Gift-tax on agricultural land upheld as a valid exercise of Parliament's residuary taxing power.

Parliament had legislative competence to levy gift-tax on transfers of agricultural lands under the Gift-tax Act, 1958, because the Act is in substance a tax on gifts and not on land. Taxing power must be found expressly, and no entry in List II covers a tax on gifts or transfer of property. Entry 97 of List I, read with Article 248, supports Parliament's residuary power to impose taxes not assigned to the State or Concurrent Lists. Entry 18 of List II on land and agricultural land does not imply a taxing power, and Entry 47 on succession to agricultural lands does not extend to inter vivos gifts. The Act was therefore valid despite its incidental effect on agricultural lands.

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Issues: Whether Parliament had legislative competence under the Constitution to levy gift-tax on transfers of agricultural lands under the Gift-tax Act, 1958.

Analysis: The charging provision of the Gift-tax Act shows that the statute is a tax on gifts as such, including gifts deemed by the Act, and its central object is to levy and collect gift-tax. The Constitution distributes taxing powers separately from general legislative powers, and taxation is treated as a distinct matter of competence. There is no specific taxing entry in List II covering tax on gifts or transfer of property. Entry 97 of List I, read with the residuary power under Article 248, authorises Parliament to legislate on taxes not mentioned in the State or Concurrent Lists. Entry 18 of List II, dealing with land and transfer and alienation of agricultural land, cannot by implication carry a taxing power, because a taxing entry must be found expressly. The doctrine of pith and substance shows that the true character of the Act is a gift-tax measure within Parliament's residuary power, and its incidental impact on agricultural lands does not invalidate it. Entry 47 of List II relating to succession to agricultural lands does not comprehend inter vivos gifts or transfers.

Conclusion: Parliament was competent to enact the Gift-tax Act, 1958, insofar as it applied to gifts of agricultural lands, and the challenge to its validity failed.

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