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Issues Involved:
1. Validity of the Gift-tax Act in relation to gifts of agricultural lands. 2. Legislative competence of Parliament to tax gifts of lands and buildings. 3. Interpretation of entries in Schedule VII of the Constitution regarding taxation powers. Issue-wise Detailed Analysis: 1. Validity of the Gift-tax Act in relation to gifts of agricultural lands: The primary issue in these writ petitions is the challenge to the validity of the Gift-tax Act (Central Act No. 18 of 1958) concerning gifts of agricultural lands. The petitioners argue that the Act, in so far as it purports to affect gifts of "lands and buildings," is ultra vires the powers of Parliament. Specifically, the petitioners contest the tax levied on gifts of agricultural lands, as seen in Writ Petition No. 1077/59, where a significant portion of the tax was levied on a gift of a coffee plantation, and in Writ Petition No. 19/1960, where the tax was levied on gifts of paddy fields and an areca garden. 2. Legislative competence of Parliament to tax gifts of lands and buildings: The petitioners contend that the power to tax gifts of lands and buildings is conferred on the State legislatures by entry 18 read with entry 49 of List II of Schedule VII of the Constitution. Conversely, the Revenue argues that this power falls within the unallocated field, thus coming under entry 97 of List I. The court emphasizes the need to interpret the scope of an entry in the legislative lists by considering the pith and substance or true nature and character of the impugned statute. The court refers to several precedents, including United Provinces v. Mt. Atiqa Begum and Subramanyan v. Muthuswamy, to establish that entries in the lists should be given the widest possible construction. 3. Interpretation of entries in Schedule VII of the Constitution regarding taxation powers: The court examines the relevant entries in Schedule VII to determine if the power to tax gifts can be located within any of them. The court notes that taxation is not intended to be included in the main subject of general legislative power but is treated as a distinct matter for legislative competence. The court refers to the decision in Sundararamier & Co. v. State of Andhra Pradesh, which states that the power to tax property includes the power to tax a right or an incidence of ownership. The court also considers the principle that the entries in the legislative lists must be construed to avoid conflict and that recourse to residuary powers should be the last resort. The court finds that the power to tax gifts cannot be traced to entries 1 to 96 in List I and that List III does not concern itself with powers of taxation. Therefore, the court examines List II and concludes that entry 49, which pertains to "Taxes on lands and buildings," includes the power to tax gifts of lands and buildings. The court rejects the argument that the power to tax ownership of property does not include the power to tax a particular use of that property or the exercise of a single power subsidiary to ownership. Conclusion: The court concludes that the power conferred on the States under entry 49 of List II includes the power to tax gifts of lands and buildings. Consequently, the Gift-tax Act, in so far as it purports to impose tax on gifts of lands and buildings, is ultra vires the powers of Parliament and to that extent unconstitutional. The orders of the Gift-tax Officers in the respective writ petitions are quashed, and the respondents are ordered to pay the costs of the petitioners. Separate Judgments: Mir Iqbal Husain, J. concurs with the judgment delivered by Hegde, J.
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