Holding

The term "individual" in section 3 of the Wealth Tax Act includes a group of individuals like a Mapilla Marumakkathayam Tarawad.

Summary

The case concerned whether a Mapilla Marumakkathayam Tarawad, a Muslim undivided family governed by the Marumakkathayam Act, fell within the meaning of "individual" under section 3 of the Wealth Tax Act, 1957 and could therefore be taxed. The deceased Karnavan of such a Tarawad had been assessed to wealth tax, which he challenged on constitutional grounds, alleging violation of Article 14. The Kerala High Court had held that non‑Hindu undivided families were outside the scope of the charging provision and quashed the assessment. On appeal, the Supreme Court examined the construction of "individual" in a taxing statute, emphasizing that the term is not limited to a single human being but can include a natural unit of persons. Relying on the general scheme of the Wealth Tax Act, the General Clauses Act, legislative practice and earlier case law, the Court held that "individual" includes a group such as a Mapilla Tarawad. Consequently, the assessment was upheld and the revenue's appeal was allowed.

Issues considered

Whether the expression "individual" in section 3 of the Wealth Tax Act, 1957 includes a Mapilla Marumakkathayam Tarawad (a non‑Hindu undivided family).
Whether the charging provision of the Wealth Tax Act violates Article 14 of the Constitution when applied to such families.

Legislation cited

Constitution of Indias. Article 14, s. Entry 86 List I
General Clauses Act, 1897s. 13(2)
Mapilla Marumakkathayam Act, 1939s. 20(1)
Wealth Tax Act, 1957s. 3, s. 4, s. 5

Subjects

wealth taxindividualundivided familyMapilla Marumakkathayamconstitutional lawArticle 14tax statute interpretationlegislative intent

Judgment

A

358

WEALTH TAX OFFICER, CALICUT

B v.
C. K. MAMMED KA YI (SINCE DECEASED) THROUGH HIS
L.RS. T.M. POCKER & ORS.

April 7, 1981

c [V.D. TULZAPURKAR AND E.S. VENKATARAMJAH, JJ.)
Wealth Tax Act, 1957-Section 3-"lndividual"-Whether includes Mapi/la -'!
Marumakkathayam Tarawad (Muslim undivided family) governed by Marumak-
ukathayam Act.

The assessee who was the Karnavan of Mapilla Marumakkathayam
Tarawad registered as impartible within the meaning of section 20(1) of the
D Mapilla Marumakkathayam Act, 1939 was assessed to wealth tax on the net
wealth of his Tarawad in the capacity of an individual under section 3 oft he
Wealth Tax Act.

The assessee's challenge as to the constitutional validity of section 3 as
being violative of Article 14 of the Constitution was rejected by the High Court.
The High Court, however, held by majority, that non-Hindu Undivided Families
E like Mapilla Marumakkathayam Tarawads were altogether outside the purview
of the charging section of the Act. The assessment was, therefore, quashed.

In appeal to this Court it was contended on behalf of the Revenue that
the expression "individual" in section 3 took in a body or group of individuals
like Mapilla Marumakkathayam Tarawad for being assessed to wealth tax and
that long legislative practice obtaining in the taxing scheme Mapilla Maru-
F makkathayam Tarawads have always been treated and assessed in the status of
''individual".

Allowing the appeal,

HELD : J. The term "individual" in section 3 includes a group of indi-
viduals like [Mapilla Marumakkathayam Tarawad. The term "individual" does
G not mean only a human being but is wide enough to include a group of persons
forming a natural unit. (365 E]

2. The canon of construction applicable to Entries in the Legislative
Lists of the Constitution would be different from the canon of construction
applicable to terms used in a taxing statute. While the object of an entry in the
H Legislative Lists is to demarcate a wide field by the use of compendious words
the rule of construction applicable to a taxing statute must ensure _that the
WEALTH TAX OFFICER V. C.K.M. KAYI 359

subject is not to be taxed unless the language of the statute clearly imposes the A
obligation. [364 B-C]

Russell v. Scott, [1948] A.C. 422, referred to.

