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TMI Blog1961 (8) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment quashed. The petitioners have not challenged the competency of Parliament to levy gift-tax in respect of properties, movable or immovable, other than agricultural lands. According to the petitioner, in each of these writ petitions, the scheme of the various lists in VII th Schedule of the Constitution will indicate that power to legislate and levy tax regarding agricultural properties and income therefrom is solely and exclusively vested in the State legislatures and that Parliament has no power to levy tax on gifts of agricultural lands. In particular, entry 18 in List II of the VII th Schedule has been very strongly relied upon as giving exclusive jurisdiction to the State legislature over such matters. According to the Revenue, levy of gift-tax on agricultural lands is not provided either in the State List or in the Concurrent List; and, therefore, it falls under the residuary power vested in Parliament under clause (2) of article 248, read with entry 97 in the Union List, and therefore Parliament is competent to enact the legislation in question, even regarding agricultural lands. Before we consider the various contentions that have been raised by Sri T.N. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessing and levying gift-tax; and there are also provisions for taking up the orders of these officers in appeal. It is not really necessary to consider all these several provisions, excepting to refer to section 13, in Chapter IV to the effect: Every person who during a previous year has made any taxable gifts shall, before the thirtieth day of June of the corresponding assessment year furnish to the Gift-tax Officer a return in the prescribed form and verified in the prescribed manner. (2) If the Gift-tax Officer is of opinion that in respect of the gifts made by a person during any previous year he is liable to gift-tax under this Act, then notwithstanding anything contained in sub-section (i), he may serve a notice upon such person requiring him to furnish within such period, not being less than thirty days, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner. Sub-section (3) gives power to the Gift-tax Officer to extend the date of submission of the return. As learned counsel appearing on both sides have referred to certain articles of the Constitution, as well as to certain entries in the lists in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel in O.P. No. 117 of i960 and by Sri V.K.K. Menon, learned counsel in O.P. No. 131 of 1961. We will now refer to the entries in Lists I and II, which have also been relied upon by the learned counsel for the petitioners in support of the contention that the scheme of distribution of legislative powers in Lists I and II will clearly show that the power to legislate regarding agricultural lands, which power according to them includes also the power to levy taxation, lie solely within the exclusive province of a State. The particular entries that have been relied upon in List I are entries 82, 86, 87 and 88. Entry 82 refers to taxes on income other than agricultural income. Again entry 86 provides for taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies; taxes on the capital of companies. Again entry 87 deals with estate duty in respect of property other than agricultural land. Entry 88 deals with duties in respect of succession to property other than agricultural land. Mr. Subramania Iyer's contention is that these entries clearly show that there is a definite exclusion of the power of Parliament to levy taxes rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver matters mentioned therein, but also to levy tax on transfer and alienation of agricultural land. In fact, the learned counsel urged that gift has been defined in the Gift-tax Act as the transfer of property and that such transfer of agricultural land is taken in and provided in entry 18 and therefore a power to levy a gift-tax on such transfers of agricultural land has been specifically conferred on State legislature. The learned counsel also urged that even a simple power given to State legislature to legislate on the heads mentioned in entry 18 also includes a power to levy a tax on such matters. The question will be whether the counsel for the petitioner is well founded in this contention based upon entry 18. Before we go into the merits regarding the various aspects that have been presented before us by the learned counsel for the petitioner, it is also desirable to state the principles applicable to construction of the various entries occurring in the Constitution. No doubt, various decisions have also been placed before us. But it is not necessary to refer to those decisions because the principle appears to be fairly well settled, and there cannot be any controv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter I, Part XI as Distribution of Legislative Powers . On this basis, the learned counsel urged that in view of the supremacy of the State legislature under clause (3) of article 246 in respect of matters enumerated in List II, the power to levy any tax in respect of a transfer of agricultural land must be considered to vest only in the State legislature, in view of entry 18 in List II. Mr. Subramania Iyer further urged that article 248 cannot be invoked by the Revenue in the circumstances of this case. According to the learned counsel clause (1) of article 248 must be considered to give exclusive power to Parliament to legislate only in respect of any matter not enumerated in the Concurrent List or State List. It is the further contention of the learned counsel that clause (2) of article 248 gives again exclusive power to Parliament to levy tax only in respect of those matters which are not enumerated in List II or List III and which are taken in by article 248(1) of the Constitution. On the other hand, Mr. K.V. Surianarayana Iyer, learned counsel appearing for the Revenue, urged that the approach to be made by this court is to find out whether levy of gift-tax regardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are also aware that it is the contention of Mr. Subramania Iyer that the learned judges of the Supreme Court had no occasion to consider the scope and ambit of the residuary power vested in Parliament under article 248(1) or (2) of the Constitution. We may also state that Mr. Surianarayana Iyer referred to the decision of the Andhra Pradesh High Court in Jupudi Sesharatnam v. Gift-tax Officer, Palacole [1960] 38 ITR 93. Where the Andhra Pradesh High Court has upheld the validity of the Gift-tax Act in its applicability to agricultural lands. That decision was rendered by the learned Chief Justice Chandra Reddi and