SECOND GIFT TAX OFFICER, MANGALORE, ETC. versus D. H. NAZARETH ETC.

Citation: [1971] 1 S.C.R. 195 · Decided: 02-04-1970 · Supreme Court of India · Bench: M. HIDAYATULLAH · Disposal: Appeal(s) allowed
Cited by 4 judgment(s) · see the full citation network in Lexace
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

195 
A 
SECOND GIFT TAX OFFICER, MANGALORE, ETC. 
V. 
D. H. NAZARETH ETC. 
April 2, 1970 
8 
[M. H!DAYATULLAH, C.J., J. C. SHAH, 
A. N. GROVER, 
A. N. RAY AND I. D. DUA, JJ.) 
Constitution of India, 1950, Art. 248, Schedule VII, Union List, Entry 
97 and State List, Entries 18 and 49-Gift Tax Act (18 of 1958)-Enacted 
by Parlian1ent under residuGr,v power--Competence of Parliament. 
Gift tax was levied under the Gift Tax Act, 1958, on gifts, of coffee 
C 
plantations, paddy and other agricultural lands and buildings, made by 
the respondents. The Gift Tax Act was enacted by Parliament but there 
is no entry in the Union or Concurrent Lists mentioning such a tax. The 
High Court held that Parliament was not competent to enact a law impas-
ing a gift tax on lands and buildings, because, entries 18 and 49 of the 
State List reserved the power to State Legislatures. 
D 
E 
F 
G 
H 
On appeal to this Court. 
HELD : The Constitution divides the topics of legislation into three 
broad categories : (a) en fries enabling laws to be made, (b) entries en-
abling taxes to be imposed, and ( c) entries enabling fees and stamp duties 
to be collected. 
The taxes are separately menuoned and contain the 
whole of the power of taxation, except entry 97 of the Union List, under 
which, Parliament has exclusive power to make a law in respect of any 
matter not enumerated in the Concurrent or State Lists and the power 
includes the power of making a law imposing a tax not mentioned in either 
of the Lists. [ 199 G-H] 
Entry 18 of the State List dealin~ with 'land', though very wide, does 
not therefore confer any power of taxatiou and cannot authorise a tax 
not expressly mentioned. [ 199 HJ 
Entry 49 of the State List contemplates a t.ax directly levied by reason 
of the general ownership of lands and buildings. 
But the pith and subst-
ance of the Gift Tax Act, is to place the tax on the gift of property which 
may include land and buildings. 
It is not a tax imposed directly upon 
lands and buildi~gs but is a tax 
upon the value of the total gifts made 
in a year which is above the exempted limit. The lands and buildings are 
valued only as a measure of the value of the gift and what is taxed is 
the gift. 
A gift tax is thus not a tax on lands and buildings as such but 
is a levy upon a particular use. namely, the transmission of title by gift. 
[200 A-El 
There being no· other entry in the State List which might cover a 
gift tax, the residuary powers of Parliament under Art. 248, and entry 97 
of the Union List. could be exe,cised by Parliament. to enact the law. 
[200 E-F] 
Sudhir Chandra Nawn v. Wealth Tax Officer, CGlcutta & Ors. (1968) 
69 l.T.R. 897 (S.C.) followed. 
S. Dhandapani v. Addi. Gift Tax Officer, Cuddalore, (1963) 49 J.T.R. 
712, ShyGm Sunder v. Gift Tax Officer, A.LR. 1967 All. 19, Jupadi Sesha-
ratnam v. Gift Tax Officer, Palacole, ( 1960) 38 J.T.R. 93 and Joseph v. 
Gift Tax Officer, (1964) 45 J.T.R. 66, approYed. 
196 
SUPREME COURT REPORTS 
[1971] l S.C.R. 
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 664 to 
669 of 1967. 
· Appeals from the judgment and order dated March 22, 1962, 
July 23, 1962, July 24, 1962, July 12, 1963 and August 14, 1963 
in Writ Petitions Nos. 1077 of 1959, 19 and 739 of 1960, 157 of 
1961, 970 of 1962 and 594 of 1963. 
Jagadish Swarup, Solicitor-General, S. K. Aiyar and R. N. Sach-
they, for the appellants (in all the appeals). 
S. V. Gupte, A. K. Varma, J.B. Dadachanji, 0. C. Mathur and 
Ravinde:· Narain, for the respondent (in C. A. No!f. 664 and 668 
Of 1967). 
0. P. Rana, for the intervener for the State of U.P. 
M. R. K. Pillai, for the intervener for the State of Kerala. 
B. Sen, Santosh Chatterjee and G. S. Chatterjee for Sukumar 
Bose, for the State of West Bengal. 
S. Govind Swaminathan, 
Advocate-General, 
Tamil Nadu, 
A. V. Rangam and M. Subramaniam, for the State of Tamil Nadu. 
Lal Narayan Sinha, Advocate-General, Bihar, D. P. Singh nad 
A 
B 
c 
D 
V. J. Francis, for the intervener for the State of Bihar. 
E 
K. A. Chitaley, Advocate-General, State of Madhya Pradesh, 
M.N. Shroff and /. N. Shr<off, for the intervener for the State of 
Madhya Pradesh. 
E. S. Venkataramiah, Adl'ocate-General, Mysore and· S. P. 
Nayar, for the intervener for the State of Mysore. 
F 
J. C. Medhi, Advocate-General, Assam and Naunit Lal, for the 
intervener for the State of Assam. 
· 
The Judgment of the Court was delivered by 
Hidayatullah, C.J. 
These six appeals by certificate under Art
Excerpt shown. Read the full judgment & AI analysis in Lexace.