3. The general scheme of the Wealth Tax Act is to assess to tax all
persons who happen to possess wealth beyond the statutory limit and since the
Act imposes a general tax on the entire wealth of the community the presump- B
tion would be of equality of incidence rather than exemption of a few. Secondly,
the term "individual'' can be read in plural and so read would include a body
or group of individuals like Mapilla Tarawad. Thirdly t.he two terms 'individual'
and 'Hindu Undivided Family' cannot b3 said to have been used in anti-thesis
with each other. Section 3, the charging section, is merely concerned with
specifying different assessable units for the purposes of assessment of wealth and
imposition of the levy. [364 E-F] c
4. It is well settled that the legislature can select persons, properties,
transactions and objects for the imposition of a tax and for that purpose classify
)- as many different assessing units as it could reasonably think necessary. This is
how the three assessable units have come to be specified in that section. [364 G]

5. Specific mention of Hindu Undivided Family in section 3 does not D
result in the exclusion of a group of individuals who only form a unit by reason
of their birth like a Mapilla Marumakkathayam Tarawad from the operation of
the scheme. [365 A]

6. The argument that because ol the references to wife, daughter and child
of an individual in section 4 the term "individual" in section 3 should be cons-
trued as referable to a single human being is without force. Similarly, absence
of provisions similar to those applicable to Hindu Undivided Family for assessing
E
groups of individuals who form non-Hindu Undivided Families cannot affect or
control the charging section. [365 D-E]

7. The legislative practice in the country in the taxing scheme had always
been to treat and assess Mapilla Marumakkathayam Tarawad as an "individual".
[365 F] F
V. Venugopala Ravi Varma Rajah v. Union of India and Another, 74 I.T.R.
49 referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1543 of
1971. G
,,,_, Appeal by certificate from the Judgment and Order dated
28.10.1965 of the Kerala High Court in O.P.674 of 1958.
B.B. Ahuja and Miss A. Subhashini for the Appellant.

G.C. Sharma, E.D. Helmes, S.P.Nayar and R.S. Sharma for H
the Respondents.
360 SUPREME COURT REPORTS [1981] 3 s.c.R.

A The Judgment of the Court was delivered by

TULZAPURKAR, J. This appeal, by certificate granted by the
Kerala High Court, raises the question whether Mapilla Marumak-
kathayam Tarwads of North Malabar-Muslim undivided families
governed by Marumakkathayam Act (Madras Act 17 of 1939)-
B fall within the expression 'individual' and are assessable to tax under
s. 3 of the Wealth Tax Act, 1957?

The checkered history through which this litigation has pas-
sed may briefly be indicated in order to appreciate how the afore-
said question arises for our determination. At the relevant time
c deceased respondent was the karnavan of a Mappilla Marumak-
kathayam Tarwad registered as impartible within the meaning of
s. 20(1) of the Mapilla Marumakkathayam Act (Madras Act 17 of
1939). He was assessed to wealth tax for the assessment year
1957-58 on the net wealth of his Tarwad considered as an indivi-
dual under s.3 of the Wealth Tax Act, J 957 and on completion of
the assessment a demand notice dated July 16, 1958 was served on
D him for payment. On September JO, 1958 he filed a writ p·etition
being O.P. No. 674 of 1958 seeking to quash the said assessment
and the demand notice on the ground of unconstitutionality of the
Wealth Tax Act No. 27 of 1957 (hereinafter called 'the Act'). Four
other writ petitions were also filed by the karnavans of Hindu
undivided families of Malabar and Cochin governed by the
E Madras Marumakkathayam Act No. 22 of 1923 challenging the
constitutionality of the Act. Since comll}on questions of law
arose for determination, the High Court disposed of the writ
petitions by a common judgment. The constitutionality of the Act
was challenged on two ~grounds-·( a) that the Parliament was not
competent to include a Hindu undivided family in the charging s. 3
F of the Act in view of Entry 86 in List I of the Seventh Schedule
of the Constitution and (b) that the charging s. 3 of the Act was
violative of Art. 14 of the Constitution. The High Court repelled
the first ground of challenge and held that Parliament . was compe-
tent to include a Hindu undivided family in s. 3 of the Act as consti-
tuting a body or group of individuals coming within the term 'indi-
G
viduals' in Entry 86, but accepted the latter ground of challenge by
its judgment rendered on July I, 1951. It took the Jview that there
was discrimination as between Hindu undivided families and Muslim
. Mapilla Tarwads which were also undivided families and, therefore,
the charging section in so far as it governed undivided families was
H
hit by Art. 14. The High Court observed that the Department had .
failed to substantiate its contention that Muslim Mapilla Tarwads
WEALTH TAX OFFICER v. C.K.M. KAYI, (Tulzapurkar J.) 361

were so insignificant in number that their existence could be ignored A
in the context of the attack under Art. 14. The Department carried
the matter in appeal to this Court. By its judgment dated February
I 7, 1964, this Court set aside the judgment and orders of the High
Court and remanded the cases to the High Court to consider whether
Art. 14 applied to the cases or not after giving the parties opportu-
nity of putting forward their respective cases supported by facts and B
figures. In doing so, this Court observed that on the question
raised under Art. 14 the High Court seemed to take the view that
it was for the State to show that Art. 14 was not applicable, that
this was not correct and that it was for the party who came forward
with the application that equality before the law or equal protection
-~--
of laws was being denied to him to adduce facts to prove such c
denial.

