9911796707
|
Home
Issues Involved
1. Competence of the legislative power of the Central Legislature under section 34(1)(c) of the Estate Duty Act. 2. Discrimination and repugnance of section 34(1)(c) to Article 14 of the Constitution of India. Issue-Wise Detailed Analysis 1. Competence of the Legislative Power The petitioner challenged the legality of section 34(1)(c) of the Estate Duty Act, arguing that it was beyond the legislative competence of the Central Legislature. The contention was that estate duty should be levied only on the property passing on the death of the deceased, as per entry No. 87 in List I and the definition of estate duty in Article 366(9) of the Constitution. The petitioner argued that section 34(1)(c) improperly aggregated the estate of the lineal descendant, Krishna Prasad, with the deceased's estate, which did not pass on death. The court held that Parliament had the exclusive power to legislate on estate duty under entry No. 87 in the Union List. The term "estate duty" includes the power to legislate the manner in which the rates of estate duty are fixed. Section 34(1)(c) was deemed a provision for fixing estate duty rates, not levying duty on the property of the lineal descendant. The aggregation was only for rate determination, and the duty was payable on the deceased's property. The court found no merit in the argument that the power to make law regarding estate duty did not include the power to fix the rate. Therefore, section 34(1)(c) was within the legislative competence of Parliament. 2. Discrimination and Repugnance to Article 14 The petitioner argued that section 34(1)(c) was discriminatory and violated Article 14 of the Constitution, which guarantees equality before the law. The claim was that the section prescribed a unique procedure for imposing tax on Mitakshara joint family members, different from Dayabhaga school members, without reasonable classification or nexus to the object sought to be achieved. The court explained that "equal protection of laws" means equal treatment in similar circumstances. It acknowledged that the principle of equality does not require universal application of every law to all persons, as varying needs necessitate separate treatment. The court examined the object of the Estate Duty Act, which aimed to reduce wealth inequalities. It found that the classification between Mitakshara and Dayabhaga schools was based on substantial differences in the incidents attached to joint Hindu families under these laws. In Mitakshara, sons acquire an interest in ancestral property at birth and take it by survivorship, whereas, in Dayabhaga, sons acquire property rights only upon the father's death. This distinction justified the application of section 34(1)(c) to Mitakshara families to remove inequality in estate duty rates. The court cited the Supreme Court's decision in Venugopala Ravi Varma Rajah v. Union of India, which upheld differential tax treatment based on reasonable classification. The classification in section 34(1)(c) was found to have a rational relation to the object of the Estate Duty Act, thus not violating Article 14. The court agreed with the Madras High Court's decision in Ramanathan Chettiar v. Assistant Controller of Estate Duty, concluding that section 34(1)(c) was neither discriminatory nor repugnant to Article 14. Conclusion Both contentions raised by the petitioner were rejected. The court held that section 34(1)(c) of the Estate Duty Act was within the legislative competence of Parliament and did not violate Article 14 of the Constitution. The writ petition was dismissed with costs.
|
