FEDERATION VERSUS FREEDOM 299
Being in the Concurrent list, the Federal Legislature has power to legislate upon with respect to these. Can the Federal Legislature also while legislating upon them raise revenue from them ? The Act does not seem to furnish any answer to this question. It may however be suggested that the rules contained in section 104 regarding the exercise of Residuary Powers will also apply here.
The sources of revenue which are made divisible by the Constitution are :
(1) Income Tax other than Corporation Tax and (2) Jute Export duty. Those which are made divisible according to the Federal Law are : (1) Duty on Salt, (2) Excise duty on Tobacco and other goods and (3) Duties of Export.
In respect of the financial powers of the Federation there is one feature which by reason of its pecularity is deserving of attention. The Act in giving the Federal Government the right to tax, makes a distinction between power to levy the tax and the right to collect it and even where it gives the power to levy the tax it does not give it the right to collect it. This is so in the case of surcharge on Income tax and the Corporation tax. The Income tax is only leviable in the Provinces and not in the States although it is a tax for Federal purposes. The State subjects are liable to pay only a Federal surcharge on Income Tax because such a surcharge is leviable both within the Provinces as well as the States. But under section 138( 3 ) the Federal Government has no right to collect it within the States. The collection is left to the Ruler of the State. The Ruler, instead of collecting the surcharge from his subjects, may agree to pay the Federation a lump sum and the Federation is bound to accept the same. Similar is the case with regard to the Corporation tax. The Federation can levy it on State subjects but cannot collect it directly by its own agency. Section 139 provides that the collection of the Corporation tax shall as of right be the function of the Ruler.
V
CHARACTER OF THE FEDERATION
(1) The Nature of the Union
How does the Indian Federation compare with other Federations ? This is not only a natural inquiry but it is also a necessary inquiry. The method of comparison and contrast is the best way to understand the nature of a thing. This comparison can be instituted from points of view. There is no time for a comparison on so vast a scale. I must confine this comparison to some very moderate dimensions. Therefore I propose to raise only four questions :
(1) Is this Federation a perpetual Union ? (2) What is the relationship of the Units to the Federal Government ? (3) What is the relationship of the Units as between themselves ? (4) What is the relationship of the people under the Units ?
There is no doubt that the accession of the Indian States to the Federation is to be perpetual so long as the Federation created by the Act is in