On remand, out of the two contentions initially formulated by
the assessees, the first relating to the constitutionality of the Act in
relation to Entry 86 in List I had in the meantime been squarely dealt
with and over-ruled by this Court in the case of Banarsi Dass v. D
Wealth Tax Officer( 1 ) and, therefore, the same was not pressed and
only the second contention regarding the validity of the charging
s. 3 as being violative of Art. 14 was argued before the High Court.
Each one of the three learned Judges, who heard the matter ultima-
tely rejected the challenge and held that s. 3 was not violative of
Art. 14, but each one did so for different reasons and in that process E
the majority reached the conclusion that non-Hindu undivided
families like Mapilla Marumakkathayam Tarwads, were altogether
outside the purview of the charging s. 3 and hence assessment
made and the demand notice served on the deceased respondent
deserved to be quashed. Justice Velu Pillai took the view that
the legislative entries in a constitution were to be widely and liberally F
construed but not the provisions of a taxing statute, that though the
term 'individuals' in Entry 86 of List I would be comprehensive
enough to include a body or group of individuals like undivided
Hindu families similar construction of the expression 'individual' in
s. 3 of the Wealth Tax Act so as to include non-Hindu undivided
families like Mapilla Marumakkathayam Tarwads was not warran- G
ted, that the term 'individual' in s. 3 of Act occurred in anti-thesis
with the terms 'Hindu undivided family' and if all undivided fami-
lies were included in the terms 'individual' there was no necessity
to mention Hindu undivided family as a distinct taxing unit.
H
. (1) [1965] 2 S.C.R. 355.
362 SUPREME COURT REPORTS [1981] 3 S.C.R.
A He, therefore, came to the conclusion that non-Hindu undivided fami-
lies were not covered by the term 'individual' and were, therefore
outside the charging section of the Act, but their exclusion from
'"(
the charging section did not attract the vice of discrimination under
Art. 14 inasmuch as it had been established that there were only
22 Mapilla Marumakkathayam Tarwads in the whole country and
B as such constituted an insignificant or microscopic minority and
their exclusion from the charging provision was neither deliberate
nor material and, therefore, s. 3 did not violate Art. 14. Justice V.P.
Gopalan Nambiyar, however, took the view that the expression
'individual' in s.3 of the Act properly read included a group of indi-
viduals who were members of a Mapilla Marumakkathayam Tar-
c wad but since such interpretation of the term 'individual' led to ---~

differential treatment to such non-Hindu undivided families as com-
pared to Hindu undivided families including Hindu Marumakka-
thayam Tarwads and would be violative of Art. 14 he would read
down that expression so as to exclude Mapilla Marumakkathayam
Tarwads and on reading down the expression as aforesaid s. 3
D avoided the vice of discrimination under Art. 14. Justice T.S.
Krishnamoorthy Iyer, however, took the view that the expression
'individual' in s.3 of the Act included group of individuals who
were members ofa Mapilla Marumakkathayam Tarwad as, accord-
ing to him, the specific mention of 'Hindu undivided families' as a
separate assessable entity in the charging section could not restrict
the meaning of the term 'individual' and, therefore, Mapilla Maru-
makkathayam Tarwads were assessable under s.3 of the Act and
that even after inclusion of such group of individuals within the
expression 'individual' the charging s.3 of the Act was not viola-
tive of Art. 14 of the Constitution. He took the view that the equa-
lity clause permitted the legislature a wider discretion to classify
F
persons, properties or transactions into different categories and tax
them differently under its power of taxation, that a Hindu Maruma-
kkathayam Tarwad and a Mapilla Marumakkathayam Tarwad were
not similarly situate, that the classification made by the legislature
was rational and, therefore, the Act which provided for lower limit
G of exemption to individual and higher limit of exemption to Hindu
undivided family could not amount to hostile discrimination against
group of individuals constituting the Mapilla Marumakkathayam
Tarwad. In his view there was no substance in the challenge to
s. 3 of the Act under Art. 14 and the writ petition was liable to be
H dismissed. However, in accordance with the view of the majority
that Mapilla Marumakkathayam Tarwads were outside the purview
of s. 3 of the Act the writ petition was allowed and the assess·
WEALTH TAX OFFICER v. C.K.M. KAYI (Tulzapurkar, J.) 363

