TMI Blog2012 (5) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... ey come into existence (iv), hardship is not relevant in pronouncing on the constitutional validity of a fiscal statute or economic law and (v), in the field of taxation, the Legislature enjoys greater latitude for classification. Had the High Court kept in view the above well-known and important principles in law, it would not have declared Clause (d), Article 45 of Schedule 1-A as violative of Article 14 of the Constitution being arbitrary, unreasonable and irrational while holding that the provision may pass test of classification. By creating two categories, namely, an agent who is a blood relation, i.e. father, mother, wife or husband, son or daughter, brother or sister and an agent other than the kith and kin, without consideration, the Legislature has sought to curb inappropriate mode of transfer of immovable properties. Ordinarily, where executant himself is unable, for any reason, to execute the document, he would appoint his kith and kin as his power of attorney to complete the transaction on his behalf. If one does not have any kith or kin who he can appoint as power of attorney, he may execute the conveyance himself. The legislative idea behind Clause (d), Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty payable at Rs. 10/- if attorney was appointed for a single transaction. By M.P. 1997 Act, Article 48 Clause (f) was substituted by Clauses (f) and (f-1). Clause (f-1) provided that where power of attorney was executed without consideration in favour of person who is not his or her spouse or children or mother or father and authorizes him to sell or transfer any immovable property, the stamp duty would be leviable as if the transaction is conveyance under Article 23. Explanation II inserted by M.P. 1997 Act provided that where under Clauses (f) and (f-1), duty had been paid on the power of attorney and a conveyance relating to that property was executed in pursuance of power of attorney between the executant of the power of attorney and the person in whose favour it was executed, the duty on conveyance should be the duty calculated on the market value of the property reduced by duty paid on the power of attorney. By M.P. 2002 Act, stamp duty relating to power of attorney has been prescribed in Article 45 of Schedule 1-A. Clause (d) thereof prescribes stamp duty at two per cent on the market value of the property which is subject matter of power of attorney when power of attorn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... torney for selling the property, unless 2% is paid on the market value is arbitrary. The provisions may pass the test of classification but it would not pass the requirement of the second limb of Article 14 of the Constitution which ostracises arbitrariness, unreasonable and irrationality. The State may have a laudable purpose but the laudable purpose alone cannot sustain the provision. The matter would been [sic] different had it included a rider that it is executed in favour of any other for consideration or some other purposes is not the situation. In view of the same, we are of the considered opinion, the aforesaid provision is defiant of Article 14 of the Constitution. Accordingly, we have no hesitation to declare the same as violative of Article 14 of the Constitution." 5. Ms. Vibha Datta Makhija, learned counsel for the appellant - State of Madhya Pradesh - submitted that the High Court was in error in declaring Clause (d), Article 45, Schedule 1-A as violative of Article 14 of the Constitution of India. She would submit that the test of challenge to a legislative provision was completely different from that of an administrative action. A legislative provision cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for by Schedule I. 9. Section 2(21) defines 'power of attorney'. It reads as follows : "S. 2(21) "Power-of-attorney" includes any instrument (not chargeable with a fee under the law relating to court-fees for the time being in force) empowering a specified person to act for and in the name of the person executing it;" 10. The 1899 Act has been amended from time to time by the Madhya Pradesh State Legislature insofar as its application to the State of Madhya Pradesh is concerned. The stamp duty on power of attorney was originally prescribed in Article 48, Schedule -1-A of the 1899 Act. Clause (f) in original Article 48, Schedule 1-A read as under: "SCHEDULE-1A Stamp Duty on Instruments ( See section 3) Description of Instruments Proper Stamp Duty (1) (2) 48.Power of Attorney, as defined by Section 2(21), not being a Proxy [No. 52]. ( f ) when giving for consideration and authorizing the attorney to sell any immovable property; The same duty as Conveyance (No. 23) for a market value equal to the amount of the consideration." 11. Section 3 of the M.P. 1997 Act brough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e person to act in more than one transaction or generally; or not more than ten persons to act jointly or severally in more than one transaction or generally; One hundred rupees. ( c ) when given for consideration and authorizing the agent to sell any immovable property. The same duty as a conveyance (No. 22) on the ( d ) when given without consideration to a person other than the father, mother, wife or husband, son or daughter, brother or sister in relation to the executant and authorizing such person to sell immovable property situated in Madhya Pradesh. Two percent on the market value of the property ( e ) In any other case; Fifty rupees for each person authorized Explanation-I.- For the purpose of this article, more persons than one when belonging to the same firm shall be deemed to be one person. Explanation-II.- The term 'registration' includes every operation incidental to registration under the Registration Act, 1908 (16 of 1908)." 