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Chapter 1Chapter 1Chapter 1Chapter 10000:::: PROGENIES WITH STAMP ACTPROGENIES WITH STAMP ACTPROGENIES WITH STAMP ACTPROGENIES WITH STAMP ACT

‘The power of government depends upon the strength of its treasury.’

Kautilya.339

10.1. Pertinence of Stamp Duty

Stamp Duty is payable under Section 3 of The Bombay Stamp Act, 1958.

Different amount of Stamp Duty is payable for different types of document as

per Schedule I of The Bombay Stamp Act, 1958. Stamp Duty must be paid in

full and on time. If there is a delay in payment of stamp duty, it attracts

penalty. A stamp duty paid document is considered a proper and legal

document and as such gets evidentiary value and is admitted as evidence in

court. Document not properly stamped, is not admitted as evidence by the

court.

10.2. Transfer of Property and Registration Act

As per section 17(1) & Section 17(1A) of The Registration Act, 1908, various

documents relating to transfer of movable and immovable properties are

required to be registered. Registration is legal formality wherein the

document, which is required under the law to be registered, undergoes the

procedure by the Sub-Registrar of Assurance of the respective district. After

completion of these procedures, the document is regarded as being

registered.

The combined effect of section 54 of the Transfer of Property Act 1882 and

section 17 of the Registration Act 1908 is that, a contract of sale in respect of

immoveable property of the value of more than one hundred rupees without

registration cannot extinguish the equity of redemption. In India, it is only on

339

The political ethics of Chanakya

305

execution of the conveyance and registration of transfer of the mortgager's

interest by registered instrument that the mortgagor's right of redemption will

be extinguished. The conferment of power to sell without intervention of the

court in a mortgage deed by itself will not deprive the mortgagor of his right to

redemption. The extinction of the right to redemption has to be subsequent to

the deed conferring such power. The right of redemption is not extinguished at

the expiry of the period. The equity of redemption is not extinguished by mere

contract of sale. The mortgagor's right to redeem will survive until there has

been completion of sale by the mortgagee by a registered deed. It must also

be noted that section 17 of the Indian Registration Act 1908 or the second

para of the Transfer of Property Act 1882, will have no application to the

agreement to recover property, being non-creation of any interest in the

immoveable property.

In a case Supreme Court held that the mortgagor has a right to redeem

unless the sale of the property was complete by registration in accordance

with the provisions of the Registration Act 1908, and therefore, the appeal

was dismissed.340

There are several documents that are not compulsorily registerable under

section 17 of the Registration Act 1908. Some of them require high stamp

duty and some of them do not. Even the ones that require high stamp duty, if

they are under stamped, can be rectified later by paying a penal amount ten

times the original amount. Non-payment of stamp duty does not make the

document void or otherwise invalid. The consequences of under stamping as

per the stamp act are:

1. to make the document inadmissible for the evidence before any

authority capable of receiving evidence of before any public authority.

2. the document can also be impounded for enforcing the payment of full

stamp value. An under stamped instrument can be admitted as

evidence in court, if penal stamp duty, is ten times the value of the

original amount is paid.

340

Narandas Karsondas vs. S.A. Kantam & Anr, (AIR 1977 SC 774).

306

In the light of the analysis of section 17 of Indian Registration Act 1908 and a

comparative study of section 17 and section 53-A and section 54 of the

Transfer of Property Act 1882, it can be fairly concluded that an incomplete

deed of transfer, though not registered or even attested, is regarded, as a

contract in writing but such a deed must have been signed by the transferor or

his agent and an unregistered document, affecting immoveable property,

required by the Transfer of Property Act 1882, or the Indian Registration Act

1908, to be registered, may be received in evidence of part-performance of a

contract or as evidence of any collateral transaction not required by a

registered instrument. A contract of sale in respect of immoveable property of

the value of more than one hundred rupees without registration cannot

extinguish the equity of redemption.

10.3. Instruments chargeable with Stamp Duty

Section 3 of the Bombay Stamp Act, 1958 is a charging section of the Stamp

Duty. This section provides that subject to the provision of this Act and the

exemption contained in Schedule I, the instrument shall be chargeable with

the duty of amount indicated in Schedule I as the proper duty therefore,

hence, duty charged by the State Legislature is on the instrument and is on

the execution of the instrument. The measure of the charging stamp duty may

be fixed or ad valorem and that is to be determined by the legislature. The

basis for computation of stamp duty can be determined by the legislature and

it may be on the basis of the market value of the property transferred or it may

be fixed amount.

Section 3 is as under;

“Subject to the provisions of this Act and the exemptions contained in

Schedule I, the following instruments shall be chargeable with duty of the

amount indicated in Schedule I as the proper duty therefore respectively, that

is to say –

307

(a) every instrument mentioned in Schedule I, which, not having been

previously 'executed by any person, is executed in the State on or after

the date of commencement of this Act;

341[(aa) every instrument mentioned in Schedule I, which not having

been previously executed by or on behalf of or in favour of, the

Government or any local authority, is executed by or on behalf of or in

favour of, the Government or any local authority;"

(b) every instrument mentioned in Schedule I, which, not having been

previously executed by any person, is executed out of the State on or

after the said date, relates to any property situate, or to any matter or

thing done or to be done in this State and is received in this State:

Provided that no duty shall be chargeable in respect of –

(1) any instrument executed by or on behalf of, or in favour of, the

Government in cases where, but for this exemption, the

Government would be liable to pay the duty chargeable in

respect of such instrument;

(2) any instrument for the sale, transfer or other disposition, either

absolutely or by way of mortgage or otherwise of any ship or

vessel, or any part, interest, share or property of or in any ship

or vessel registered under the Bombay Coasting Vessels Act,

1838, or the Indian Registration of Ships Act, 1841.”

10.3.1. Observations of Charging Section

Every instrument executed by or on behalf of or in favour of the Government

or any local authority is now specifically covered within the charging Section 3

by inserting this new clause (aa). However, where the Government is

statutorily liable to bear the expense of stamp duty as provided in Section 30

341

Clause (aa) was inserted by Gujarat 5 of 2002, Section 2 w.e.f. 1/4/2002.

308

of the Act, such instrument executed by or on behalf of or in favour of

Government is required to pay any duty as per Proviso (1) to this section.

Instrument executed by or on behalf of or in favour of any Local authority,

unless specifically exempted or remitted from payment of stamp duty, is

required to pay stamp duty as per charging section 3.

Instrument covered within the scope of clause (b) is chargeable with stamp

duty as provided in the scheme of Section 18 and Section 19 of the Act.

In absence of such original instrument received in the State, its counterpart,

duplicate or copy is chargeable with stamp duty under Section 7 of the Act.

In proviso (2) in last two lines "any ship or vessel registered under the -

Bombay Costing Vessels Act, 1838, or the Indian Registration of Ships Act,

1841" are mentioned. The Indian Registration of Ships Act, 1841 has already

been repealed by the Merchant Shipping Act, 1958 and, therefore, proviso (2)

to Section 3 requires appropriate amendment by the authority.

10.3.2. Important Definitions and Charging Section

It is worth observing certain definitions, given under section 2 of Bombay

Stamp Act, 1958, to understand correct and clear interpretation of charging

section.

10.3.2.1. Chargeable: Section 2(d)

"chargeable" means, as applied to an instrument executed or first executed

after the commencement of this Act, chargeable under this Act, and as

applied to any other instruments, chargeable under the law in force in the

State when such instrument was executed or, where several persons

executed the instrument at different times, first executed;

309

10.3.2.1.1. Observation on Chargeable

Here, first part of the definition applies to an instrument executed or first

executed in the State and chargeable as provided for in Section 3, clause (a)

of this Act and second part applies to an instrument executed out of the State

and chargeable as provided for in Section 3, clause (b) of this Act.

Where an instrument is executed outside the State and the same is received

in this State it will be chargeable with stamp duty as per the scheme laid down

in Sections 18 & 19 of the Act. Where, in lieu of an original instrument

executed out of the State, a counterpart, duplicate or copy of any such

instrument is received in this State it will attract stamp duty same as original

instrument as provided for in Section 7 of this Act.

10.3.2.2. Conveyance: Section 2(g)

"conveyance" includes, -

(i) a conveyance on sale,

(ii) every instrument,

(iii) every decree or final order of any civil court;342[XXX],

(iv) every order made by the High Court under Section 394 of the

Companies Act, 1956 in respect of 343[reconstruction or amalgamation

of companies, or]

(v) 344any writing or letter of allotment in respect of the premises, given to

its members or allottee by a co-operative society registered or deemed

to have been registered under the Gujarat Co-operative Societies Act,

1961 or 345[a corporation or an association formed and registered

under the Bombay Non-Trading Corporation Act, 1959] or the Gujarat

ownership Flat Act, 1973, as the case may be".

342

The word "or" was deleted by Gujarat 19 of 2001 Section 2(i), w.e.f. 1/09/2001 343

These words were substituted for the words "amalgamation of companies" by Gujarat 19 of 2001 Section 2(ii) 344

sub-clause (v) was inserted, ibid, Section 2(iii) w.e.f. 1/9/2001 345 The Bombay Non-Trading Corporation Act, 1959 was repealed by the Bombay Non-Trading Corporation (Gujarat Repeal) Act, 2005 (Act No.6 of 2005) For details of Repeal Act No.6 of 2005.

310

by which property, whether movable or immovable, or any estate or

interest in any property, is transferred to, or vested in, any other

person, inter vivos, and which is not otherwise specifically, provided for

by Schedule I;

Explanation I: For the purpose of this clause, an instrument whereby a

co-owner of any property transfers his interest to another co-owner of

the property and which is not an instrument of partition shall be

deemed to be an instrument by which property is transferred inter

vivos;

10.3.2.2.1. Observation on Conveyance

The term "conveyance" normally connotes a deed whereby the title to land is

transferred from one person to another.346 In the context of Section 2 (xxiv) of

the Gift Tax Act, 1958 it is observed that the word "conveyance" means

transfer of ownership.347

The word "conveyance" basically relates to transfer of property. The preamble

to the Transfer of Property Act, 1882 reads as under:

Whereas it is expedient to define and amend certain parts of the law relating

to the transfer of property by act of parties, it is hereby enacted as follows:

Section 2, clause (d) of the Transfer of Property Act, 1882 provides thus:

But nothing herein contained shall be deemed to affect-

(d) “save as provided by Section 57 and Chapter IV of this Act, any

transfer by operation of law or by, or in execution of a decree or

order of a Court of competent jurisdiction.”

Section 57 of the Transfer of Property Act, 1882, deals with the "Provision by

court for encumbrances and sale freed there from". In short the words "by act

346

Chalker v. Chalker, 1 Conn. 79 347

CGT v. N.S. Getti Chettier, (1971) 82 ITR 599, 606 (SC).

311

of parties" used in the Preamble of the Transfer of Property Act, 1882 exclude

transfers by operation of law.

Prior to amendment made by Guj.13 of 1994 with effect from 4/4/1994, and

amendment made by inserting clause (v) by Gujarat 19 of 2001, the definition

of the word '"conveyance''' included –

(i) conveyance on sale and

(ii) every instrument

(v) Any writing or letter of allotment in respect of the premises,

given to its members or allottee by a Co-operative Society etc.,

by which property, whether movable or immovable, is

transferred inter vivos and which is not specifically provided for

by Schedule I;

the aforesaid definition included transfer of property "by act of parties"

only.

