ARTICLE 248 OF THE INDIAN CONSTITUTION
The Legal Lock
INTRODUCTION
Article 248 states that:
1. Parliament has exclusive power to make any law with respect to any matter not enumerated in the concurrent list or state list.
2. Such power shall include the power of making any law imposing a tax not mentioned in either of those lists.
SIGNIFICANCE OF SEPARATELY MENTIONING TAXES IN ARTICLE 248:
It implies that the power to make laws does not include the power to impose taxes. Ordinary legislation is a police-power i.e. the power to regulate law and order. This power is subject to a greater degree of limitations. Tax legislation, on the other hand, is the power of collecting revenue and is subject to lesser limitations. Tax laws are not generally invalidated by the courts.
In the case of Union of India v. H. S. Dhillon (AIR 1972 SC 1061)
The Wealth Tax Act, 1957 was amended in 1969 by the Finance Act in 1969 with the effect of inserting: “For the purpose of computing the total wealth on which the tax was to be imposed, the agricultural assets would be taken into account.” The High Court held the amended portion of the Act to be ultra vires the constitution of India. However, the High Court also held that the impugned Act was not covered by Entry 49 List II. The question is if neither the state legislature nor the parliament can legislate on the subject, then who is to legislate on the matter?
The Union's Contentions:
i. The impugned Act is not a law with respect to any entry in List II; it falls within the purview of Entry 86, List I, read with Entry 97 List I and Article 248.
ii. The proper way of testing the validity of a parliamentary statute was first to see whether the parliamentary legislation was with respect to any matter or tax mentioned in List II, if it was not. no further question arises.
Respondent's Condition:
i. The effect of 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 Article 248. This was in order to give the States the exclusive power to legislate on 'agricultural land', 'income on agricultural land' and ‘taxes thereon’.
ii. The second contention of the Union is based on Canadian decisions and the Canadian constitution is very different from the Indian constitution and those decisions ought not to be applied to the Indian constitution plus no judicial decisions in India hinting towards such an approach.
Supreme Court was of the opinion that two questions should be asked:
1) Is the impugned Act legislate with respect to Entry 49, List II
2) If not, is it beyond the legislative competence of Parliament
It has been contended that the words: "Exclusive of agricultural land" in entry 86, list I, themselves constituted a matter and, therefore, they could not fall within the words "any other matter", entry 97, List I. There are other entries in List I where certain items have been excluded from list I. But all these matters excepting entry 86, have been included in the entries of list 2.
THE TERM ‘ANY OTHER MATTER’ IN ENTRY 97, LIST I
The words have reference to matters on which the Parliament has been given the power to legislate by the enumerated entries 1-96, list 1 and not to matters on which it has not been given power to legislate.
The matter in entry 86 is the whole entry and not the entry without the words "exclusive of agricultural land" plus the matters in entry 86 is not tax on capital value of assets but the whole entry.
We do not interpret the words 'any other matter' to mean a topic mentioned by way of exclusion. These words really refer to the matters contained in each of the entry 1-96. The words had to be used because entry 97, list I follows entry 1-96. It is true that the field of legislature is demarcated by entry 1-96, but demarcation does not mean that if entry 97 confers additional power; we should refuse to give effect to it.
EFFECT OF USING THE WORD 'OTHER' IN ENTRY 97, LIST 1
1. Had the words not been there, the effect would have been that only E.97 would have been there in List I and all other entries would have been redundant or unnecessary.
2. As a result the scope of the entries in the other list would have been unrestricted. The enumeration of parliament's power, on the other hand, imposed a number of restrictions on the scope of the enumerated powers of the other lists.
If 'other' was not there, there would have been no need to have Entries 1-96. Wide interpretation would have been given to the state and concurrent lists, and as a result, Parliament's powers would have got restricted e.g. In Gujarat University case, in the absence of any enumerated entries of List I, the state power to regulate university education would have been widely constructed and it would not have come into conflict with any parliamentary power to "fix standards of education…" As a result, the states would have had the power to fix any medium of instruction. This would, in effect, affected the uniformity in higher education.
The enumeration of topics of legislation for parliament gives a wide interpretation to parliamentary powers and hence such a construction as above is avoided.
ARTICLE 248 OF THE INDIAN CONSTITUTION
The doubts regarding the interpretation of entry 97 set at rest by Article 248- framed in the widest possible terms. The only question to be asked on terms Article 248 is - Is the matter sought to be
legislated included in List II or List III: No question has to be asked about list I. If the answer is negative, it follows that parliament has power to make laws with respect to that matter.
Moreover, Article 246 confers the legislative powers to the legislatures whereas the three lists merely demarcate the legislative fields. Article 248 confers a power on the parliament and there is no rule of construction by which one can cut down the wide words of a substantive Article like Article 248 by the wording of an entry in Schedule VII and hence Article 248 has to be given full effect.
