S DHANDAPANI Vs. GIFT TAX OFFICER ADDL

JUDGEMENT

(1.) THE question raised is whether the Gift -tax Act, 1958 (18 of 1958), enacted by Parliament is within its legislative competence in so far as the Act purports to levy a tax on gifts of agricultural lands The petitioner executed a settlement deed on 8th April, 1957, in favour of his niece, Manonmani Ammal, and thereby gifted an extent of 20 acres 28 cents of agricultural lands. He also made a gift under an instrument dated 7th April, 1957, of an extent of 114 acres 38 cents of agricultural lands in favour of his two sisters, Gajalakshmi and Savithri. The Gift -tax Officer, Cuddalore, called upon the petitioner by notice dated 4th December, 1958, to furnish a return in the prescribed form of all gifts made by him for the year ending 31st March, 1958. The officer exercised his jurisdiction under the provisions of the Gift -tax Act, 1958. The petitioner submitted a return and disclosed the two settlement deeds referred to above. By order dated 7th April, 1960, the officer assessed the petitioner to gift -tax of Rs. 8, 520 valuing the agricultural lands at Rs. 1, 54, 000. On such assessment the petitioner was called upon to pay the tax on or before 15th May, 1960. In this petition the petitioner prays for the issue of a writ of certiorari under article 226 of the Constitution to quash the order of assessment to tax The Gift -tax Act, 1958, is impugned on the ground that the topic of agricultural lands falls within the exclusive competence of the State legislature, that the said topic is outside the purview of the powers of Parliament and that a tax on agricultural lands which is no doubt permissible under the Act cannot be levied by Parliament but only by the State legislature. The short point that arises for consideration is whether Parliament is competent to legislate imposing tax on gifts or transfers of agricultural landsWe shall first examine the scope and ambit of the Gift -tax Act. In substance the design of the Act is to levy and collect tax on gifts. Gift is defined as the transfer by one person to another of any existing movable or immovable property made voluntarily without consideration in money or money's worth.

(2.) THE charging section, section 3, provides that

(3.) THERE is no specific entry or subject in any of the three Lists providing for a tax on transfer of property or gift. The Union claims the power to enact the Gift -tax Act even with reference to agricultural lands only under entry 97 of the Union List, and that reads "Any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists." Now entry 97 has to be read along with article 248(2) of the Constitution which provides that Parliament has exclusive power of making any law imposing a tax not mentioned in the State or Concurrent Lists. There are specific entries in the Union List providing for taxation like entry 82 (taxes on income other than agricultural income) entry 86 (taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies taxes on the capital of companies) entry 89 (Terminal taxes on goods or passengers carried by railway, sea or air taxes on railway fares and freights) entry 92 (taxes on the sale of purchase of newspapers and on advertisements published therein). Similarly in the State List there are specific entries for levying taxes, like entry 46 (taxes on agricultural income) entry 49 (taxes on lands and buildings) entry 59 (taxes on mineral rights, subject to any limitations imposed by Parliament by law relating to mineral development) entry 52 (taxes on the entry of goods into a local area for consumption, use or sale therein entry 53 (taxes on the consumption or sale of electricity) entry 54 (taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I) entry 55 (taxes on advertisements other than advertisements published in the newspapers) entry 56 (taxes on goods and passengers carried by road or on inland waterways) entry 57 (taxes on vehicles whether mechanically propelled, etc.) entry 60 (taxes on professions, trade, callings and employment) entry 61 (capitation taxes) entry 62 (taxes on luxuries, including taxes on entertainments, amusements, betting and gambling). There is no entry in the Concurrent List specifying a topic for taxation. The dichotomy between topics of taxation and other topics is clearly maintained in this scheme of distribution of legislative powers. The doctrine of implied or incidental power inherent in any legislative body to undertake legislation in respect of a specified field, to which we shall advert to a little later, does not appear to be capable of application either to Parliament or to the State when a taxing power is invoked not on the ground of its being specified in the List, but on the ground that it is necessary, ancillary or incidental to the other enumerated subjects. We do not think that the question, whether that is a correct mode of interpretation of the entries in the Lists, is debatable in view of the pronouncement of the Supreme Court in Sundararamier's case (Sundararamier and Co. v. State of Andhra Pradesh). It is enough to refer to the following passage in the judgment of Venkatarama Aiyar J., at page 1480