Amendment made by Gujarat 13 of 1994 in the definition of the word

"Conveyance," enlarged its scope by including therein the transfer of property

by "operation of law" also. The enlarged and amended definition of the word

"conveyance" by inserting sub-clause (iii) and (iv) as reproduced below

covered within the meaning of "conveyance" –

(iii) every decree or final order of any civil court; or

(iv) every order made by the High Court under Section 394 of the

Companies Act, 1956 in respect of reconstruction or

amalgamation of companies.

The Bombay High Court in a case held that the State Legislature has

jurisdiction to 'levy stamp duty under entry 44, List III of the Seventh Schedule

of the Constitution of India and prescribe rates of stamp duty under entry 63,

List 11. By sanctioning of amalgamation scheme, the property including the

liabilities are transferred as provided in sub-sec. (2) of Section 394 of the

Companies Act, 1956 and on that transfer instrument, stamp duty is levied. In

view of the Constitutional provisions as aforesaid, it cannot be said that the

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State Legislature has no jurisdiction to levy such duty on an order of the High

Court sanctioning a scheme of compromise or arrangement under Section

394 of the Companies Act, 1956.

In the same judgment the Bombay High Court has also observed that in

enacting provisions for levy of stamp duty on an order passed by the High

Court under Section 394 in Section 2(1) of the Bombay Stamp Act, the

legislature has not made any direct or indirect inroads into the judicial powers.

It has only provided that if an instrument including an order passed by the

court transfers movable or immovable property, then on the same instrument,

stamp duty as provided under the Act is required to be paid. This cannot be

stated to be in any manner making a direct inroad into judicial function of the

High Court or of the Supreme Court. It cannot be said that Article 261 (3) of

the Constitution, which provides that final judgments or orders delivered or

passed by civil court, in any, part of the territory of India, shall be capable of

execution anywhere within that territory according to law, is violated.348

Letter of Allotment in respect of the premises given to its members or allottee;

(i) by a Co-operative Society registered or deemed to have been

registered under the Gujarat Co-operative Societies Act, 1961;

or

(ii) by a Company registered. under the Companies Act, 1956

constituted as provided for in Section 4 of the Gujarat

Ownership Flat Act, 1973 (iii) by a Corporation or an Association

formed and registered under the Bombay Non-Trading

Corporation Act, 1959- (The NTC Act repealed by Gujarat Act.

No.6 of 2005 published in the Gujarat Govt. Gaz. Pt. IV, No.6

dated 25-02-2005 p.6-1) is chargeable with stamp duty as

conveyance with effect from 1-09-2001.

Explanation I: to this clause (g) provides that an instrument, other than an

instrument of partition, whereby a co-owner of any property, transfers his

interest to another co-owner of the property shall be deemed to be an

348

Li Taka Pharmaceuticals Ltd. v. State of Maharashtra and others, reported in (1996) 4 Comp LJ 385 (Bom)

313

instrument by which property is transferred inter vivos. The word 'instrument

of partition', as, defined in clause (m) of Section 2 of the Act, means any

instrument whereby co-owners of any property divide or agree to divide such

property in severalty. Now, instead of making physical division of such

property if one I co-owner purports to abandon or relinquish his claim to the

share in the family property in favour of remaining co-owner or co-owners of

the property such instrument by deeming provision of this explanation shall be

an instrument by which property is transferred inter vivos and would be

chargeable with stamp duty as 'conveyance'.

With a view to cover certain types of instrument of release within the scope of

definition of 'conveyance' several other States', namely; Maharashtra, Andhra

Pradesh, Uttar Pradesh and West Bengal have amended this definition by

inserting Explanation therein.

10.3.2.3. Duly Stamped: Section 2(h)

Duly stamped as applied to an instrument means that the instrument bears an

adhesive or impressed stamp of not less than the proper amount and that

such stamp has been affixed or used in accordance with the law for the time

being in force in the State;

10.3.2.3.1. Observation on Duly Stamped

1. An instrument must bear the proper description of stamps as provided

in the Gujarat Stamp Rules, 1978;

2. Such stamps must be affixed, impressed or used according to the

provisions of the Act and the Rules;

3. Such stamps used according to the provisions of the Act and Rules

must be of the proper amount as prescribed in Schedule I to the Act.

4. Wherever it is expressly provided by the Act, proper amount of duties

can be paid otherwise than by means of stamps, proper amount of

stamp duty can be paid accordingly.

5. The words "impressed stamp" as defined in clause (k) now includes

"impression by franking machine" and, therefore, proper amount of

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stamp duty paid by impression by franking machine, as provided by

sub-section (2A) and (28) of Section 10 of the Act.

10.3.2.4. Executed and Execution: Section 2(i)

"Executed" and "Execution" used with reference to instruments, means

"signed" and "signature";

349["Explanation - The terms "signed" and "signature" also include attribution

of electronic record as provided in section 11 of the, Information Technology

Act, 2000"]

10.3.2.4.1. Observation on “Executed” and “Execution”

Prior to amendment made in clause (i) by adding "Explanation" there under

the words "executed" and "execution", used with reference to instruments,

means "signed" and "signature". According to judicial decisions one of the

essential elements of execution of an instrument is that it should be signed by

the party, or parties, to the instrument. In absence of their signature, they

cannot be bound by such, unexecuted instrument. In view of this legal

necessity if an instrument is of such a character that both the parties to the

instrument should sign it to constitute a binding agreement between them,

then such instrument should contain signatures of both the parties to the

instrument so as to legally complete it. Similarly, if such instrument also

requires to be signed by two attesters in order to make such instrument legal

this attestation will also be necessary in view of this definition.

Section 11 of the Information Technology Act, 2000 (IT Act) reads as under:

“An electronic record shall be attributed to the originator,-

(a) if it was sent by the originator himself;

(b) by a person who had the authority to act on behalf of the

originator in respect of that electronic record; or

349

Explanation in clause (i) was added by Gujarat 11 of 2007, Section 2(1)

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(c) by an information system programmed by or on behalf of the

originator to operate automatically.”

In pursuance of the aforesaid provisions of Section 11 of Information

Technology Act, various instruments covered within the ambit of charging

Section 3 of the Bombay Stamp Act, 1958 are not required to be executed as

contemplated in the definition of Section 2(i) of the Bombay Stamp Act, 1958.

All these instruments prepared by an electronic record when sent to the

parties as provided for in the said Section 11 of the Information Technology

Act without any sign or signature of its originator would now, in view of the

amended provisions of the Section 2, clause (i) of the Act, be liable to stamp

duty.

10.3.2.5. Instrument: Section 2(l)

"Instrument" includes every document by which any right or liability is, or

purports to be, created, transferred, limited, extended, extinguished or

recorded but does not include a bill of exchange, cheque, promissory note, bill

of lading, letter of credit, policy of insurance, transfer of share, debenture,

proxy and receipt;

350[Explanation: The term "document" also includes any electronic record as

defined in clause (t) of sub-section (1) of section 2 of the Information

Technology Act, 2000].

10.3.2.5.1. Observation on Instrument

Prior to amendment made in the definition of the word "instrument" by adding

explanation thereto, in a case the Gujarat High Court has held that the right or

the liability, as the case may be, is created by the original instrument and not

by its copy.351

350

Explanation in clause (I) was inserted by Gujarat 11 of 2007 Section 2(4) 351

The Chief Controlling Revenue Authority v. the Nutan Mills Limited, reported 18 GLR page 409.

316

The said clause (t) of sub-section (1) of Section 2 of the Information

Technology Act, 2000, reads as under:

"electronic record" means data, record or data generated, image or sound

stored, received or sent in electronic form or micro film or computer generated

microfiche.

This explanation under clause (1) is specifically added to cover documents

which fall mostly within the following descriptions of entries of Schedule I to

the Act. :

(i) Art. 5, clauses (b) to (g)

(ii) Art. 39, clauses (a) to (d) and (f); and

(iii) Art. 48A clauses (b) to (d).

All such agreements, contract notes and records pertaining to transactions of

shares, scrip, stock and the commodities will be covered within the meaning

of the Explanation and such electronic record shall be now covered within the

scope of the definition of 'instrument' given in Section 2, clause (l) of the Act

and will be chargeable with stamp duty accordingly.

Instrument pertaining to transfer of immovable property and such other

documents which cannot be created by ‘electronic record’ would not fall within

the ambit of Explanation added under clause(l) and, therefore, the right of

liability in respect to such property can be created by the original registered

instrument only.

Under The Bombay Stamp Act, 1958, stamp duty is to be paid on all the

documents by which any right or liability is or purports to be created,

transferred, limited, extended, extinguished or recorded but does not include a

cheque, promissory note, bill of exchange, bill of lading, letter of credit, policy

of insurance, transfer of shares, debentures proxy and receipt, which is

charged under Indian Stamp Act, 1899.

Stamp duty is payable on document and not on transactions. Stamp duty

should be charged on the basis of the contents of the document only. If

any information essential for working out stamp duty is missing in the

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document, stamp duty valuation officer can ask for the same. Information

such as the Carpet or Built-up area of the flat, number of floors in the building,

year of construction, name of Division/Village and survey number of plot of

land on which property is situated must be mentioned in the agreement.

Majority response to survey favours that; classification of instruments in

different groups should be more specific so that the ambiguity to determine

the true nature of the instrument can be averted.352

10.3.3. Additional Duty: Section 3A

Section 3A of Gujarat Stamp Act, 1958 makes provision for additional stamp

duty. The section 3A is as under:

353[3A. Instruments chargeable with additional duty

(1) Every instrument chargeable with duty and described in the following

articles of Schedule I when executed in respect of immovable property

situated in the State shall, in addition to such duty, be chargeable with

a duty at the rate of forty per cent, (including rate of stamp duty to be

increased as provided for in Sections 207 and 209 of the Gujarat

Panchayats Act, 1993 (Guj. 18 of 1993), of such duty, namely:

(1) No. 17 (Certificate of sale),

(2) No. 20(a), 20(b) and 20(c) (Conveyance),

(3) No. 26 (Exchange of property),

(4) No. 27 (Further Charge),

(5) No. 28 (Gift),

(6) No. 30 (Lease),

(7) No. 36 (Mortgage),

(8) No. 45(f) (Power of Attorney when given for consideration and

authorizing the attorney to sell any immovable property),

(9) No. 52 (Settlement),

352

Annexure-I, Survey Report, Majority Responses, Item No. 12. 353

Section 3A was inserted by Gujarat 15 of 2003, S 2.

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(10) No. 57 (Transfer of lease).

(2) Except as otherwise provided in sub-sec. (1), the provisions of this Act

and the rules made there under shall, so far as may be, apply in

relation to the additional duty chargeable under sub-sec. (1) as they

apply in relation to the duty chargeable under Section 3.

10.3.3.1. Observation on Additional Duty

By the amendment made by Gujarat 15 of 2003 additional panchayat stamp

duty levied under Sections 207 and 209 of the Gujarat Panchayats Act, 1993

prior to 1/04/2003 has been included within the ambit of Section 3A.

