TaxTMI 
TaxTMI 
2012 (5) TMI 262
X X X X Extracts X X X X
X X X X Extracts X X X X
....ions, the 1899 Act as applicable to Madhya Pradesh was further amended by the M.P. 2002 Act. The respondents, referred to as writ petitioners, amended their writ petitions and prayed that Clause (d), Article 45 of Schedule 1-A of the 1899 Act as substituted by M.P. 2002 Act be declared ultra vires. The writ petitioners set up the case that original Article 48 of the 1899 Act, Schedule 1-A prescribed stamp 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 execut....
X X X X Extracts X X X X
X X X X Extracts X X X X
....there is intelligible differentia. On a first blush the aforesaid submission of the learned counsel for the State appears to be quite attractive, but on a deeper probe it is not what it is. In the guise of the classification something has been stated in the said provision. One can give certain examples. One may not have kith or kin and intact [sic] even that case to deprive him to execute the power of attorney 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. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s contained in Section 2(10) of the 1899 Act which reads as under: "S.2. Definitions.- In this Act, unless there is something repugnant in the subject or context,-- (10) "Conveyance" includes a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos and which is not otherwise specifically provided 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....person or more to act in single transaction, including a power of attorney executed for procuring the registration of one or more documents in relation to a single transaction or for admitting execution of one or more such documents; Fifty rupees. (b)when authorizing one 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' in....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be struck down only if it is found not saved by any of the clauses (2) to (6) of Article 19 and so on. No enactment can be struck down by just saying that it is arbitrary or unreasonable. Some or other constitutional infirmity has to be found before invalidating 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 r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty Co. Ltd. v. State of Bihar and others AIR 1955 SC 661, a seven-Judge Bench speaking through majority in paragraph 43 (at pg. 685) of the Report while dealing with hardship in the statutes stated as follows : "..........If there is any real hardship of the kind 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he High Court erred in its approach of trying to find out the intention of the legislature in enacting the impugned amendment to the Stamp Act." While dealing with the aspect as to how and when the power of the court to declare 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f constitutionality of an enactment and the burden is upon him, who attacks it, to show that there has been a clear violation of the constitutional principles. It stated in paragraph 15 (at pgs. 740-741) of the 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, in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bay v. F.N. Balsara.)" 27. A well-known principle that in the field of taxation, the Legislature enjoys a greater latitude for classification, has been noted by this Court in long line 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 ....