Constitution of India
Article 272: Taxes which are levied and collected by the Union and may be distributed between the Union and the States
Part XII — Finance, Property, Contracts and Suits (Chapter I — Finance: Distribution of Revenues between the Union and the States)
Article 272 (single article, no sub-clauses in final version)
WHAT IT SAID: Union excise duties (excluding medicinal/toilet preparations) were levied and collected by the Centre, but Parliament could by law direct that whole or part of net proceeds be paid to States from the Consolidated Fund of India. WHAT IT MEANT: Excise duty sharing with States was PERMISSIVE (Parliament 'may'), unlike income tax sharing under Art. 270 which was MANDATORY — giving Centre discretion over excise devolution. KEY DOCTRINE: Permissive Devolution — Parliament retained full discretion on whether, how much, and on what principles to share excise proceeds with States.
Constitutional Inspiration
SOURCE(S): 1. Government of India Act, 1935 — Section 140(1) Original provision: Federal duties of excise and export duties shall be levied and collected by the Federation; if Federal Legislature so provides, sums equivalent to whole or part of net proceeds paid to Provinces per principles formulated by the Act. What India kept: Near-identical language — Centre levies and collects excise, Parliament determines sharing principles by law. INDIA'S SPECIFIC ADAPTATIONS: 1. Salt duty exclusion — Section 140 of 1935 Act included salt duties; Art. 272 excluded them (Draft Art. 253(1) originally banned Union salt duties). 2. Medicinal/toilet preparations exclusion — India carved out excise on these items as exclusively Union revenue, not shareable under Art. 272. 3. Parliament replaced Federal Legislature — democratic accountability ensured elected Parliament decided devolution, not a Governor-General. 4. Finance Commission oversight — Unlike the 1935 Act, India's Art. 280 created a constitutional Finance Commission to recommend excise distribution principles, adding an independent advisory layer absent in British scheme.
Constituent Assembly Debate
DEBATED ON: 5 August 1949, 8–10 August 1949 (CAD Volume IX) Draft Article number: 253 KEY SPEAKERS: 1. Dr. B.R. Ambedkar (Bombay) — Explained that excise duty distribution is left to Parliament by law, while income tax distribution is left to the President; both subject to Finance Commission recommendations. 2. Pandit H.N. Kunzru (United Provinces) — Argued that income tax allocation should be independent of the Finance Commission after initial fixation. 3. Shri B. Das (Orissa) — Reluctantly accepted Ambedkar's framework, concerned about equitable treatment of poorer provinces like Orissa. 4. Rev. J.J.M. Nichols-Roy (Assam) — Advocated greater financial protection for provinces with tribal areas. MAJOR DISAGREEMENTS: 1. Parliament vs. President — Whether excise sharing should be decided by Parliament (as in Draft Art. 253) or by the President on Finance Commission advice (as with income tax under Art. 251). 2. Finance Commission's role — Kunzru wanted to limit Commission's power to review income tax percentages; Ambedkar insisted Commission should have jurisdiction over both income tax and excise recommendations. FINAL OUTCOME: Draft Article 253 adopted with Parliament retaining authority over excise duty distribution by law, while Finance Commission was given advisory jurisdiction over both income tax and excise allocations. AMBEDKAR'S KEY QUOTE: "Parliament must leave it to the executive to undertake the very onerous duty of distributing between the various provinces... the proceeds of certain taxes levied and collected by the Centre."
Landmark Judgments
LANDMARK JUDGMENTS: 1. No direct Supreme Court judgment specifically interpreting Art. 272 alone — the article was a permissive devolution provision operationalized through parliamentary statutes (e.g., Union Duties of Excise (Distribution) Act, 1979) rather than litigation. 2. Union of India v. Modi Rubber Ltd. (1986) 4 SCC 66 — Clarified distinction between basic excise duties (shareable under Art. 272) and additional/special excise duties imposed under Finance Acts. 3. SRD Nutrients v. CCE (2018) 1 SCC 105 — Held Education Cess/SHE Cess are surcharges (Art. 271), not basic excise duties; reinforced that surcharges are not part of the divisible pool under Arts. 270/272. 4. Unicorn Industries v. Union of India (2019) — Held NCCD, Education Cess and SHE Cess are additional/special duties of excise; touched upon Art. 271 vs Art. 270/272 distinction. NOTABLE DISSENTS: 1. None directly on Art. 272 — disputes centered on classification of levies rather than the article's validity. SCHOLARS & JURISTS: 1. 10th Finance Commission (Chairman: K.C. Pant, 1994) — Recommended the 'Alternative Scheme of Devolution' that rendered Art. 272 redundant by pooling all central taxes under a unified divisible pool. 2. M.P. Singh (Constitutional scholar) — Noted that Art. 272's permissive nature gave Centre excessive fiscal discretion, weakening States' revenue certainty and justifying its merger into mandatory Art. 270.