Prior to this amendment rate of additional stamp duty in respect of Urban area

was 25 per cent whereas under the area of Panchayats jurisdiction rates of

additional panchayat duty were maximum 35 per cent. Accordingly, total

stamp duty inclusive of additional stamp duty leviable in respect of

instruments of conveyance etc., was 10 per cent whereas it was maximum

10.8 per cent in case of instrument of conveyance etc., in respect of property

situated in the Jursidiction of Taluka Panchayats and District Panchayats.

These rates have virtually been increased to 11.2 percent and it is made

applicable to all immovable properties irrespective of its situation.

10.4. Machinery Provision of Stamp Duty

Bombay Stamp Act, 1958 consist totally VIII chapters. Sections 4 to 76 are

machinery provisions. There are two schedules in the Act. Schedule I

contains 59 articles. The Schedule mentions: descriptions of instruments, rate

of stamp duty and kind of stamp to be used. Schedule II gives details of

enactments repealed. Under section 70 of Act, State Government is having

power to make rules generally to carry out purpose of the Act. The State

Government has framed: Gujarat Stamp Rules, 1978, Bombay Stamp

(Determination of Market Value of Property) Rules, 1984 and Gujarat Stamp

Supply and Sales Rules, 1987.

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10.4.1. Stamp Duty When Payable

Sections 17, 18 and 19 are dealing with the situation when stamp duty is

payable. Stamp duty is payable either before execution of the document or on

the day of execution of document or on the next working day of executing

such a document. Execution of a document means putting signatures on the

document by the persons who are party to the document. However it is

advisable to pay stamp duty before executing the document, for all practical

purposes.

10.4.2. Stamp Duty by Whom Payable: Section 30

In the absence of any agreement to the contrary, the purchaser/transferee

has to pay stamp duty or in case of exchange of properties, both parties have

to bear stamp duty equally.

10.4.3. Penalty for Executing Instruments not Duly Stamped

Section 59 of Bombay Stamp Act, 1958 is as under;

“(1) Any person executing or signing otherwise than as a witness any

instrument chargeable with duty without the same being duly stamped

shall, on conviction for every such offence be punished with fine which

may extend to five hundred rupees:

Provided that, when any penalty has been paid in respect of any

instrument under Section 34, Section 39 or Section 58, the amount of

such penalty shall be allowed in reduction of the fine (if any)

subsequently imposed under this section in respect of the same

instrument upon the person who paid such penalty.

(2) If a share-warrant is issued without being duly stamped, the company

issuing the same, and also every person who, at the time of when it is

issued, is the Managing Director or Secretary or other principal officer

of the company, shall, on conviction be punished with fine which may

extend to five hundred rupees.”

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Whenever word penalty comes in mind of the person with regard to the stamp

duty section 32A and section 33 comes first. This section is dealing with the

penalty on stamp duty which is paid less. Many times it happens that there is

a mistake in calculating the stamp duty due to which less stamp duty is paid to

the government. When less duty is paid at that time the process of registration

of instrument is stopped or if done then notice is issued to pay the duty, in this

case they have to pay certain fine which is decided by the collector. Now let

us see Section 32A(3) of Bombay Stamp Act, 1958.

Section 32A Sub-section(3) is as under;

“(3) Upon such determination, the collector of the district shall require the

party liable to pay the duty, to make payment of such amount as is

required to make up the difference between the amount of duty

determined under this sub-section and the amount of duty already paid

by him and shall also require such party to pay penalty 354[of two

hundred and fifty rupees 355[or the amount of proper duty or of the

deficient portion thereof whichever is less] and on such payment, return

the instrument to the officer referred in sub-section(3) of Section 31 or,

as the case may be, sub-section(1) of this section:”

10.4.4. Impounding of Instruments: Section 33

When through mistake or otherwise any instrument which is not duly stamped

is registered under the Registration Act, 1908, the registering officer may call

for the original instrument from the party and, after giving the party an

opportunity of being heard and recording the reasons in writing and furnishing

a copy thereof to the party, impound it. On failure to produce such original

instrument by the party, a true copy of such instrument taken out from the

registration record shall, for the purposes of this section, be deemed to be the

original of such instrument.

Section 33 of Bombay Stamp Act, 1958 is as under;

354

The words were substituted by Guj 4 of 1991, S.2. 355

These words were inserted by Guj 13 of 1994, S.7(3).

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“33. Examination and impounding of instruments:

(1) 356[Subject to the provisions of section 32-A, every person]

having by law or consent of parties authority to receive

evidence, and every person in charge of a public office except

an officer of police, before whom any instrument, chargeable, in

his opinion, with duty, is produced or comes in the performance

of his functions shall if it appears to him that such instrument is

not duly stamped, impound the same.

(2) For that purpose every such person shall examine every

instrument so chargeable and so produced or coming before

him in order to ascertain whether it is stamped with a stamp of

the value and description required by the law for the time being

in force in the State when such instrument was executed or first

executed:

Provided that

(a) nothing herein contained shall be deemed to require any

Magistrate or Judge of Criminal Court to examine or

impound, if he does not think fit so to do any instrument

coming before him in the course of any proceeding other

than a proceeding under Chapter XII or Chapter XXXVI of

the Code of Criminal Procedure, 1898; (V of 1898).

(b) in the case of a Judge of High Court, the duty of examining

and impounding any instrument under this section may be

delegated to such officer as the Court may appoint in this

behalf.

(3) For the purpose of this section, in case of doubt,

356

These words, figures and letter were substituted for the words "Every person", by Gujarat 21 of 1982, S.15.

322

(a) the State Government may determine what offices shall be

deemed to be public offices; and

(b) the State Government may determine who shall be deemed

to be persons in charge of public offices.”

In Section 2(g) of the Bombay Stamp Act, 1958 as adapted by the State of

Maharashtra 'explanation' similar to one inserted in Section 2(g) of Gujarat Act

was inserted with effect from 10/12/1985. In view of the said explanation Sub-

Registrar of Assurances impounded a document of release deed without

consideration wherein the daughter and the son renounced their claim in

respect of the property in favour of their mother. The Bombay High Court in its

judgment observed that in order to determine whether a document is a

release or conveyance, actual character of the transaction and precise nature

of the rights created under the instrument are relevant and quashed the

impugned order impounding the document treating it to be deed of

conveyance.357

It is established provisions of law that once the sub-registrar registers the

instrument presented to him for registration under the provisions of the

Registration Act, 1908 he becomes functus officio and, thereafter, he cannot

impound the same under the provisions of Section 33.

During the receipt audit conducted by the Accountant General's office or the

Departmental Audit of the Sub-Registrar Office when it is noticed that owing to

mistake or otherwise any instrument which is not duly stamped is registered

then on the basis of audit note or original or, as the case may be, a copy of

such document is called for from the concerned party and the Sub-Registrar

forward the same to the Collector of Stamps for initiating appropriate action.

It seems that in most of the cases the Collector initiate action on such

instrument under Section 39(1) and a copy of such instrument under Section

7(3) without impounding the same. Initiation of such statutory action by the

Collector of Stamps would obviously be improper and illegal. In this situation it

357 Asha Kishanlal Bajaj (Smt) v. Sub-Registrar Assurances, 2001 (2) Bom. LR 629 (Bom-

DB)

323

would be proper to make a scheme similar to one adopted by the

Maharashtra State by inserting Section 33A which reads as under:

33A. Impounding of instruments after registration

When through mistake or otherwise any instrument which is not duly stamped

is registered under the Registration Act, 1908, the registering officer may call

for the original instrument from the party and, after giving the party an

opportunity of being heard and recording the reasons in writing and furnishing

a copy thereof to the party, impounding it. On failure to produce such original

instrument by the party, a true copy of such instrument taken out from the

registration record shall, for the purpose of this section, be deemed to be

original of such instrument.

Registering officer in Maharashtra can, on the basis of statutory provisions of

Section 33A, legally impound such registered instrument and forward the

same to the Collector as provided for in Section 37 who will initiate action for

the recovery of deficit duty and penalty under Section 39 of the Act.

Sec. 18 & Section 32 proviso (b) - respectively provide that instruments

executed out of State may be stamped or, as the case may be, endorsed with

proper certificate within three months after it has been first received in this

State.

Supreme Court in a case has held that time limit of three months provided in

Section 18 and Section 32. Proviso (b) in respect of documents executed

outside India and presented for use in court proceedings in India is not

attracted where document is impounded under Section 33. The Supreme

Court also held that in case where the unstamped document (other than bill of

exchange) is produced as evidence, within three months as statutorily

provided, the stamp duty can be collected without impounding and without

penalty. If the document is sought to be used as evidence beyond three

months, the above said bar of three months shall not apply, and the document

324

can be impounded under Section 33 and stamp duty and penalty levied, even

after expiry of three months.358

10.4.4.1. Effect of Impounding

The provision of Section 39 of the Bombay Stamp Act, 1958 is as under;

“39. Collector's power to stamp instruments impounded:

(1) When the Collector impounds any instrument under section 33, or

receives any instrument sent to him ,under sub-section (2) of section

37, not being an instrument chargeable with a duty of twenty naye

paise, or less he shall adopt the following procedure :-

(a) if he is of opinion that such instrument is duly stamped or is not

chargeable with duty, he shall certify by endorsement thereon

that it is duly stamped, or that it is not so chargeable, as the

case may be;

(b) if he is of opinion that such instrument is chargeable with duty

and is [lot duly stamped he shall require the payment of the

proper duty or the amount required to make up the same,

together with a penalty of five rupees; or, if he thinks fit, an

amount not exceeding ten times the amount of the proper duty

or of the deficient portion therefore, whether such amount

exceeds or falls short of five rupees:

Provided that, when such instrument has been impounded only

because it has been written in contravention of section 13 or

section 14, the Collector may, if he thinks fit, remit the whole

penalty prescribed by this section.

(2) Every certificate under clause (a) of sub-section(1), shall for the

purposes of this Act, be conclusive evidence of the matters stated

therein.

358

Malaysian Airlines System I v. Stic Travels (P) Ltd., (AIR 2001 SC 358)

325

(3) Where an instrument has been sent to the Collector under sub-

section(2) of section 37 the Collector shall, when he has dealt with it as

provided by this section, return it to the impounding officer.”

10.4.5. Exemption

The body of tax statues as whole is voluminous and complex in structure as

well as in concept and expression. In fact, taxes are as complex as life. The

moralist calls for just taxes, but taxes cannot just be just, if we recall the

scheme of special bearer bonds for mopping up black money. They cannot

simply be simple. The businessman demands practical taxes, but financially

history proves that it is impracticable to make them practical. Exemption

Notifications have to be strictly construed; if exemption is available on

complying with certain conditions, conditions have to be complied with; plea of

'substantial compliance' depends upon facts of each statue imposing taxes or

monetary burdens are strictly construed.

Exemption Notifications have to be strictly construed; if exemption is available

on complying with certain conditions, conditions have to be complied with

which is true because if the condition for taking exemption for tax relief is not

fulfill then exemption will not be granted, exemption or tax relief will be

granted only when the essential condition which are complying with must be

fulfilled. The taxing statute is also strictly constructed as all statutes are

interpreted strictly because each and every statute should be interpreted in a

strict manner. There is another thing that for taking exemption or tax relief one

must have fulfilled the tax relief application. It is well settled principle that tax

exemptions are strictly against taxpayers. Tax refunds in the nature of tax

exemption, are resolved strictly against the claimant. Taxing enactment

should be strictly construed and the right to tax should be clearly established

that is strict and favorable construction equitable construction should not be

taken into account. Courts should not strain words and find unnatural meaning

to fill loopholes.