ment made and demand notice served on the deceased respondent A
were quashed. In other words, though all the learned Judges repel-
led the challenge to the charging section based on Art. 14 of the
Constitution, the majority reached that conclusion by holding that
Mapilla Marumakkathayam Tarwads were outside the purview of
s. 3 of the Act. It is this latter view which is being challenged
before us by the Department in this appeal. B
Counsel for the Revenue urged two contentions in support of
the appeal. In the first place he supported the construction placed
by Krishnamoorthy Iyer, J., on the expression 'individual' in s. 3 of
the Act that it took in a body or group of individuals like a Mapilla
Marumakkathayam Tarwad for being assessed to wealth tax. c
Secondly, he urged that such construction was in accord with the
long legislative practice obtaining in the taxing scheme in the country
under which Mapilla Marumakkathayam Tarwads have always
been treated and assessed in the status of individual-a legislative
practice that has been judicially noted by this Court in the case of
V. Venugopala Ravi Varma Rajah v. Union of India and Another.( 1) D
On the other hand, counsel for the respondent assessee canvassed
for our acceptance the view taken by Velu Pillai, J., that the ex-
pression 'individual' in s. 3 did not cover non-Hindu undivided
families like Mapilla Marumakkathayam Tarwads and these were,
therefore, outside the purview of the charging provision. He
attempted to strengthen that view by contending that the expression E
'individual' in s. 3 meant a single individual as a human being and
according to him this was clear from the fact that references to
'wife', 'daughter' and 'child' of an individual occur in s. 4 of the
Act. He further pointed out that under s. 5(1) (ii) wealth tax was
not payable by an assessee in respect of his interest in the coparce-
nary property of any Hindu undivided family of which he is a F
member but there was no corresponding exclusion of the interest of
the assessee in the property of a non-Hindu undivided family like a
Mapilla Marumakkathayam Tarwad from the incidence of the tax
and this also suggested that the term 'individual' in s. 3 was not
intended to include a Mapilla Marumakkathayam Tarwad.
G
Section 3 of the •Act at the material time ran thus :

"Subject to the other provisions contained in this Act,
there shall be charged for every financial year commencing
on and from the first day of April, 1957, a tax (hereinafter H
(1) 74 I.T.R. 49.
364 SUPREME COURT REPORTS [1981] 3 S.C.R.
A referred to as wealth tax) in respect of the net wealth on
the corresponding valuation date of every individual, Hindu
undivided family and company at the rate or rates specified
in the schedule."

It cannot be disputed that the canon of construction applicable
B to Entries m the three Legislative Lists occurring in a Constitution
would be different fwm the canon of construction that would apply
to terms or expressions used in a taxing statute. The object of an
Entry in any Legislative List is to demarcate as wide a Legislative
field as possible by the use of compendious words or expressions
__ ..
c while the rule of construction applicable to a taxing statute must
ensure that "the subject is not to be taxed unless the language of
...

the statute clearly imposes the obligation" (per Lord Simonds in
Russell v. Scott( 1 ). It is, therefore, clear that because the expression.
'individuals' occurrjng in Entry 86 of List I of the Seventh Schedule
to the Constitution takes within its ambit a Hindu undivided family,
it would not automatically follow that the term 'individual' occurring
D
in s. 3 of the Wealth Tax Act 19.J7 would include a non-Hindu
undivided family like a Mapilla Marumakkathayam Tarwad, but
the q~estion will have to be considered in the light of the scheme
of the Wealth Tax Act itself. The enactment is intended to provide
for the levy of wealth-tax; the general scheme thereof is to assess
E all persons who happen to po~sess or earn wealth beyond a parti-
cular limit fixed by the statute to wealth-tax and since the Act
imposes a general tax on the entire wealth of the community the
presumption would be of equality of incidence rather than exemp-
tion of a few. Secondly, the term 'individual' under s. 13 (2) of
the General Clauses Act, 1897 can be read in plural and as such
F would include a body or group of individuals like a Mapilla
Tarwad. Thirdly, there is no warrant for suggesting that the two
terms 'individual' and 'Hindu undivided family' have been used in
anti-thesis with each other, for s. 3 being the charging provision is
merely concerned with specifying different assessable units for pur-
poses of assessment of wealth and imposition of the levy; it cannot
G be disputed that the Legislature can select persons, properties, trans-
actions and objects for the imposition of a levy and for that purpose
classify as many different a ;sessing units as it could reasonably
think necessary and this is how three assessable units namely, 'indi-
vidual', 'Hindu undivided family' and 'company' (which was later
·H omitted) have come to be specified in s. 3. In our view the specific