One more contention of Mr. Palkiwala was that the tax on 'net wealth' was well known and if it had been the desire to include it, it would have been mentioned.
Another contention was that, if 'any other' in entry 97 include the entries 1-96, list I, what was the need to enumerate entries 1-96 in List 1; it would have been simply said that all the matters not enumerated in list II and III are to be legislated upon by the parliament.
ANSWERS TO THIS CONTENTION
1) Dr. Ambedkar was of the opinion that the framer wanted to know categorically and particularly what are the legislative powers of the state; they were not going to be satisfied by saying that the centre will have only residuary powers.
2) In absence of list I, the terms of list II would have been given much wider interpretation.
CERTAIN QUESTIONS PERTAINING TO THE ISSUE ARE RAISED AS FOLLOWS:
(1) Why was it excluded when it was contemplated to be within the competence of parliament by way of 'residuary powers’?
Several reasons for the above are possible. One may be a question of policy matter and may be that the constitution makers did not want to annoy the land holders by expressly enumerating it in the state list. They left it to be done some years later by
way of interpretation of 'residuary powers', when the circumstances might be different.
(2) What was the need of entry 97 when Article 248 was there or vice-versa? The entries are not supposed to confer powers; rather they are mere illustrations. Article 248 confers that power of which entry 97 is an illustration. The constitution makers wanted to make it clear that the residuary powers lie with the centre.
(3) Are we not making that part - "Exclusive of Agricultural land", redundant? We are not making it redundant for the period when the constitution came into force. We are making it redundant now, when the circumstances have changed. And this can very well be said to have been the intention of the constitution makers.
(4) Is it that there is nothing on which none of the legislature can legislate? No, there are provisions in the constitution which render certain matters beyond the competence of the legislation of all the legislatures. But these are purposely so enacted for some specific period and not indefinitely.
(5) Is not 'tax on agricultural land' included in entry 49: "Tax on lands and buildings"?
There is a difference between tax on land and tax on capital values of land, for example, income tax and corporate tax are both taxes on income, but are two separate entities. If we interpret entry 49, widely, it would cover capital value on land which would include agricultural land. But then it would in other words, in order to include agricultural land in entry 49. We have to construe entry 49 so widely that it covers tax on capital value of lands. Here, it would come in conflict with entry 86 which has the exclusive provisions for tax on capital value of assets including land but excluding agricultural land
LANDMARK CASES
∙ After the Dhillon's Case, the Supreme Court in Sat Pal & Co. v. Lt. Governor of Delhi reiterated that Parliament could employ one or more entries in Lists I and III and also Entry 97 of List I and Article 248 to make a law. It also reiterated that the fact that a subject of legislation was known to the Constitution-makers was no ground to exclude it from the residuary power of Parliament if that subject was not included elsewhere in any of the entries in the three lists.
Accordingly, it upheld that the imposition of special duty by Parliament by an amendment to the Punjab Excise Act, 1914 as applied to the Union Territory of Delhi. Under the un amended Act, a countervailing duty on the alcoholic liquors for human consumption manufactured or produced outside Delhi could be imposed in terms of Entry 51 of List II. Since Delhi did not manufacture or produce any alcoholic liquors. Parliament by amendment imposed a special duty on country-made liquor brought into Delhi from outside. The Court justified the amendment under Entry 97 of List I read with Article 248.
∙ In International Tourist Corporation vs. State of Haryana, Chinnappa Reddy, J. thought that there was a patent fallacy in the submission of arguments based on the observations in Dhillon Case relating to the combination of power to legislate in respect of any matters enumerated in Entries 1-96 of List I with power to legislate under Entry 97 of the same list, and quoted with approval in Sat Pal Case. He pointed out, and rightly so, that before exclusive legislative competence could be claimed for Parliament by resort to the residuary power, the legislative incompetence of the State legislature must be clearly established. A matter could be brought under Entry 97 only if it was not to be found in List II or List III. The test formulated by Sikri, C.J., in Dhillon Case in order to validate a Central legislation became handy to Chinnappa Reddy, J. for validating a State legislation, and to prevent the exercise of residuary power from destroying or belittling the State autonomy. In upholding the vires of Section 3(3) of the Punjab Passengers and Goods Taxation Act in so far as it permitted the levy of tax on passengers and goods carried by their carriages plying entirely on the national highways, Chinnappa Reddy, J. observed that there is no justification for reading Entry 56 of List II in conjunction with Entry 26 and comparing it with Entries 23 and 42 of List I read together, and it is but proper that where the competing
entries are Entry 56 in List II and Entry 97 of List I, the entry in the State List must be given a broad and plentiful interpretation.
∙ Emphasizing the wide amplitude of the legislative power of Parliament, including its residuary power, in Dhillon Case, Sikri, C.J., also made the following sweeping remark: “If a Central Act is challenged, as being beyond the legislative competence of Parliament, it is enough to enquire if it is law with respect to matters or taxes enumerated in List 2. If it is not, no further questions need to be asked.”