326

10.4.5.1. Exemption: Indian Stamp Act, 1899.

Any instrument executed by or on behalf of the corporation, in relation to its

business, payment of stamp duty and registration is exempt from payment of

stamp duty, mentioned in Schedule 1-A to the Indian Stamp Act, e.g.

conveyance deed executed under Punjab Scheduled Castes Land

Development and Finance Corporations Act, 1970.359

The sine qua non for involving provisions of Section 47A(3) of the Act is that

the collector had reason to believe that the stamp duty had not been properly

set forth in the instrument as per market value of the property. Once the

instrument is registered and the prescribed stamp duty as prescribed by the

collector had been paid, the burden to prove that the market value of the

property was more than the minimum as prescribed by the collector under the

rules, was upon the collector. The report of the Sub-Registrar or Tehsildar

itself was not sufficient to discharge the burden.360

Loan taken for leveling land and for development of farm house cannot be

said to for the purpose exempted, not liable to exemption from stamp duty.361

Co-operative society accruing land for purpose of housing, sold it to its

members for raising commercial complex is not entitled to exemption from

payment of stamp duty under notification dated 24th October 1980.362

In case of execution of sale deed through court in pursuance of decree for

specific performance, demand of stamp duty made on purchaser on the basis

of market value of property as on the date of execution and registration of the

documents would not be legal. However, the Registering Authority shall have

the right to assess market value of the property as on date of agreement and

collect stamp duty.363

359

State of Punjab v, Jaspal Singh, 2009 (4) PLR 708 (P&H). 360

Vijay Kumar v. Commissioner, Meerut Division, AIR 2008 All 176. 361

Joginder Singh v. State of Punjab, 2009(1) PLR 3 (P&H)-(DB). 362

Abhishek Co-operative Housing Society Ltd. v. Board of Revenue, Madhya Pradesh, AIR 2009 MP 17: 2008 (2) MPLJ 602. 363

State of Tamil Nadu v. Janab Habeeb Jank, (2008) I MLJ 1136: (2008) 1 Mad LW 743 (Mad).

327

10.4.5.2. Exemption: Bombay Stamp Act, 1958.

An exemption section must be construed having regard to the object and

purpose of the Act which it seeks achieve.364 Exemption notification,

particularly in fiscal matters has to be strictly construed and person claiming

its benefit, its obliged to satisfy the court that his claim was covered by the

exemption notification. The notification has to be read in entirely and not in

parts.365 Exemption notification is to be construed strictly as regards

entitlement of a person there under.366 The intention to create exemption must

affirmatively appear and cannot be raised by implications.367 It has been held

that an enactment imposing a burden requires a strict construction in favour of

the subject, but an exemption must be strictly construed in favour of the

state.368 The notification has to be read in its entirety and not in parts.369

Section 9 of Bombay Stamp Act, 1958 provides provision regarding power to

reduce, remit or compound duties. Section 9 is as under;

The State Government may, by rule or order published in official gazette,

(a) Reduce or remit, whether prospectively or retrospectively, in the whole

or any part of the State the duties with which any instruments or any

particular class of instrument or any of the instruments belonging to

such class, or any instruments when executed by or in favour of any

particular class of persons, or by or in favour of any members of such

class are chargeable, and

(b) provide for the composition or consolidation of duties in the case of

issue by any incorporated company or other body corporate of bonds

or marketable securities other than debentures.

The State Government is empowered to rescind the order granting remission

or reduction in stamp duty by virtue of Section 21 of the Bombay General

364

Government of India v. Indian Tobacco Association, (2005) 7 SCC 396, 399. 365

Grasim Industries Ltd. v. State of M.P., AIR 2000 SC 66. 366

Tamilnadu Electricity Board v. Status Spinning Mills Ltd., AIR 2008 SC 2838. 367

Visheswar Singh v. Commissioner of Income Tax, AIR 1935 Pat 342 (SB). 368

The Deputy Commissioner of Commercial Taxes v. Pentapati Lakshmanaswami, 1956 Andh LT 700. 369

Grasim Industries Ltd. v. State of M.P., AIR 2000 SC 66.

328

Clauses Act, however, such order will come in force only with effect from the

date of publication in the Government Gazette, and not with any retrospective

effect.370 What may be the form in which the purchaser society has couched

the sale deeds and whatever might be the devise adopted, it was to plain and

needs to argument to conclude that the land of 840 sq. yards with the

superstructure thereon was sold to co-operative society for a construction far

exceeding Rs.50,000/-, though this was done by the devise of 12 documents

executed on one and the same day. If this be the case, it would be the outside

of the scope of exemption contemplated by the notification.371 Hotel industries

can be considered and industries undertaking within the meaning at

notification dated 3/11/1972 issued under Section 9 of Bombay Stamp Act.372

Majority survey response suggests that geographical area is most effective

criterion for granting exemptions of stamp duties. Researcher personally does

not agree with the majority response. The present provision in the Act is more

effective classification for the purpose of exemption.373

10.4.5.3. Survey and Exemption

Questionnaire item no. 10 is basically dealing with the issue of exemption.

The detail of questionnaire item no. 10 is as under.

Question: Which of the following should be the most effective criterion for

granting exemptions of stamp duties-

Response

(a) Class of persons 97

(b) Class of instruments 101

(c) Geographical area 118

(d) Economic development 86

402

370

Vimpsan Precision Pvt. Ltd. v. State of Gujarat, 1993(2) GLR 1015. 371

President Kankaria C-op. Housing Society Ltd., Ahmedabad v. The Chief Controlling Revenue Authority, Ahmedbad, AIR 1984 Guj 118-121. 372

Daljit Khimji & Others v. State of Gujarat, 1993 (1) GCD 78 (SC). 373

Annexure-I, Survey Report, Majority Responses, Item No. 10.

329

• The questionnaires were sent to 601 persons, among those 408 have

responded, 6 respondents have not answered this item.

Figure 10.1: Survey Response Graph for Item No. 10

Majority Response:

Most effective criterion for granting exemptions of stamp duties is

geographical area.

Observations:

The majority of respondent have opted for the geographical area as the most

effective criteria for granting the exemption for stamp duty, geographical area

is often indicative of economic strata of tax payers. The class of persons

therefore shall be a better option so far as granting exemption is concern

under Section 9 of the Bombay Stamp Act, 1958, the executive powers to

grant exemptions are delegated by the legislature for the simplification of the

procedure. However, executive powers may lead to opportunity for favourable

offers; researcher therefore suggests that executive decision should be

placed before the legislature, for the purpose of perusal which may indirectly

control the executive powers. The basic idea behind the perusal of executive

order before legislature is to maintain check and balance system.

97101

118

86

0

20

40

60

80

100

120

140

(a) (b) (c) (d)

330

10.4.6. Adjudication

Section 31 of Bombay Stamp Act, 1958 provides for Adjudication. The section

corresponds to section 12 of the English Stamp Act and section 31 of Indian

Stamp Act, 1899. It provides for securing the Adjudication of the Collector in

cases of bona fide doubts on payment of nominal fee. While section 11 of the

English Stamp Act applies only to instruments executed, this section applies

also to instruments in the stage of being executed.374 In the case of

instrument already executed, the party gets the benefit of getting the

instrument certified as duly stamped on payment of the duty determined by

the collector without having to pay the penalty. But the instrument should be

brought to the Collector for the purpose of such adjudication within prescribed

time. Direction to sub-Registrar to submit valuation report cannot be termed

as adjudication under section 31 of the Act, whereas reasons must be

disclosed for the basis of the valuation of the property for determination of

Stamp Duty. Therefore there can be no restriction on proceedings under

section 33 of the Act.375 Section 31 cannot be considered as a remedy in a

situation where document presented before the Registrar for registration was

not properly stamped. Section 31 obviously applies to the instruments which

are voluntarily submitted to the Collector for his adjudication as to the Stamp

Duty payable on them.376

10.4.6.1. Adjudication as to Proper Stamps

The Supreme Court has decided the important question as to whether the

executed instrument submitted to the collector under section 31 for obtaining

his opinion regarding proper stamp duty leviable thereon is competent to

impound the same under section 33 of the Act. Any person having doubt

regarding proper amount of duty payable in regard to executed document,

which was executed more than a month, may submit application under

374

Chief Controlling Revenue Authority v. Madras Industrial Investment Corporation, (1966) 2 MLJ 320 (FB). 375

Adarsh Kumar v. State of Uttar Pradesh, AIR 2008 ALL 2 : 2008 ALHC 151 : (2007) 16 All LJ 198. 376

Kethi Needi Jainendra Kumar v. District Registrar, Elure, AIR 2000 AP 268 (269) : 2000(1) ALT 336 : 2000(1) APLJ 427 : 2000(2) ALD 74.

331

section 31 to the collector who shall require to determine the duty with which

in his judgment the instrument is chargeable.377

Upon receiving the Collector’s opinion, if the said instrument is found to be

deficiently stamped, the applicant may withdraw the said instrument and

simultaneously produce the same of his own motion before the Collector

under section 40 of the Act and offers to pay to the Collector the amount of

proper duty or the amount required to make up the same, and if the

application made by the applicant is within one year from the date of its

execution or first execution and the Collector is satisfied that the omission to

duly stamped such instrument has been occasioned by the accident, mistake

or urgent necessity, the Collector may, instead of proceeding under section 33

and 39, receive such amount and endorse the same as provided in section 41

of the Act.

Similarly, if the instrument is produced before the Collector after one year

from the date of execution or first execution the Collector would obviously

proceed under section 33 and 39 of the Act, this is, he will impound the said

document under section 33 and issue order of levying deficit stamp duty and

penalty as providing in section 39 (1)(b) of the Act.

10.4.7. Demand of Stamp Duty

Once the consideration amount was paid it could not be attacked on any

ground, the question of demanding stamp duty subsequently on the basis of

the market value prevailing on the date of execution of sale deed not arise,

because of the circumstances that had taken place and in view of abnormal

delay in execution of sale deed in terms of the agreement of sale. On the

other hand 128 respondents were fighting the litigation throughout in one

Court or the other and ultimately realized the fruits of litigation by 1995. Hence

there was no justification on the part of the registering authorities under Rule

1 of Andhra Pradesh Stamp (Prevention of under Valuation of Instruments)

377

Government of Uttar Pradesh and other v. Raja Mohmmad Amir Ahmed Khan, (AIR 1961 SC 787).

332

Rules, 1975 in demanding stamp duty on the basis of the market value

prevailing on the date of execution of the sale deed by the Court.378

It is well settled that the question of payment of deficit stamp duty on any

document would arise only at the stage when it is sought to be tendered in

evidence and the stage for collecting the deficit stamp duty would arise

thereafter Clause (a) and (i) of Order 7 Rule 1 CPC do not contemplate that

the deficit stamp duty, if any, should be paid at the inception. The order of the

subordinate Judge insisting upon payment of deficit stamp duty at the very

inception was illegal and set aside in revision.379 Wherein, it was held that the

trial Court had erred in ordering payment of stamp duty and penalty before the

stage of admission of documents in evidence.

