1. First petitioner is the son and second petitioner is the mother. First petitioner wants to gift his property (a residential site with a small building) valued at Rs. 6 lakhs to his mother (second petitioner). He got a gift deed drafted and also obtained a certificate of clearance under Section 230A of the Income-tax Act, 1961, for making the gift. The petitioners approached the second respondent on 3-7-2000 with the intention of getting the gift deed registered and offered to pay stamp dutyby demand draft and sought confirmation that the stamp duty payable will be under Article 28(b) of the Schedule to the Karnataka Stamp Act, 1957 ('Act' for short) which provides that where the donee is a member of the family of the donor, the stamp duty will be 2% of the market value where the market value is Rs. 50,000/- and above but less than Rs. 10 lakhs. According to the petitioners, the Sub-Registrar informed them that the stamp duty will have to be paid under Article 28(a) and not under Article 28(b). Feeling aggrieved, petitioners have filed this petition for the following reliefs:
(a) for striking down the explanation to sub-article (b) of Article 28 of the Schedule to the Act, as being violative of Article 14 of the Constitution of India;
(b) alternatively, a direction to first respondent to include mother and father of a donor in the explanation to sub-article (b) of Article 28 of the Schedule to the Act.
2. Article 28 of the Schedule to the Act reads as follows:
'Gift-Instrument of.--Not being a Settlement (No. 48) or Will or Transfer (No. 52)-
(a) Where the donee is not a family member of the donor.--the same duty as a conveyance (Article No. 20) for a market value equal to the market value of the property which is the subject-matter of gift. ....
(b) Where the donee is a member of the family of the donor: (i) Where the marketvalue is less thanRs. 50,000/- Rs. 500/-(ii) Where the market value isRs. 50,000/- and above but less thanRs. 10 lakhs 2% of the value(iii) and (iv).....Explanation.--Family in relation to donor for this purpose means husband, wife, sons and daughters'.
3. Petitioners contend that the mother being the nearest of relations, should always be treated as a member of the family of her son; that a gift by a son to a mother would fall under Article 28(b) but for the explanation which unreasonably restricts the family to husband, wife, sons and daughters; and excluding gifts in favour of other family members like father and mother, from the concessional duty under Article 28(b) amounts to hostile discrimination and the classification made by the definition of family in the explanation is not based on any intelligible differentia and there is no discernible nexus to the object sought to be achieved. Petitioners contend that if a gift from mother to son can fall under Article 28(b) there is no logic in denying such concession in regard to a gift by a son to the mother.
4. Stamp Act is a fiscal legislation. In view of the inherent complexities of such legislation and having regard to the fact that augmentation of revenue is the main object of such fiscal legislation, Courts have always recognised a larger discretion in the legislature in the matter of classification. Logic or reason are not of much avail in interpreting a taxing statute. In H.H. Prince Azam Jha Bahadur (dead) by L.Rs v. Expenditure Tax Officer, Hyderabad, the Supreme Court was considering the definition of the word 'dependent' in Section 2(g) of the Expenditure Tax Act, 1997. The relevant portion of the definition stated that 'dependent' meant where the assessee is an individual, his or her spouse or minor child and includes any person wholly or mainly dependant on the assessee for support and maintenance. Having regard to the use of the word 'and', the Supreme Court held that the definition has to be read in two parts: first part consisting of spouse or minor child; and second part including those who are wholly or mainly dependant on the assessee for support and maintenance. Consequently, it was held that the words 'wholly or mainly dependant on the assessee' did not refer to spouse or minor child and a spouse and minor child would be dependents even if they had their separate income and were not dependant on the assessee. The Apex Court observed thus:
'It does look somewhat anomalous and illogical that where the expenditure has been incurred by the wife and minor children who are altogether independent of the assessee and which has no connection with their being dependant on him or with any property transferred to them should be included in the expenditure of the assessee..... But it must be remembered that logic and reason cannot be of much avail in interpreting a taxing statute'.
..... In a tax legislation where the incidence of the tax falls differently upon different classes of assessees as in the present case, it can be said that there is legislation without any classification or that there is no rational relation to the object. According to the learned Judge, the object of the enactment is to augment the revenue, to encourage thrift and to avoid wasteful expenditure and because some classes are taxed higher than the others or same are given concessions while others fire not, it cannot be held that there has been discrimination within the meaning of Article 14'.
5. In State of Andhra Pradesh and Others v McDowell and Company and Other, the Supreme Court has specified the grounds on which an enactment or provision therein can be challenged, thus:
'A law made by the Parliament or the Legislature can be struck down by Courts on two grounds and two grounds alone. viz., (1) lack of legislative competence; and (2) violation of any of the fundamental rights guaranteed in Part III of the Constitutionor of any other constitutional provision. There is no third ground. . .... if an enactment is challenged as violative of Article 14, it canbe struck down only if it is found that it is violative of the equality clause/equal protection clause enshrined therein. ...... Noenactment 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. The Parliament and 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'.
6. When examined in the background of the said principles, it is clear that the challenge to the explanation to Article 28(b) has no merit. It is not the case of the petitioners that there is lack of legislation competence. The ground of challenge is that the explanation of 'family' in Article 28(b) is violative of Article 14 on account of non-inclusion of father and mother. It is possible that in certain circumstances, logically mother, father and dependant brothers/sisters may be included in the definition of 'family'. But, it is also possible in a different set of circumstances, mother and father or siblings may not be considered as members of the family. When a person is married and has children, normally the spouse and children are alone considered as family, for several purposes. There is nothing unreasonable about it. Further, the question is not whether it is reasonable to include the parents, but whether their non-inclusion is unreasonable and arbitrary so as to render the explanation open to challenge on the ground of violation of Article 14. It is not possible to hold that when mother is not included in the definition, the definition of 'family' in the explanation becomes incomplete and violates Article 14 or that the explanation defining 'family' should be so interpreted as to include the mother. Equally baseless is the contention that because a gift from mother to son falls under Article 28(b), a gift from son to mother should also necessarily fall under Article 28(b). I find no substance in the challenge to the constitutional validity of the explanation to Article 28(b) of the Act.
Re: Point (b):
7. The alternative prayer is for a direction to first respondent to include mother and father of the donor in the explanation to Article 28(b) of the Act. It is now well-settled that Courts will not direct the Legislature either to enact, or repeal or modify any law -- See Supreme Court Employees' Welfare Association v Union of India and Others. Making laws and modifying laws is within the sphere of the Legislature. In State of Uttar Pradesh and Others v M/s. Hindustan Aluminium Corporation and Others, the Apex Court observed:
'It has to be appreciated that the power to legislate is both positive in the sense of making a law, and negative in the sense of repealing a law or making it inoperative. In either case, it is a power of the Legislature, and should lie where it belongs. Any other view will be hazardous and may well be said to be an encroachment on the legislative field'.
Therefore, it may not be appropriate for this Court to direct the legislature to amend the explanation to Article 28(b). The remedy is to mobilise public opinion and appeal to the legislature. Hence, alternative prayer is also liable to be rejected.
8. Article 28(b) will have to be read with the explanation, in a plain and normal manner. Only if the deed falls squarely under Article 28(b), the concessional rate of stamp duty can be availed. If not, the deed will be governed by Article 28(a). The Legislature can pick and choose regions, objects, persons, methods and rates of taxation, so long as it is done reasonably. In Commissioner of Sales Tax, Uttar Pradesh v Modi Sugar Mills Limited, the Supreme Court held:
'In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions and assumptions. The Court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any assumed deficiency'.
9. Consequently, the petitioners are not entitled to either of the reliefs. Petitions are therefore dismissed.