13. In our opinion, the High Court was clearly in error in declaring Clause (d), Article 45 of Schedule 1-A of the 1899 Act which as brought in by the M.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Act. An enactment cannot be struck down on the ground that court thinks it unjustified. Parliament and the legislatures, composed as they are of the representatives of the people, are supposed to know and be aware of the needs of the people and what is good and bad for them. The court cannot sit in judgment over their wisdom ." [Emphasis supplied] Then dealing with the decision of this Court in State of T.N. and others v. Ananthi Ammal and others [1995] 1 SCC 519 , a three-Judge Bench in Mcdowell and Co. observed in paragraphs 43 and 44 (at pg. 739) of the Report as under : " Now, coming to the decision in Ananthi Ammal , we are of the opinion that it does not lay down a different proposition. It was an appeal from the decision of the Madras High Court striking down the Tamil Nadu Acquisition of Land for Harijan Welfare Schemes Act, 1978 as violative of Articles 14, 19 and 300-A of the Constitution. On a review of the provisions of the Act, this Court found that it provided a procedure which was substantially unfair to the owners of the land as compared to the procedure prescribed by the Land Acquisition Act, 1894, insofar as Section 11 of the Act provided for paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d referred to, there is Parliament which is expressly invested with the power of lifting the ban under cl. (2) either wholly or to the extent it thinks fit to do. Why should the Court be called upon to discard the cardinal rule of interpretation for mitigating a hardship, which after all may be entirely fanciful, when the Constitution itself has expressly provided for another authority more competent to evaluate the correct position to do the needful?" 18. In Commissioner of Income Tax, Madras v. R.SV. Sr. Arunachalam Chettiar AIR 1965 SC 1216 , a three-Judge Bench of this Court, inter alia, observed in paragraph 13 (at pgs. 1220-21) of the Report, "equity is out of place in tax law; a particular income is either exigible to tax under the taxing statute or it is not." 19. In the Income Tax Officer, Tuticorin v. T.S. Devinatha Nadar etc. AIR 1968 SC 623 , this Court in paragraph 30 (at pg. 635) of the Report observed as follows : " 30. From the foregoing decisions it is clear that the consideration whether a levy is just or unjust, whether it is equitable or not, a consideration which appears to have greatly weighed with the majority, is wholly irrelevant in con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lare the statute unconstitutional can be exercised, this Court referred to the earlier decision of this Court in Rt. Rev. Msgr. Mark Netto v. State of Kerala and others [1979] 1 SCC 23 and held in para 46 (at pg. 740) of the Report as under : "46. In our opinion, there is one and only one ground for declaring an Act of the legislature (or a provision in the Act) to be invalid, and that is if it clearly violates some provision of the Constitution in so evident a manner as to leave no manner of doubt. This violation can, of course, be in different ways e.g. if a State Legislature makes a law which only Parliament can make under List I to the Seventh Schedule, in which case it will violate Article 246(1) of the Constitution, or the law violates some specific provision of the Constitution (other than the directive principles). But before declaring the statute to be unconstitutional, the court must be absolutely sure that there can be no manner of doubt that it violates a provision of the Constitution. If two views are possible, one making the statute constitutional and the other making it unconstitutional, the former view must always be preferred. Also, the court must make ever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Report as under : " ..The courts, it is accepted, must presume that the legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. It must be borne in mind that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest and finally that in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation " 23 . The above legal position has been reiterated by a Constitution Bench of this Court in Mahant Moti Das v. S.P. Sahi AIR 1959 SC 942 . 24 . In Hamdard Dawakhana and another v. The Union of India and others AIR 1960 SC 554 , inter alia, while referring to the earlier two decisions, namely, Bengal Immunity Company Ltd. and Mahant Moti Das AIR 1959 SC 942 , it was observed in paragraph 8 (at pg. 559) of the Report as follows: " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne of cases. Some of these decisions are : M/s. Steelworth Limited v. State of Assam 1962 Supp (2) SCR 589; Gopal Narain v. State of Uttar Pradesh and another. AIR 1964 SC 370 ; Ganga Sugar Corporation Limited v. State of Uttar Pradesh and others [1980] 1 SCC 223 ; R.K. Garg v . Union of India and others [1981] 4 SCC 675 and State of W.B. and another v. E.I.T.A. India Limited and others [2003] 5 SCC 239 . 28. In R.K. Garg [1981] 4 SCC 675, the Constitution Bench of this Court stated that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. 29. While dealing with constitutional validity of a taxation law enacted by Parliament or State Legislature, the court must have regard to the following principles: (i), there is always presumption in favour of constitutionality of a law made by Parliament or a State Legislature (ii), no enactment can be struck down by just saying that it is arbitrary or unreasonable or irrational but some constitutional infirmity has to be found (iii), the court is not concerned with the wisdom or unwisdom, the justice or injustice of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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