Order calling upon the petitioner to pay deficient amount of stamp duty on gift

deed registered in 1992 without issuing show cause notice was the result of

non-application of mind in initiating proceedings was unsustainable in law.

However, it would not debar the respondents from proceeding against the

petitioner a fresh strictly in accordance with laws.380

The collector exercising quasi-judicial powers to determine proper market

value of the subject matter of the document may either go against the

decision of the Registering Officer or the party presenting the document. Such

a procedure always satisfies the equal protection of laws enshrined in Article

14 of the Constitution. By keeping the document pending registration, there is

enough safeguard for collecting the deficit stamp duty in the event of collector

accepting valuation suggested by Registering Officer. That being the intention

of protecting the public exchequer, there is no nexus for calling upon the party

to deposit 50 per cent of differential stamp duty as condition for making

reference.381

378

Sub-Registrar, Kodd Town Mondal v. Amaranaini China Venkat Rao, AIR 1998 AP 252 (258) : 1998 (2) ALT 457: (1998) 1 APLJ 404: (1998) 1 LS AP 405. 379

Link Well Electronic Ltd. v. A.P. Electronic Development Corpn. Ltd., 1997 (2) An WR 42 (AP) (The Court relied upon K. Santhakumari v. Suseela Devi, 1961 (1) An WR 425.) 380

Diwakar Tiwary v. State of Jharkhand, 2003 (3) CCC 308 (Jhar) : 2003 (6) ALT 122. 381

P. Laxmi Devi v. Government of A.P., AIR 2001 AP 446, p. 451 : 2001 (3) ALT 666 : 2001 (2) LJ 233 (AP-DB).

333

Where possession was delivered to vendee in pursuance of agreement to

sell, the vendee was liable to make payment of stamp duty under Explanation

to Article 47A.382

Reference regarding recovery of deficiency in stamp duty can be made only

after registration of document or in the course of registration of document.

Impugned order holding that sale deed was under-valued was set aside on

account of non-compliance of procedure.383

10.4.8. Deficit Stamp Duty and Indian Stamp Act

Order to pay deficit stamp duty without notice to petitioner suffers from legal

infirmity.384

The collector can exercise powers to check undervaluation and to assess

deficiency in stamp duty only after registration of the document.385

Reference made by the Registrar to the collector for determining value of the

property with a note that market value of the property was less than the value

fixed was upheld when remedy of appeal was available against the order of

the collector.386

Where the title of a document, whether it was a release or conveyance could

not be decided by the Sub-Registrar, the matter should have been referred to

the collector for classification of the document and stamp duty payable

thereon.387

Once the tenancy of the petitioner in the suit property prior to the execution of

the agreement to sell was admitted, it clearly meant that he was already in

possession and the delivery of possession did not follow the execution of sale

deed. Section 47A was not attracted for the purpose of levy of stamp duty.

382

M. Linga Reddy v. D. Gangi Reddy, AIR 1995 AP 329 : 1995 (1) ALT 828 : 1995 (2) ALD 59 (AP); Danlurn Ramachandra Rao v. Bhogi Venkata Ramana, 1996 (3) ALT 725 : 1996 (3) ALD 919 (AP). 383

Paramjit Kaur v. State of Punjab, AIR 2002 P&H 241, p. 242 : 2002 (1) PLR 651 : 2002 (2) Rec CR 94: 2002 (2) CCC 212 : 2002 (4) ALT 232 P&H. 384

A. Barakath Ali v. Joint Sub-Registrar, AIR 2009 NOC 3003 (Mad). 385

Government of Tamil Nadu v. Pv. Enterprise, 2001 (1) AWC 24 (SC) NOC. 386

State of M.P. v. Rambabu Agrawal, AIR 2004 M.P. 104, 108. 387

P.P. Palanivelu v. Sub-Registrar, 2003 (4) AIC 487 (Mad).

334

Order of the trial Court directing the document to be stamped as a sale-deed

was erroneous.388

Where the document was registered prior to introduction of section 47A, there

was no provision in the Stamp Act enabling the Government to recover stamp

duty. When the document in question was registered in 1978 and section 47A

was introduced in Punjab by way of amendment in the year 1980, section 47A

was not applicable for purposes of recovery of stamp duty.389

Where the civil court found that the sale agreement was insufficiently

stamped, the proper course would be to impound the document and ask the

party to remit the deficient stamp duty and penalty, instead of forwarding the

impounded document to the Collector for determination of market value of the

property.390

Mere nomenclature of a document is not the conclusive proof of the nature of

a document and if on the correct construction of a document, the stamp duty

has not been paid in accordance with law, the same can be recovered by

invoking Section 47A.391

Stamp duty is charged on the consideration amount passed on between the

parties and not on the market value of the property.392

Before passing an order under sub-section (2) of Section 47A, the Collector is

under a statutory duty to hold an enquiry in the manner prescribed and also

give an opportunity to the vendee and the Sub-registrar to project their

respective cases on the issue of determination of the land or property. The

Collector is also required to disclose the evidence collected during the course

388

M.A. Gafoor v. Mohd. Jani, 1999 (1) ALT 596 at p. 599: 1999 (1) ALD 159: 1999 AIWC 2716 (AP). 389

Gauri Farm Equipment v. State of Punjab, 1997 (2) PLR 604 (P&H). See also Doaba Co-op. Milk Producers Union Ltd. v. State of Punjab, 1997 (2) PLR 596: 1997 (3) RCR(Civil) 436 (P&H). 390

Chilakuri Gangalappa v. Revenue Divisions Officer, AIR 2001 SC 1321 : 2001 (2) Punj LJ 66. 391

Thaggil Mamma v. Kottiah Rammani, AIR 1966 SC 337. 392

District Registrar v. Lake Paradise, 2001 (3) KLT 521 : 2001 (2) KLJ 517.

335

of enquiry or otherwise give opportunity to both the parties to support or

controvert such evidence.393

The collector appointed under the Registration Act can only proceed to

recover the deficient stamp duty.394

Rates fixed by the collector are applicable to property purchased in industrial

focal point where the rates of land were Rs. 40,000/- per marla. On the basis

of value of the land, the stamp duty payable comes to Rs. 2,09,600/- along

with Rs.39,000/- as registration charges, whereas the petitioner paid

Rs.55,000/- as stamp duty and Rs. 6,100/- as registration fee. Petitioner was

directed to pay deficient amount of stamp duty.395

Registering authority has no jurisdiction to demand stamp duty and

registration fee after registration of document.396

In the instant case, despite service of notice, petitioners did not contest the

matter. The collector proceeded ex-parte and determined deficiency in stamp

duty, and even did not avoid the opportunity given. Jurisdiction under Article

226 of the Constitution could not be invoked for fault of the petitioners

themselves.397

Where sale deed and other documents show that petitioner had purchased

some land with godown and only land was valued for purposes of stamp duty,

order levying deficit stamp duty by applying valuation mentioned as urban

basic register was proper and reasonable.398 Collector can initiate action for

recovery of deficient stamp duty payable on sale deed or document within

three years of its registration.399

393

Lalita Devi v. Commissioner, Gurgaon Division, 2001 (I) PLJ 568 : 200 I (3) RLR (Civil) 654 (P&H). 394

Chand Kaur (Smt.) v. State of Haryana, AIR 2008 P&H 136: 2008(4) PLR 355 (DB). 395

M/s Mohali Auto Craft v. State of Punjab, 2008 (4) PLR 699 (P&H)-(DB). 396

Naib Tehsildar Joint Registrar, Chemkaur Sahibh v. Prabhakar Coldstorage, Bela, Tehsil Dist.Ropar, 2007(3) PLR 426 (P&H). 397

Ramkishore Agarwal v. State of U.P., (2010) 3 All LJ 684 (All). 398

Natraj Steels (P) Ltd. v. CCRA & Inspector General of Registration and Stamps, Hyderabad, AIR 2005 NOC 552: (2005) 1 Andh LT 463 (AP). 399

Raghbir v. State of Haryana, 2004 (1 ) PLR 545 (P&H).

336

In order to ensure that there is no evasion of stamp duty, circle rates are fixed

from time to time and notification is issued. Issuance of notification becomes

imperative to arrest the tendency or evading payment of actual stamp duty.

Where circle rates for registration of commercial plots were fixed at Rs.4,200/-

per square yard by the collector, no sale deed could be registered for an

amount lesser than Rs. 4,200/- fixed by the collector. In the instant case the

market value of the land in dispute, as per collector's rate, was Rs.33,09,600/-

on which a total stamp duty of Rs. 5,13,050/- was payable, whereas the

respondent had affixed stamp duty of Rs. 31,000/-. Respondent was directed

to pay balance amount of Rs. 4,82,050/-.400

Under section 47A(3), collector appointed under the Registration Act, could

proceed to recover deficient stamp duty either on his own motion or on receipt

of reference from concerned officers within three years. Recovery sought to

be effected by Tehsildar after a lapse of about six years from the date of

registration of release deed was barred by period of limitation. Impugned

notice was, therefore, unsustainable.401

Proceedings initiated after eight years from the date of registration of sale

deed of immovable property were barred by limitation.402

10.4.8.1. Additional Deficit

The Registrar can demand additional stamp duty whenever he is of the

opinion that the market value of the property is not truly set forth in the

instrument. 'Reason to believe' is the condition precedent for exercising

jurisdiction under section 47A of the Act.403

Where there is no material to arrive at a conclusion that the market value of

the property conveyed to the allottees under respective sales deeds has not

been truly set forth, and no reasons have been recorded by the authority to

400

State of Haryana v. Manoj Kumar, AIR 2010 SC 1779: (2010) 4 SCC 350: (2010) 3 LW 583. 401

Chand Kaur (Smt.) v. State of Haryana, AIR 2008 P&H 136: 2008 (4) PLR 355 (DB) 402

CJ. Paul v. Collector, (2009) 14 SCC 564; Om Prakash v. Slate of U.P., AIR 2010 Uttr 64. 403

Harvinder Kaur (Smt.) v. State of M.P., AIR 2007 MP 86 : 2007 AIHC 1586 : 2007 (52) All Ind Cases 629.

