Law:

Section:

Section 3 of the Gift-tax Act, 1958, read with article 248 and entries 18 and 49 of State List and entry 97 of Union List of Schedule VII of the Constitution of India - Charge of tax - Assessee challenged right of Parliament to impose a gift tax on lands and buildings - High Court held that entry 49 of State List, read with entry 18, reserved power to tax lands and buildings to legislature of State and Parliament could not, therefore, use residuary power conferred by entry 97 of Union List - Whether gift tax is not a tax on lands and buildings as such but is a levy upon a particular use which is a transmission of title by gift - Held, yes - Whether since entry 18 of State List does not confer additional power of taxation and merely levies fees in respect of certain items of lands and entry 49 contemplates a tax directly levied by reasons of general ownership of land and building, it cannot include gift tax - Held, yes - Whether there being no other entry which covers a gift tax, residuary powers of Parliament could be exercised to enact a law - Held, yes - Whether, therefore, Parliament has power to legislate with respect to taxes on gifts of land and buildings - Held, yes FACTS The assessee made a gift by registered deed of certain properties in favour of his four sons. The gift tax was demanded in respect of market value of the said properties. On writ, the assessee challenged the authority to charge gift-tax on the gift of the properties and the questioned the right of the Parliament to impose a gift-tax on lands and buildings. The High Court held that entry 49 of the State List read with entry 18 of the same list reserved the power to tax lands and buildings to the Legislatures of the States and Parliament could not, therefore, use the residuary power conferred by entry 97 of the Union List. On appeal to the Supreme Court: HELD Under article 245 of the Constitution Parliament makes laws for the whole or any part of the territory of India and the Legislatures of the States for the whole or part of their respective States. The subject-matter of laws are set out in three lists in the Seventh Schedule. List I (usually referred to as the Union List) enumerates…

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