vs. Charusila Das, AIR1959 SC 1002.
Territorial Nexus Doctrine

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