337

show that the allottees have fraudulently evaded payment of stamp duty,

notices demanding additional stamp duty are liable to be quashed.404

In another identical case, the registering authority has not shown any material

to come to the conclusion that the market value of the property had not been

truly set forth in the sale deed with the intention to evade payment of proper

stamp duty as such there was no reason to justify demand of excess stamp

duty in respect of the property.405

Stamp duty has to be paid on the valuation of the property on the date when

the deed of conveyance is presented for registration.406

Stamp duty can only be determined on the basis of land use recorded by the

state in the revenue records. Mere fact that the land is in close proximity to a

residential land would not make an agricultural land into a residential land nor

could the authority determine the stamp duty of an agricultural land treating

the same land as a residential land.407

For valuation of property for determining stamp duty, circle rates were

determined and circulated under section 47A of the Act and Uttar Pradesh

Stamp (Valuation of Property) Rules, 1997, are relevant only for initiating

proceeding, while deciding the case, no reliance could be placed upon the

circle rates and market values shall be determined on the basis of general

principles evolved, by the courts, particularly applied in determining market

value in land acquisition cases.408

Additional stamp duty cannot be demanded without verifying facts. Report of

Tehsildar showed that there was neither a pumping set nor construction was

raised on the plot. Additional Commissioner (Judicial), Allahabad Division

illegally upheld the order of Additional District Magistrate (Finance) without

getting verification about correctness of the report of LekhpaI, which was

404

Government of Tamil Nadu v. Section Jayalakshmi, (2009) 5 MLJ 391 : 2009(1) Mad LW 811 (Mad-DB). 405

R. V. Refractories v. District Revenue Officer (Stamps), Collectorate, Chennai, (2009) 3 MLJ 672 (Mad). 406

Brij Nandan Singh v. State of Bihar, AIR 2007 Patna 4. 407

Prafulla Singh v. State of U.P., AIR 2009 NOC 1927 : (2009) 3 ALJ 338 (All). 408

Manju Tomar v. State of U.P., AIR 2008 NOC 280 : (2007) 6 ALJ 336 : 2008 AIHC 159 (All).

338

contrary to report of the Tehsildar. Impugned order passed by Additional

Commissioner (Judicial) was set aside.409

Proceedings under section 47A of the Act cannot be equated or compared to

regular appeal under Order 41, Rule 27, Civil Procedure Code and the parties

cannot be permitted to adduce additional evidence at appellate stage.410

However, Sub-Registrar has no jurisdiction to initiate proceedings for recovery

of additional deficient stamp duty.411

Where notice under section 47A of the Act has not been served, order passed

under Revenue Recovery Act directing petitioner to pay additional stamp duty

is liable to be set aside.412

Government order issued by department of Commercial taxes and religious

endowment is not applicable to demand of additional stamp duty in respect of

sale deed.413

In view of circular dated 8/4/2005 issued by Inspector General of Registration

directing District Registrar to return the document registered to the party, writ

petition forbearing the respondents from demanding additional stamp duty

and additional registration charges is not maintainable.414

10.4.9. Appeal, Review and Revision: Section 53A and Section 58

Under sub-section (2) of section 47A of the Indian Stamp Act, 1899, the

Collector shall, after giving the parties adequate opportunity and after holding

an enquiry determine the market value of the property and under sub-section

409

Roshanlal v. Additional Commissioner (Judicial), Allahabad, AIR 2007 NOC 170 : (2006) 5 All LJ 561 : (2006) 4 All WC 4203. 410

L. C. Polymers India (P.) Ltd., District Registrar-cum-Collector, Visakhapatnam, AIR 2010 AP 11 : (2009) 6 ALT 262. 411

State of Haryana v. Mis Mahabir Solvent Plant, 2007(4) PLR 273. 412

Nirmala Kumar v. SpecialDeputy Collector (Stamps), Vellore, (2010) 4 MLJ 604 (Mad.). 413

MBI Metalloys (P) Ltd. v. Inspector General of Registration, Chennai, 2010 (4) MLJ 523 : 2010 (2) MLW660. 414

Consumer Welfare Association, Kumbakonam v. State of Tamil Nadu & Drs. (2007) 1 Mad LW 237.

339

(4) the aggrieved party has got a right of appeal against the order of the

Collector, to the civil Court.415

Rule 9(3) of the Madhya Pradesh Prevention of under Valuation of Instrument

Rules make a departure from parallel provisions in Order 41 Rule 1 Civil

Procedure Code, requiring the appellant to sign and verify the memorandum

of appeal under Section 47A. It may not be open to invoke the provisions of

Order 6, Rule 15 Civil Procedure Code. The order of the Revenue Board in

dismissing an appeal for want of verification under Rule 14(4) of the Madhya

Pradesh Stamp Act and Order 6, Rule 15 Civil Procedure Code without

affording an opportunity to the appellant to rectify the defect of verification was

set aside.416 Proceedings under section 47A are quasi-Judicial in nature.

Once the market value has been determined under section 47A, it becomes

final. There is no power under the Act to reopen the matter and re-determine

the valuation.417

Determination of market value of the property is a disputed question of fact.

Effective remedy of revision is available under section 56(2) of the Act.418

Revision can also be allowed on the ground that the trial Court had not taken

into consideration the objections for determining the market value of the

property.419

The District Registrar does not enjoy any power either of review or appeal or

revision against the orders passed by the Collector under section 47A.420

The appellate authorities mentioned in sub-section 47A are 'Courts'.421 Where

the appeal memo is not verified or signed, even in the absence of specific

power, the appellate authority by virtue of sub-rule (4) of Rule 14, the Board of

Revenue can allow opportunity to the party to verify the memorandum of

415

Sub-Registrar v. M. Damodar Reddy, 1997 (5) ALT 187 at p. 193 : 1997 (3) ALD 325 (AP-DB). 416

Trilochan Singh v. Board of Revenue, M.P., 1997 (1) MPU 164 at p. 171 (MP). 417

Milap Chand Jain v. State of UP., 1989 RD 48 (All). 418

JugaL Kishore v. State of UP., 1991 AWC (Suppl.) 619. 419

Sanjay Dabas v. State of UP., 1996 (1) AWC 321 (CCRA, BR); Dhiraj Kumar v. State of UP., 1996 (2) AWC 372 (BR). 420

Milap Chandra Jain v. State of UP., 1988 (2) AWC 1053: 1988 ALJ 1078 (All). 421

Elgibi Investments (P.) Ltd. v. Asst. Collector & Collector, (1993) 1 MLW 297, 299.

340

appeal in accordance with the requirements of sub-rule (3) of Rule 9.422 Under

the Amendment Act of 1966, appeal could be filed to the District Judge

against the order of the Collector. But under the Amendment Act of 1982,

such an appeal lies only to the Board of Revenue. In respect of a document

presented for registration in 1973, the Additional Collector passed the order

only after the 1982 Amendment Act came into force. It was held that since the

1982 Amendment Act applies only to documents presented for registration

subsequent to the coming into force of that Act, regarding document

presented for registration earlier, the appeal lies only to the District Judge.423

It is open to the aggrieved party to file objections before the authorities under

the Stamp Act and convince them if any order is passed causing prejudice,

aggrieved party can always prefer an appeal provided under sub-section (5)

of Section 47A.424

Section 47A(5) specifically provides for an appeal against notice to make

good short payment of registration fee. The person instead of filing appeal

choosing to file writ petition cannot be allowed to raise plea of his inability to

file appeal in the absence of notice of short payment of registration fee.425

Where the Special Deputy Collector (Stamps) fixed market value of the

property at Rs. 28,55,794/- and directed the petitioner to pay difference of

stamp duty of Rs. 3,32,254/-, against which remedy of appeal under section

47A(5) before the Inspector General of Registration was not availed, writ

petition challenging the impugned order is not maintainable.426

Appeal can be entertained for violation of principles of natural justice.427

Right of appeal accrues to a petitioner on the date of reference to the collector

for determination of market value of the property, and not the law existing on

the date of disposal of reference. Orders passed by the collector subsequent

to coming into force of amendment was insignificant, because appeal was

422

Trilochan Singh v. Board of Revenue, AIR 1993 MP 208, 213. 423

State of Rajasthan v. Karni Singh, AIR 1986 Raj 84, 88. 424

Civil Engineering Corporation Ltd. v. Special Tehsildar (Stamps), AIR 2001 Mad 277. 425

N. Dhankoti v. Special Deputy Tehsildar, Tiruchengode, AIR 2003 Mad 96, p. 97. 426

K. Bose v. Special Deputy Collector (Stamps), (2006) 4 MLJ 1251 (Mad). 427

K. Bose v. Special Deputy Collector, Madurai, AIR 2007 NOC 1050: 2007(2) Mad LW 393 : 2007 (2) CTC 301 (Mad).

341

entertainable under the unamended Act without requiring petitioner to deposit

differential amount of stamp duty.428

Condition imposed by proviso to Section 47A (2) requiring the party proposing

to prefer an appeal to deposit difference of the amount of stamp duty, though

onerous, was not infringe to Article 14 of the constitution.429

Under the amended provisions of Section 45A of the Karnataka Stamp Act, an

appellant is required to deposit 50 per cent of difference in amount of stamp

duty. Such a provision, however, does not take away the vested right of

appeal without deposit where the issue is related to period prior to

amendment.430

Once the Deputy Commissioner had determined the proper market value of

the property after holding an enquiry, he would have no power to review his

own order or conduct de novo enquiry.431 An appeal against the order of the

Collector District Registrar under section 47A(2) of the Stamp Act determining

market value of the property under sale is not maintainable dehors the

condition in the proviso thereto, i.e. without complying with condition to

deposit difference in amount of stamp duty.432

Limitation period of two months for preferring an appeal, against the order

passed by Special Deputy Collector (Stamps) starts running from the date of

service of order on appellant and not from the date of passing of the order.433

An appeal arising out of proceedings under section 47A of the Act cannot be

equated to or compared with one arising out of a civil suit and rigors of Rule

428

Mohd. Abdul Azeem Zakee v. Government of A.P. (Revenue Department), 2001 (6) ALT 57 : 2001 (6) ALD 394 (AP-FB). 429

R. Srikant v. Govt. of A.P., AIR 2002 AP 109, p. 110: 2002 (I) ALT 210 : 2002 (I) CCC 496 following Gujarat Agro Industries Co. Ltd. v. Municipal Corporation of Ahmedabad, AIR 1999 SC 1818 : (1999) 4 SCC 468 430

Parvinder Kaur Chawla v. Divisional Commissioner, Bangalore, 2001 (6) Kar LJ 449. 431

Shantosh Gureddji v. State of Karnataka, 2003 (6) Kar LJ 149. 432

Ramasinghu Buchanna v. Joint Sub-Registrar, Vizianagaram, 2006(1) ALT 97 (AP) (DB). 433

Vijaya v. Inspector General of Registration, AIR 2007 Mad 276 : (2007) (4) MLJ 1240: 2007 (4) Mad LW 960 : 2007 (3) CTC (Mad).

342

27 of Order 41 Civil Procedure Code cannot be applied for leading additional

evidence.434

Final order passed by District Registrar requiring appellant to pay deficit

stamp duty on partition deed, would not be a case of improper calculation of

market value of property falling under Section 47A of the Act, but under

section 40, which is not appealable, remedy of appeal provided under section

47A (4) and (5) would not be available to the appellant.435

Appeal against the order to pay additional stamp duty with interest, presented

within two months from the date of receipt of order has to be decided on

merits.436

Where two orders have been challenged, one ex-parte order directing

recovery of deficient stamp duty and the other by which application to set

aside ex-parte order was rejected; proper course was to give option to

appellant to confine his appeal against either of the two orders.437

An order passed under section 47A is amenable to revisional jurisdiction

conferred on the Chief Controlling Revenue Authority under Section 56(1) of

the Act. The expression "control" in section 56(1) encompasses within its

ambit the supervisory jurisdiction vested in the Chief Controlling Revenue

Authority. Where an order passed by the Collector was per se erroneous

resulting in loss of revenue to the State and conferred undue advantage on

the beneficiaries, the State certainly has a right to challenge his order before

the authority vested with power to exercise control over the Collector.438

434

L.G. Polymers India (P.) Ltd. v. District Registrar-Cum-Collector, Visakhapatnam, AIR 2010 AP 11 (1:3) : (2009) 6 ALJ 262. 435

Kotta Narayana Murthy v. Sub-Registrar, Jagampet, East Godavari District, AIR 2007 NOC 2194 : (2007) 2 ALT 244 : (2007) 3 ALD 33 (AB). 436

R. Ramakrishnan S/o G. Raju v. District Revenue Officer (Stamps), Coimbatore, (2010) 3 MLJ 921 (Mad). 437

Vijay Kumar Gupta v. State of Uttar Pradesh, AIR 2008 All 119 : 2008 AIHC 2650 : (2008) 72 All LR 352: (2008) 4 ALL LJ 127 (All). 438

J.H.V. Sugar Corporation Ltd. v. CCRA, Allahabad, AIR 2001 All 358, p. 365 : 2001 (2) A WC 1170 : 200 1 All LJ 2886.

