India is said to be a combination of federal and unitary traits when it comes to the structure of its governance. Its hybrid model falls somewhere in between that of the United States of America and the United Kingdom. The Federal elements of the Indian Constitution are most prominently highlighted in the provisions from Article 245-255 which deal with the Legislative Relations between the Centre and the States. The division of authority is based on two criterias; Territorial Jurisdiction and Subject Matter. 

Territorial Jurisdiction

Limiting the scope to Territorial Jurisdiction, our provision in focus is Article 245. Article 245(1) allows the Parliament to make laws for the entirety or any particular part of the territory of India and similar power is given to the State Legislature. Article 245(2) states that the Parliament shall be allowed to make a law valid for having extra-territorial operation whilst the State law for the same operation will stand invalid. Furthermore, such operation by State law will hold no immunity from Judicial scrutiny provided that the territorial nexus is proved from the enactment of such operation. 'Doctrine of Territorial Nexus' comes into play.

Doctrine of Territorial Nexus

As per this Doctrine the object of the law does not need to be physically situated in the territorial bounds of the said State but it should satisfy the purpose for which the connection is utilized.  

In 'State of Bihar v. Charushila Dasi', (AIR 1959 SC 1002) Bihar Hindu Religious Trust Act, 1950 was in question. The question raised was whether, the said trust, whose purpose was preservation of properties recognized as belonging to Hindu religious trusts, would cover such properties situated outside of the state of Bihar. Doctrine of Territorial Nexus was constructed between the extra-territorial properties and the Trust situated within the territorial bounds. As a result, it was held that the provisions of the Bihar Hindu Religious Trust Act, 1950 was declared to be applicable to properties outside of Bihar, but appertianing to a trust situated in Bihar where the trustees functioned. The judgment held the following -

".....what is necessary is that the connection between the trust and the property appertaining thereto is not illusory and that the religious institution and the property appertaining thereto form one integrated whole. It cannot be disputed that if the religious endowment is itself situated in Bihar and the trustees function there, the connection between the religious institution and the property appertaining thereto form one integrated whole and one cannot be dissociated from the other. If therefore, any liability is imposed on trustees, such liability must affect the trust property."

In another case, State of Bombay v. RMDC, (AIR 1957) the Doctrine of Territorial Nexus was applied to a different set of laws this time; income tax laws. In the given case the respondent who did not reside in Bombay conducted competitions with prize money via a popular newspaper which was in fact published in Bangalore. All the necessary activities such as entry fees and filling up of forms took place within the territorial bounds of Bombay. Therefore, the Supreme Court held that the State Government could levy tax on the respondent.