The Constitution of India meticulously demarcates the legislative powers between the Union Parliament and the State Legislatures through the Seventh Schedule, which comprises the Union List, the State List, and the Concurrent List. This distribution ensures a federal structure where each tier of government operates within its defined sphere. However, legislatures may sometimes attempt to indirectly legislate on subjects that fall outside their constitutional competence by disguising the true nature and character of the law. This is where the judicially evolved Doctrine of Colourable Legislation comes into play.

The essence of this doctrine, encapsulated in the Latin maxim "quando aliquid prohibetur fieri indirecte, prohibetur et per obliquum" (what cannot be done directly cannot also be done indirectly), dictates that a legislature cannot transgress its constitutional limitations by resorting to a camouflage or a pretense. The focus is not on the motive or intention of the legislature, but rather on the competence to enact the law. If the substance of the legislation falls outside the legislature's assigned field, it is deemed unconstitutional, even if it ostensibly appears to be within its powers.

The Supreme Court of India has consistently applied this doctrine to prevent legislative overreach and maintain the federal balance enshrined in the Constitution. The key lies in examining the pith and substance of the legislation. If the true nature and character of the law, upon closer scrutiny, relate to a subject matter outside the legislature's purview, it will be struck down as colourable legislation.

Several landmark cases have illuminated the application of this doctrine:

One of the earliest and most significant cases is K.C. Gajapati Narayan Deo and Others v. The State of Orissa (1953). In this case, the Orissa Estates Abolition Act, 1951, was challenged. The petitioners argued that while the Act purported to legislate on the abolition of estates (a matter within the State List), its real object was to reduce the income of the intermediaries, a matter related to taxation, which fell under a different entry in the State List. The Supreme Court, applying the Doctrine of Pith and Substance, held that the dominant purpose of the Act was indeed estate abolition and not the imposition of tax, even though it had an incidental impact on the intermediaries' income. The Court emphasized that the doctrine does not imply any bad faith or motive on the part of the legislature but merely examines whether the legislature has, in substance, transgressed its powers.

Another crucial case is State of Bihar v. Kameshwar Singh (1952), which also involved land reform legislation. The Bihar Land Reforms Act, 1950, was challenged on various grounds, including colourable legislation. The Court scrutinized the compensation provisions of the Act and found that the principles laid down for determining compensation were illusory and arbitrary. While the legislation ostensibly dealt with land reform (a State List subject), the Court found that under the guise of land reform, the legislature was essentially confiscating property without providing just compensation, which could be argued to fall under the ambit of acquisition of property but was being done in a manner that circumvented constitutional requirements.

The case of R.S. Joshi, Sales Tax Officer, Gujarat v. Ajit Mills Limited (1977) further clarified the distinction between incidental encroachment and colourable legislation. The Gujarat Sales Tax Act, 1969, levied a tax on sales. The respondents argued that the levy on certain inter-state sales was colourable legislation as it encroached upon Parliament's power to legislate on inter-state trade and commerce (Union List). The Court held that the tax was essentially on intra-state sales, and the levy on inter-state sales was merely incidental to the main purpose of the Act. The doctrine applies when the substance of the legislation falls outside the legislative competence, not when there is a mere incidental impact on a subject in another list.

More recently, the doctrine has been invoked in cases concerning environmental regulations and other areas where the legislative competence of the Union and States might overlap. The courts continue to be vigilant in ensuring that legislatures do not use their power to legislate on a permitted subject as a means to encroach upon the legislative domain of the other.

The Doctrine of Colourable Legislation is a vital tool in the hands of the Indian judiciary to uphold the federal structure and prevent legislative overreach. It operates on the principle that the true nature and character of a law, its pith and substance, must fall within the legislative competence of the enacting body. While it does not impute mala fide intentions to the legislature, it ensures that constitutional boundaries are respected, and the distribution of legislative powers as enshrined in the Seventh Schedule is maintained in its true spirit. The landmark cases discussed above serve as crucial precedents in understanding the nuances and application of this essential constitutional doctrine