343

Where an appeal against an order lies under section 47A, such an order

cannot be agitated in revision under section 56(1) before the Board of

Revenue.439

Revisional jurisdiction is akin to the appellate jurisdiction and the Chief

Controlling Officer has the powers to grant interim relief during pendency of

revision.440

Under Section 53 of the Bombay Stamp Act, 1958, it is provided that appeal

can be filed to Chief Controlling Revenue Authority. Proviso to Section 53

clearly indicates that while filing an appeal, one has to pay twenty five per

cent of the amount of the difference of duty payable. Survey conducted by

Researcher indicates that the amount of twenty five per cent is judicious; the

provision does not require any change.441

10.4.9.1. Alternate Remedy

Alterative remedy, however, cannot be a bar for exercise of extraordinary

jurisdiction of High Court under Article 226 of the Constitution in cases where

fundamental right is breached or there is violation of statutory provisions.442

10.4.9.2. Limitation

Limitation commences only on proper service of order.443

The limitation period of two years prescribed in sub-section (3) of the Section

47A would apply only in a case where the Collector takes action either suo

motu or on receipt of reference from the Inspector General of Registration or

the Registrar of the District appointed under the Registration Act, 1908

(Central Act 16 of 1908), in whose jurisdiction the property or any portion

thereof was situated. In other words, the limitation prescribed in sub-sec. (3) 439

State of Rajasthan v. Kami Singh, AIR 1983 Raj 90. 440

Jagdish Narain v. Chief Controlling Revenue Authority, AIR 1994 All 371. 441

Annexure-I, Survey Report, Majority Responses, Item No. 7. 442

State of Himachal Pradesh v. Gujarat Ambuja Cement Ltd., JT 2005(6) SC 298; N. Meenakshi v. Assistant Commissioner of Income Tax, Business Circle Ill, Chennai, (2010) 2 MLJ 644 (Mad.) 443

A. Vijay Kumar v. Tamil Nadu Chief Controlling Authority & Inspector General of Registration, (2009) 1 MLJ 830.

344

of Section 47A has no application to the case when reference was made by

the Registering Authority, namely, the primary authority under sub-section (1)

of Section 47A. From a conjoint reading of sub-section (1), (2) and (3), the

inevitable conclusion would be that last action of the Collector taken under

sub-section (2) and (3) on reference under sub-section (1) was not controlled

by the limitation of two years prescribed under sub-section (3).444

The period of limitation of four years under sub-section (4) to Section 47A

applies to the action initiated by the Collector and not to a reference from any

Court or other authorities-enumerated in the sub-section. The language used

in the opening part of sub-section (4), Section 33 is exactly similar to the

language used in the opening part of sub-section (4) of Section 47A of

Section 33. The proviso to sub-section (5) of Section 33 says that no action

under subsection (4) or sub-section (5) shall be taken after a period of four

years from the date of execution of the instrument. The bar of limitation

applies to the action which may be taken by the Collector and not to a

reference.445

Sub-section (4) of section 47A empowers the Collector to examine a

document to satisfy himself about the correctness of the market value of the

property. Even after registration of the document, proceedings can be initiated

for recovery of deficit stamp duty within four years from the date of registration

of such instrument.446

The petition challenging the vires of Rule 59-B of the Rajasthan Stamp Rules

after a lapse of five years was dismissed on the ground of delay and

laches.447

The Apex Court examined the question of limitation in the context of the

words from the date of the order and held that in the absence of positive proof

of service the aggrieved person was not supposed to be under any obligation

444

State of Punjab v. Mahajan Sabha, Gurdaspur, AIR 1996 SC 2153; Chandrakant C. Adesara v. State of Bihar, AIR 1997 Patna 145 (152) SR. 445

Girjesh Kumar Srivastava v. State of U.P., AIR 1998 All 237 (245) : 1998 All LJ 1604 : 1998 (1) AWC 403: 1998 (4) Rec CR 193 : 1998 (4) RCR (Civil) 194 (All-SB). 446

Dilwali v. Commissioner, AIR 2000 All 344 : 2000 (3) AWC 2519 (All). 447

Pawan Kumar v. State of Rajasthan, 1999 (1) Raj LR 198 at p. 199 (Raj).

345

to file appeal within the prescribed period from the date of the order.448 Similar

views were expressed by the Division Bench of Orissa High Court.449

Therefore, in all such cases where there was not proper proof of service, the

period of limitation would be deemed to commence from the date of

knowledge of the aggrieved person.450

Where the transactions regarding registration of properties were for the period

27/10/1989, 30/10/1989 and 7/12/1990, the proceedings initiated for recovery

of short payment made by petitioner towards registration charges by service

of notice on 30/4/1991 were within limitation period of two years.451

Appeal against the order determining market value of the party cannot be

refused on technical grounds of delay, where the facts of the case justify

condonation of delay.452

Period of limitation is applicable to an action initiated by the Collector and not

on reference to the Collector from any court or other authorities enumerated in

section 47(4).453

Date of order under Section 47A for the purpose of deciding limitation for filing

appeals should be construed to mean the date of service of order and the

date of order under Rule 9 of the Tamil Nadu Stamp Prevention of Under

Valuation of Instruments Rules 1968 shall be the date of service of order for

the purpose of determining the time limit to prefer appeals.454 Appeal and

revision are not separate proceedings. Any order to be passed as appeal or

revision would get merged with the order passed by the original authority.455

Show cause notice demanding deficient stamp duty issued after a lapse of

four years from date of registration of sale deed was in contravention of

section 47A of the Act and imposition of levy and penalty was liable to be

448

Raja Harish Chandraraj Singh v. Dy. LAO, AIR 1961 SC 1500. 449

P. Apparao v. A.D.M. Koraput, AIR 1975 Ori. 209. 450

Chander Bhan v. The Collector, Gurgaon, AIR 1995 P&H 211. 451

N. Dhimakoti v. Special Deputy Tehsildar, Tiruchengode, AIR 2003 Mad 96, p. 98. 452

Jayashree v. Divisional Commissioner, 2001 (6) Kar LJ 329. 453

Girish Kumar Srivastava v. State of U.P., AIR 1998 All 237 : 1998 All LJ 1604 : 1998 (1) AWC 403 : 1998 (4) Rec CR 193 (All-SB). 454

D. Devaraj v. Inspector-General of Registration, Cum-Tamil Nadu Chief Revenue Controlling Authority, Chennai, (2005) 1 LW 576 (Mad). 455

Farooq Ali v. Sub-Registrar, North Madras, (2005)3 LW 684 (Mad).

346

quashed.456 Where appeal against the order of District Revenue officer

directing appellant to deposit a sum of Rs.24,955 as deficiency in stamp duty

and Rs. 223.75 as registration fee in Government Treasury within a period of

one month, was held as time barred, revision was allowed by counting the

period from date of receipt of notice on the principal of adopting liberal

approach for condonation of delay.457 Under Section 47A of the Stamp Act as

incorporated by Madhya Pradesh Act 8 of 1975 which came into effect from

15/5/1975, action could be taken only in respect of documents registered after

amendment was inserted and that too within a period of five years.458 Notice

issued by collector after expiry of period of four years from the date of

registration of sale deed, and proceedings initiated pursuant thereto and im-

pugned order were held to be wholly without jurisdiction and beyond the

authority of Law and quashed.459 Date of order under Section 47A for the

purpose of deciding the limitation for appeals should be construed to mean

the date of service of order under Rule 9 of the Tamil Nadu (Prevention of

under Valuation of Instruments) Rules.460

Proceedings initiated for receiving of deficit stamp duty after six to eight years

from the date of registration of sale deed of immovable property were barred

by limitation.461

Limitation of two months for preferring an appeal against the order passed by

Special Deputy Collector (Stamps), starts running from the date of service of

order on the appellant and not from the date of passing of the order.462

Under Section 47A(3), collector appointed under the Registration Act could

proceed to recover the deficient stamp duty either on his own motion or on

receipt of reference from concerned officers within three years. Recovery

sought to be effected by Tehsildar after a lapse of about six years from the

456

Nisha Keserwani (Smt) v. State of U.P., AIR 2006 All 152. 457

Kanwar Lal v. State of Haryana, 2002 (3) PLR 759 (P&H). 458

South Eastern Coalfields Ltd. v. State of M.P., 2003(5) MPLJ 314 (MP). 459

Meena Khanna v. State of U.P., 2005(3) AWC 2296 (All). 460

D. Ramadoss v. Revenue Divisional Officer Sivakasi, (2004) 3 MLJ 280 : 2004 (2) Mad LW 720 (Mad). 461

C.J. Paul v. Collector, (2009) 14 SCC 564; Om Prakash v. State of U.P., AIR 2010 Uttr 64; Neelu Chopra (Smt.) v. State of U.P., AIR 2009 NOC 552: (2008) 6 ALJ 507 (All). 462

Vijaya v. Inspector General of Registration, AIR 2007 Mad 276 : 2007 (4) MLJ 1240 : 2007 (4) Mad LW 460: 2007 (3) CTC 756 (Mad).

347

date of registration of release deed was barred by period of limitation.

Impugned notice demanding deficient stamp duty was, therefore,

unsustainable.463

10.5. Penalty for Executing Instrument not Duly Stamped

Section 62 of Indian Stamp Act, 1899 provides;

“(1) Any person-

(a) drawing, making, issuing, endorsing or transferring, or signing otherwise

than as a witness, or presenting for acceptance or payment, or accepting,

paying or receiving payment of, or in any manner negotiating, any bill of

exchange payable otherwise than on demand or promissory note without the

same being duly stamped, or

(b) executing or signing otherwise than as a witness any other instrument

chargeable with duty without the same being duly stamped; or voting or

attempting to vote under any proxy not duly stamped ; shall for every such

offence be punishable with fine which may extend to five hundred rupees :

Provided that, when any penalty has been paid in respect of any instrument

under section 35, section 40 or section 61, the amount of such penalty shall

be allowed in reduction of the fine (if any) subsequently imposed under this

section in respect of the same instrument upon the person who paid such

penalty.

(2) If a share-warrant is issued without being duly stamped the company

issuing the same, and also every person who, at the time when it is issued, is

the managing director or secretary or other principal officer of the company

shall be punishable with fine which may extend to five hundred rupees.”

