Union of India v. Harbhajan Singh Dhillon (AIR 1972 SC 1061)

Parliament included agricultural land within “assets” for wealth tax by amendments to the Wealth Tax Act. This was attacked as beyond Parliament’s power.

The Supreme Court upheld Parliament’s competence under Entry 97, List I (residuary power). Wealth tax targets net wealth, not land as land.

• Competence: Can Parliament, using residuary power, impose wealth tax that counts agricultural land?
• Entry Placement: Does the Wealth Tax Act rest on Entry 86 or Entry 97 of List I?

• Residuary power (Entry 97) covers subjects and taxes not found in Lists II or III.
• Whoever holds residuary power, its scope does not change in content.
• Constitution makers aimed for a strong Centre, giving Parliament wide residuary powers, including new taxes.

The Supreme Court rejected the challenge and sustained the law under Entry 97 (List I). Parliament had competence through the residuary field.

The levy is on wealth. Agricultural land may be part of wealth, but the tax is not a direct tax on land as land.

• Entry 97 empowers Parliament to legislate and tax on subjects not covered elsewhere.
• Wealth tax targets the aggregate value of assets, not a specific property unit.
• Residuary power remains the same in content regardless of who holds it; in India, it vests in Parliament.

The case clarifies Centre–State fiscal lines. It confirms a strong central residuary field, useful for new forms of taxation not listed in the Constitution.

1. Entry 97 (residuary) validates Parliament’s competence when other entries are silent.
2. Wealth tax is on net wealth—agricultural land can be counted within it.
3. Residuary power supports modern fiscal tools beyond the original lists.
4. Federal balance is kept: States regulate agriculture; Centre may tax unlisted subjects.

Mnemonic: “DHILLON = Does High Income List Leave Out New-tax?” → Use Entry 97.

1. Scan Lists: Check Lists I–III for a matching entry.
2. If Silent: Move to Entry 97 (residuary).
3. Test Nature: Is it wealth-wide, not a specific land tax?

Residuary Power

Power over subjects and taxes not listed elsewhere in the Constitution.

Entry 97 (List I)

Union List entry giving Parliament authority over unlisted matters and taxes.

Wealth Tax

A levy on the net wealth of a person, considering all assets minus debts.