(I) [1948] A.C. 422.
WEALTH TAX OFFICER v. C.K.M. KAY! (Tulzapurkar, J.) 365

mention of Hindu undivided family in the section does not result in A
the exclusion of group of individuals who only form a unit by
reason of their birth like a Mapilla Tarwad from the operation of
the section. It is difficult to accept the argument that if term 'indi-
vidual' was intended to include joint families or undivided families
it was redundant to specify Hindu undivided families.
B
In the context of the argument that the term 'individual' can
refer only to a single human being it will be apposite to refer to
what this Court has observed in Commissioner of Income Tax, Madhya
Pradesh and Bhopal v. Sodra Devi.(1) At page 620 of the report
this Court has said : C
" ......... word 'individual' has not been defined under
the Act (Indian Income Tax Act 1922) and there is autho-
rity for the proposition that the word 'individual' does not
mean only a human being but is wide enough to include a
group of persons forming a natural unit."
D
The contention that because there are references to 'wife', 'daughter'
and 'child' of an individual in s. 4 the term 'individual' in s. 3
should be construed as referable to a single human being cannot
obviously .be accepted. Similarly absence of provisions similar to
those applicable to Hindu undivided family for assessing group of
individuals who form non-Hindu undivided families [provisions like E
s. 5 (I) (ii)] cannot affect or control in any manner the charging
section. On construction, therefore, we are clearly of the view
that the term 'individual' in s. 3 includes a group of individuals like
a Mapilla Tarwad.

F
Furthermore, we would like to point out that the aforesaid
construction would be in accord with the legislative practice obtain-
ing in the taxing scheme in the country whereunder Parliament has
always been treating and assessing Mapilla Marumakkathayam
Tarwads in the status of 'individual' under the various taxing sta-
tutes. In V. Venugopala Ravi Varma Rajah v. Union of India and G
Another (supra), a case arising under the Expenditure Tax Act (29 of
1957), the question for determination was whether s. 3 of that Act
was violative of Art. 14 of the Constitution because a Hindu un-
divided family (specifically mentioned as a distinct assessing unit)
governed by the Marumakkathayam Law had to pay tax at a higher H
(!) 32 I.T.R. 615.
366 SUPREME COURT REPORTS (1981] 3 S.C.R.
A rate by reason of the amalgamation of the expenditure of all the
members .of the family whereas a Mapilla undivided family was
required to pay tax at a lower rate since the members of such family
governed by the Marumakkathayam Law were liable to be taxed as
individuals under the section and this Court answered the question
in the negative. While doing so this Court pointed out how Parlia-
B ment had been accustomed in enacting tax laws to make a distinction
between a Hindu undivided family consisting of Hindus and undi-
vided families of Mapillas and how for purposes of taxing statutes
Mapilla Tarwads have always been regarded as individuals. The
relevant observations in this behalf run as follows :

c "Under the taxing Acts the scheme of treating a
Hindu Undivided Family has been adopted for a long
time, e.g., the Indian Income-tax Act IX of 1869, Indian .i
Income-tax Act IX of 1870, Indian Income-tax Act XII of
1871,ActVIIIofl872,Act II of 1886, Act VIIofl918,
Act XI of 1922, Act 43 of 1961 have treated a Hindu Un-
D divided Family as a distinct taxable entity. Similarly
under the Wealth-tax 27 of 1957 and the Gift-tax Act 18
of 1958, the Hindu Undivided Family is made a unit of
taxation. Under the Business Profits Tax Act, 21 of
1947 and the Excess Profits Tax Act, 1940 also the Hindu
Undivided Family was made a unit of taxation. For the
E purposes of these Act.s Mapilla Tcrwads governed by the
Marumakkathayam law have been regard<d as individuals."

(Emphasis supplied)

For all these reasons we hold that the term 'individual' in s. 3
of the Act includes within its ambit Mapilla Marumakkathayam
F Tarwads and they are well within the purview of the taxing pro-
visions of the enactment. Further, even after their inclusion in the
term 'individual' s. 3 of the Act would not be violative ,of Art. 14
for the same reasons for which s. 3 of the Expenditure Tax Act,
1957 has been held to be not so violative by this Court in V.
Venugopala' s case (supra).
G
In the result the appeal is allowed but there will be no order
as to costs.

.P.B.R. Appeal allowed•