Legislative references: See section 61 of Act I of 1879, sections 29 and 30 of

Act XVIII of 1869. Sub-section (2) is re-enactment of sub-section 35 of the

Indian Companies Act 1882.

463

Chand Kaur (Smt.) v. State of Haryana, AIR 2008 P&H 136 : 2008 (4) PLR 355 (DB); Vikas v.State of Haryana, 2008 (2) PLR 724 : AIR 2008 NOC 1887 (DB).

348

In clause (a) of sub-section (1), the word “cheque” has been omitted and after

the words “bill of exchange” the words ‘payable otherwise than an demand’

have been inserted by Act v of 1927 by which duty on cheques and demand

bills was abolished.

Sub-section (1)-“Person”-Liability of firm or corporation for Servants’ Act- The

term ‘person’ includes a partnership firm and a corporation –see section 3(42)

of the General Clauses Act. Where the servant of a trading partnership firm

gave an unstamped receipt and refused to give a stamped receipt, all the

partners of the firm were held criminally liable.464 In Attorney General v.

Carlton Bank,465 a Bank was fined for the omission of its official to stamp

receipts. Sub-section 2 makes the Company liable for issue of unstamped

share certificates and implies that the company would be liable under sub-

section (1) for the execution of any other unstamped document. Where

criminal intention is an essential ingredient, there can of course be no such

liability, unless the person is guilty of abetment in having employed his

servant to do the act with a criminal intent. But such criminal intention is not

necessary for an offence under this section- see cases cited infra on the point.

The company is not liable for payment of duty if it registers a transfer of

shares which is not duly stamped.466

Sub-section (1), Clause (a) - ‘Issue’ means the first delivery of a bill or note to

be a person who takes it as first holder. For stamp purposes a bill is not

deemed to be issued until it has reached the hands of a holder for value.467

The words ‘signing otherwise than as witness’ must be read together. A

witness to an instrument does not draw, make or execute it.468

The term ‘accepting’ does not mean receiving but executing as an acceptor.

To receive a promissory note duly stamped and to put it in suit does not

464

Queen Empress v. Khettar Mohan Chowdhry, 27 Cal 324. 465

(1899) 2 K B 158. See also Pearks Guston & Tea Limited v. Ward, (1902) 2 KB 1. 466

In re, Jagdish Mills Ltd., 56 Bom LR 525 (SB): AIR 1955 Bom 79. 467

Bills of Exchange Act, 1882. (45 and 46, Vic. c. 61) Section 2; Downes v. Richardson, (1822) 5 B & Ald 974. 468

Shams Din v. Collector, Amritsar, 17 Lah 223 : 162 IC 774 : 38 PLR 558 : AIR 1936 Lah 449 (SB).

349

constitute an offence.469 The person in whose favour an unstamped

promissory note is made is not subject to penalty. If an instrument is not duly

stamped, the person subject to penalty is the person who makes it, not the

person in whose favour it is made. The letter incurs the risk being debarred

from producing it in evidence, but does not render himself liable to penalty.470

The receiver of the document is not also liable as abettor.471

‘Receiving the payment of a promissory note’ means receiving the money due

under the note and not receiving the note itself.472

Instrument chargeable with duty- In one Patna case,473 it is held that an

agreement for a lease whereby no rent is reserved and no premium is paid or

money advanced, is not an instrument chargeable to stamp-duty under the

Stamp Act and the executants of such a document cannot be convicted under

the said section. The court has apparently over looked the residuary provision

in schedule 1 Article 5 C. An instrument which is an agreement exempted

under Article 5 as a memorandum relating to the sale of goods is not

chargeable with duty and the executants of document cannot be convicted.474

The court ought not to be guided by the fact that the collector has decided that

the duty and penalty are livable and ordered prosecution, and must decide for

itself on the question of stamp duty.475

10.6. Instrument not Duly Stamped Inadmissible in Evidence

Section 34 of Indian Stamp Act is as under;

“No instrument chargeable with duty 476[(not being an instrument referred to in

sub-section (1) of section 32A),] shall be admitted in evidence for any purpose

469

Queen Empress v. Gulam Hussain, 7 Mad 71; Queen Empress v. Palani, 7 Mad 537; Queen Empress v. Nihalchand, 20 All 440; The Empress v. Sikshan Das, 1887 PR 12 (Cr); Piari Lal v. Queen Empress, (1890) PR 11; Hira v. Queen Empress, 1865 PR 18. 470

Queen v. Nadi Chand Poddar, 24 WR Cr 1. 471

Queen Empress v. Nihalchand. 20 All 440. 472

Emperor v. Kallumal, 1903 AWN 174. 473

Sunder Kuer v. Emperor, 17 Cr LJ 495 : 1 Pat LJ 366 : 20 CWN 923 : 3 Pat LW 72 : 36 IC 175. 474

Mian Bux v. Emperor, 162 IC 504 : AIR 1937 All 190. 475

Empress v. Dwarakanath Chowdhury, 2 Cal 399 at p. 403. 476 These brackets, words, figures and letter were inserted by Gujarat 21 of 1982, S.16.

350

by any person having by law or consent of parties authority to receive

evidence, or shall be acted upon, registered or authenticated by any such

person or by any pubic officer unless such instrument is duly stamped:

Provided that

(a) any such instrument not being an instrument chargeable with a duty of

twenty naye paise and less shall, subject to all just exceptions, be

admitted in evidence on payment of the duty with which the same is

chargeable, or in the case of an instrument insufficiently stamped, of

the amount required to make up such duty, together with a penalty of

five rupees, or, when ten times the amount of the proper duty or

deficient portion thereof exceeds five rupees, of a sum equal to ten

times such duty or portion;

(b) where a contract or agreement of any kind is effected by

correspondence consisting of two or more letters and anyone of the

letters bears the proper stamp, the contract or agreement shall be

deemed to be duly stamped;

(c) nothing herein contained shall prevent the admission of any instrument

in evidence in any proceeding in a Criminal Court, other than a

proceeding under Chapter XII or Chapter XXXVI of the Code of

Criminal Procedure,1898;

(d) nothing herein contained shall prevent the admission of any instrument

in any Court, when such instrument has been executed by or on behalf

of the Government or where it bears the certificate of the Collector as

provided by Section 32 or any other provision of this Act.”

Sec. 34 clearly provides thus:

"No instrument chargeable with duty (not being an instrument referred to in

sub-sec. (1) of section 32A) shall be admitted in evidence xx xx"

It means that instrument referred to in sub-sec. (1) of Section 32A, viz;

"instrument of conveyance, exchange, gift, certificate of sale, partition,

partnership, settlement or power of attorney to sell immovable property when

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given for consideration or transfer of lease by way of assignment" even

though not duly stamped it shall required to be admitted in evidence for any

purpose by any person having by law or consent of parties authority to receive

evidence. The second part of Section 34 viz;, "or shall be acted upon,

registered or authenticated by any such person or by any public officer unless

such instrument is duly stamped" is so far as the provisions of Section 34 is

concerned it is not applicable to aforesaid instruments referred to in Section

32(1) of the Act. However, the registering officer or any person referred to in

Section 33, before whom such instrument is produced or comes in the

performance of his function, has reason to believe that the consideration set

forth in the instrument does not approximate to the market value of the

property which is the subject matter of such instrument, he shall before

registering the instrument or performing his functions in respect to such

instrument refer the same to the Collector for determining true market value of

such property and the proper stamp duty payable thereon. In short the

provisions of Section 34 are not applicable to instruments referred to in

Section 32A(i) of the Act and as the aforesaid instruments even if not duly

stamped the same can be admitted in evidence for any purpose by any

person having by law or consent of parties authority to receive evidence,

however, so far as the public officer are concerned the provisions of Section

32A(1) will be applicable to the said instruments and, therefore, a public

officer before whom such instrument is produced or comes in the performance

of his function he cannot act upon, register or authenticate such not duly

stamped instrument. In this context prevailing provisions of Section 32A(1)

and Section 34 are contradictory and, therefore, Section 34 need immediate

amendment.

The aforesaid provisions of Section 34 was in consonance with the provisions

of Section 32A, sub-sec. (1) till the registering officer was required to register

the instrument even where he has reason to believe that amount of

consideration set forth in the instrument is not approximate to the market

value which is the subject matter of the instrument.

Accordingly, when such instrument was required to be registered even if it

was found not duly stamped in view of the consideration set forth therein

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being not approximate to the market value of the property which is the subject

matter of the said instrument under the provisions of Section 34 of the Act

would obviously cannot apply. However, when the scheme of sub-sec. (1) of

Section 32A was amended by Guj.8 of 2000 with effect from 1-04-2000 by

substituting the words, "shall before" for the words "may either before or

after", and the registering officer cannot register such instrument before it

being duly stamped and, therefore, prevailing provisions of Section 34 (not

being any instrument referred to in sub-sec. 32A) cannot be termed as proper

and legal and need appropriate amendment otherwise even if such instrument

is not duly stamped under the prevailing provisions of Section 34 it will have to

be received in evidence for any purpose by any person having by law or

consent of parties to receive evidence.

In Maharashtra Stamp Act the similar provisions of Section 34 viz "not being

any instrument referred to in sub-section (1) of Section 32A" was deleted by

Maharashtra Tax Laws (Levy and amendment) Act, 29 of 1994 (w.e.f.

1/05/1994). To avoid any legal question on this account it would be necessary

to carry out similar amendment in the Section 34 of the Act.

Proviso (a) empowers authority to admit in evidence unstamped or

insufficiently stamped documents on payment of duty and penalty. If the

Lower Court has not granted such opportunity or if such opportunity could not

be availed of for some good and sufficient cause the Appellate Court can

grant such opportunity in appeal so as to impart justice.477

Failure to stamp a document properly does not affect the validity the

transaction embodied therein, but renders the document inadmissible in

evidence.478 An unstamped or defectively stamped document is effective from

the date of its execution, though it is incapable of being made use of, as

evidence, until it is stamped properly.479 There is no provision of law in the

Stamp Act which compels parties to a document not to act upon or perform

the obligations as between them before having it stamped. The requirement of

477

John Mithalal Desai v. Dineshbhai K. Vora 1997-3 GLR 2106. 478

Pumachandra Chakrabanhy v. Kalipada Roy, 46 CWN 477 : 201 IС 557 : AIR 1942 Cal 386. 479

Subramanian Chettiar v. Revenue Divisional Officer, Devakottah, ILR (1956) Mad 1074.

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stamping and the prohibition of admitting an unstamped document as

evidence will be operative only in relation to proceeding before court or other

officers. As between the parties themselves, that too parties to a compromise

decree it becomes operative immediately and the rights and obligations

between them spring forth in accordance with the terms of the decree itself.480

An award on a reference cannot be questioned on the ground that the

reference was not properly stamped but the court can proceed under section

35, Proviso (a).481 Payment of duty and penalty does not of course have the

effect of extending the period lease which has expired up to the date of such

payment.482

480

Duruaiswami v. Venkatakrishna Reddiar, (1969) 1 MLJ 135 : 81 LW 469. 481

Kali Charan Banik v. Mani Mohan Saha Banik, AIR 1924 Cal 794. 482

Narayan v. Natesan Achari, (1986) 2 MLJ 18.