LexUNION OF INDIA versus H. S. DHILLON
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A B c D .• E .G . H ·~ .. UNION OF INDIA v. H. S. DHILLON October 21, 1971 33 [S. M. S1KRI, C.J., J.M. SHELAT, A. N. RAY, I. D. DuA, S. C. RoY, D. G. PALEKAR AND G. K. MITTER, JJ.] Constillltion of India, 1950, Arts. 246, 248, List /, Sev~ntlz. Schedule, entries 86 and 97, and List JI, entry 49-Scope of-;-:Enqllll'Y uzto sc~pe of residuary powers-Nature of-'An}' other niatter ill entry 97, n1ea111ng of. Wealth Tax Act, 1957, as amended by s. 24, Finance Ac_t, 1969- Comvetencv of Parliameiit to enact-If fa/ls unda entry 49. List //. Section 3 of the Wealth Tax Act, 1957, imposes a tax on the c.apital value of the net wealth of an assessee. Net wealth, under the Act, JS the amount by which the aggregate value of all assets of the assessee, computed in the manner provided by the Act, is in excess of the aggregate value of all debts (subject to some exceptions) owed by the assessee; and assets, under s. 2(e) as it originally stood, meant generally property of every description but not including agri.cultural land, &rowmg crops, grass or standing trees on such land. Section 24 of the Fmance Act, 1969, amend- ed s. 2(e) of the Wealth Tax Act and included agricultural land etc., in thC assessee's assets for the purpose of computing his net wealth. The High Court held that the amendment was beyond the legislative competence of Parliament. In appeal to this Court, on the questions : ( 1) whether such a tax on agricultural land could be imposed only by the States under entry 49, List II, Seventh Schedule to the Constitution, dealing with 'taxes on lands and buildings'; and (2) whether the object of specifically excluding agricultural land from the scope of entry 86, List I, was also to take it out of the ambit of entry 97, List I, and Art. 248, dealing with residuary powers of ParJiament. HELD: (Per S. M. Sikri, C.J., S. C. Roy, D. G. Palekar and G. K. Mitter, JJ.) : The amendment is valid. [75 G] (Per S. M. Sikri, C.J., S. C. Roy and D. G. Palekar, JJ.) : (I) (a) Article 248 of the Constitution provides that Parliament has exclusive power to make any law with respect to any matter not enumerated in List II or List III and that such power includes the power of makinl( any Jaw im~ing a tax not 11_1entioned in those Lists. Under entry 97, List I, Parliament has exclusive power to make laws with respect to any other !"at~er not enumer~ted in Lists II or III including any tax not mentioned 10 either o.f. t~ose Lists. The scheme of distribution of legislative powers in the Const1tut1on !lamely, Arts. 246 ~nd 248 and entry 97, List I, shows .that any matter !ncludmg a tax, ~h1ch has not been allotted exclusively to the ~tale Legislat~rc~ un.der 1:-1st II, or concurrently with Parliament unc!~r List III, ~all.s w1th10 Ltst I, 10clud1~g entry 97 of that List read with Art. 248. ,If t~1s IS the .true scope of residuary powers of Parliament. then ~hen dealmg with a Central Ac~ the only enq?iry is whether it is legislation 10 respect of any matter m List ,II, for, this 1s the only field rel(arding w'1ic!t •there is a prohibition against Parliament. If a Central Act d0es not 34 SUPREME COURT REPORTS (1972] 2 S.C.R. enter or invade. these prohibited fields there is no point in trying to decide A a.s to under which entry or entries of List I or List Ill a Central Act would rightly fit to. 1.46F; 47F-G; 61D, E] Gift Tax Officer v. Nazareth, [1971] I S.C.R. 195,. 200. (b) This is the test that had been applied in interpreting the Canadian Cons!Itut10n and ~I?ce the scheme of distribution of legislative powers betw~en the _Domm10n and the Provmces under the British North America B Act IS essentI~lly the same as under the Indian Constitution those principles of mterpretat10n may be accepted as a guide. [61F-G] · Subrahmanyam Cheltiar v. M11th11swami Goundan; [1940] F.C.R. 188, npphed. Lefroy Canada's Federal System; Halslmry's Laws of E11gla11d, 3rd Ed. Vol. 5 p. 498, Russe/ v. The Quee11 [1881-82] 7 A.C. 836, A. G. for C Canada v. A.G. for Br. Columbia [1930] A.C. 111, Jn re: The Regulation and Control of Aero11a11tics in Canada, [1932] A.C. 54, Jn re : Silver Bros. Ltd. [1932] A.C. 514 and Canadian Pacific Ry. Co. v. A.G. for Br .. Columbia [1950] A.C. 122, referred to. Chhotabhai Jethablwi Patel v. Union, [1962] Supp. 2 S.C.R.· J, Prorince of Madras v. Boddu Paidanna, [1942] F.C.R. 90; Bombay v. Chamorbaug. wala, [1957] S.C.R. 874, Atiabari Tea Co. v. As
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