Mr. Justice M.A. Ansari, as he then was. The learned judges after a consideration of the various entries and the scheme of the Constitution, have come to the conclusion that the Gift-tax Act is within the competence of Parliament. Mr. V.K.K. Menon, learned counsel for the petitioner in O.P. No. 131 of 1961, while adopting the contentions of Mr. Subramania Iyer, has also urged that even in respect of taxation on analogous matters, both the Parliament, as well as the States, have been given power to tax. For instance, learned counsel drew our attention to entries 82,86 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly the power to legislate on a particular matter takes along with it a power to levy tax, in our view, the provisions of clause (2) of article 248 will be wholly. redundant and unnecessary and no separate entries need be made giving power to levy a tax. It is also interesting to note that in all the three Lists, namely, Union List, State List and Concurrent List, there is a specific entry relating to fees in respect of the matters in the particular list concerned.. For example, see entry 96 in List I, entry 66 in List II and entry 47 in List III. We are only adverting to these matters to show that under the scheme of our Constitution if really the power to legislate carries with it a power of levying tax and also imposing a fee is incidental to the power of legislation, Parliament would not have taken so much trouble to specify or confer the right also to levy tax in respect of certain matters or levy fees in respect of certain other matters. That provisions have been made under specified entries empowering levy of tax regarding some of the main subjects of legislation clearly shows that the scheme of distribution adopted by our Constitution is different. No doubt, clause (3) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 92 enumerate the taxes which could be imposed by a law of Parliament. An examination of these two groups of entries shows that while the main subject of legislation figures in the first group, a tax in relation thereto is separately mentioned in the second. Thus, entry 22 in List I is 'Railways', and entry 89 is 'terminal taxes on goods or passengers, carried by railway, sea, or air; taxes on railway fares and freights.' If entry 22 is to be construed as involving taxes to be imposed, then entry 89 would be superfluous. Entry 41 mentions 'Trade and commerce with foreign countries; import and export across customs frontiers'. If these expressions are to be interpreted as including duties to be levied in respect of that trade and commerce, then entry 83 which is 'Duties of customs including export duties' would be wholly redundant. Entries 43 and 44 relate to incorporation, regulation and winding up of corporations. Entry 85 provides separately for corporation tax. Turning to List II, entries 1 to 44 form one group mentioning the subjects on which the States could legislate. Entries 45 to 63 in that List form another group, and they deal with taxes. En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arayana Iyer, learned counsel for the Revenue, that the power to legislate given under the particular entry, viz., entry 18 of List II, will not also carry with or as incidental to it, a power to levy a tax unless a power to tax has been clearly conferred by any particular entry in one or other of the lists has to be accepted, as it is based on the scheme of our Constitution. We may also refer to the decision of the Andhra Pradesh High Court in Jupudi Sesharatnam v. Gift-tax Officer, Palacole [1960] 38 ITR 93. No doubt, it will be seen that in that case the counsel appearing for the various petitioners who were attacking the Gift-tax Act, were also relying upon certain other entries in List II in support of their contention that the State legislature alone had got power to levy tax on gifts and not the Parliament. It is not really necessary for us to consider that aspect, because no arguments have been advanced before us to show that, apart from entry 18 in List II, the State legislature can be considered to have any power to levy tax in respect of a gift of agricultural lands. We are not certainly inclined to accept the contention of the learned counsel for the petitioners t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that their attention was drawn to the meaning of the word succession in dictionaries and law lexicons and a contention was raised that the word succession was capable of comprehending every kind of passing of property intended to be comprised in question No. 1 that was referred for consideration to the Federal Court. The learned Chief Justice observes: We are by no means satisfied that this is so. Then considering the entries in the various lists of the Government of India Act as also entry No. 7 of List III of the Government of India Act dealing with Wills, intestacy and succession corresponding to entry No. 5 in List II of the Constitution where the same words occur, the learned Chief Justice observes: The Succession Act broadly divides the subject of 'succession' into 'testamentary' and 'intestate' succession; and the ordinary meaning of succession is the transmission, by law or by the will of man, to one or more persons of the property and the transmissible rights and obligations of a deceased person. That this is the sense in which 'succession' is used in the Lists in Schedule 7 is indicated by the collocation of the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional question raised before us in all these writ petitions will have to be answered against the petitioners. There are, no doubt, certain other contentions raised in the writ petitions and in our opinion it is not desirable that we should adjudicate upon these aspects in proceedings under article 226. We make it very clear that except answering the constitutional points that have been raised with regard to the competency of Parliament to enact the legislation in question, regarding agricultural lands, we express no opinion whatsoever on the various other contentions that have been raised. It is open to the respective petitioners in O.P. Nos. 323 and 1339 of 1959 and 117 of 1960 to raise all the other points before the appropriate Gift-tax Officers before whom proceedings for assessment are pending. With these observations, these three writ petitions will be dismissed and parties will bear their own costs. In O.P. No. 131 of 1961, as we mentioned earlier, there has also been an order of assessment made by the Gift-tax Officer in question. Here again, we make it very clear that, excepting considering the constitutional question that has been raised and argued before us and wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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