In the stamp Act, 1899 there are
two stages where a case of deficient stamp duty arises-
(i)
When
at the stage of execution of the instrument.
(ii)
When
at the stage of civil suit proceedings.
The first stage is covered by
section 31 of the Act where it states as follows:
I. WHEN AT THE STAGE OF INSTRUMENT
Legal Provisions:
17. Instruments executed in India
All
instruments chargeable with duty and executed by any person in India shall be
stamped before or at the time of execution.
31. Adjudication as to proper
stamp-.
(1) When any instrument, whether executed or not and whether previously
stamped or not, is brought to the Collector, and the person bringing it applies
to have the opinion of that officer as to the duty (if any) with which it is
chargeable, and pays a fee of such amount (not exceeding five rupees and not
less than [fifty naye paise] as the Collector may in each case direct, the
Collector shall determine the duty (if any) with which, in his judgment, the
instrument is chargeable.
(2) For this purpose
the Collector may require to be furnished with an abstract of the instrument,
and also with such affidavit or other evidence as he may deem necessary to
prove that all the facts and circumstances affecting the chargeability of the
instrument with duty, or the amount of the duty with which it is chargeable,
are fully and truly set forth therein, and may refuse to proceed upon any such
application until such abstract and evidence have been furnished accordingly:
Provided that-
(a)
no evidence furnished in pursuance of this section
shall be used against any person in any civil proceedings except in an inquiry
as to the duty with which the instrument to which it relates is chargeable; and
(b)
every person by whom any such evidence is furnished
shall, on payment of the full duty with which the instrument to which it
relates is chargeable, be relieved from any penalty which he may have incurred
under this Act by reason of the omission to state truly in such instrument any
of the facts or circumstances aforesaid.
32. Certificate by Collector –
1)
When an instrument brought to the
Collector under section 31, is, in his opinion, one of a description chargeable
with duty, and--
(a)
the Collector determines that it is already
fully stamped, or
(b)
the duty determined by the Collector under
section 31, or such a sum as, with the duty already paid in respect of the
instrument, is equal to the duty so determined, has been paid, the Collector
shall certify by endorsement on such instrument that the full duty (stating the
amount) with which it is chargeable has been paid.
2)
When such instrument is, in his
opinion, not chargeable with duty, the Collector shall certify in manner
aforesaid that such instrument is not so chargeable.
3)
Any instrument upon which an
endorsement has been made under this section, shall be deemed to be duly
stamped or not chargeable with duty, as the case may be; and, if chargeable
with duty, shall be receivable in evidence or otherwise, and may be acted upon
and registered as if it had been originally duly stamped:
Provided
that nothing in this section shall authorise the Collector to endorse—
(a)
any instrument executed or first executed in
1*[India] and brought to him after the expiration of one month from the date of
its execution or first execution, as the case may be;
(b)
any instrument executed or first executed out
of 1*[India] and brought to him after the expiration of three months after it
has been first received in 1*[India]; or
(c)
any instrument chargeable 2*[with a duty not
exceeding ten naye paise] or any bill of exchange or promissory note, when
brought to him, after the drawing or execution thereof, on paper not duly
stamped
DISCUSSION-
The
section
covers both the stages of the instrument i.e whether executed or not and
whether stamped or not.
After taking the due fee prescribed under this section the Collector shall
provide his adjudication as to the proper duty.
Adjudication can be claimed in
respect of any instrument, whether executed or not. The collector may require
for adjudication an abstract of the instrument along with affidavit or any
other instrument to enable him to determine the proper duty. The collector is
alone authorized to decide as to the duty chargeable under this section and his
decision is final or he may also refer the case to Chief Controlling Revenue
Authority u/s 66 of the Act.
No penalty for insufficient
stamping, beyond the deficient duty and the adjudication fee is leviable when
the document is unstamped or insufficiently stamped and is taken to collector
u/s 31.
U/s 32(Proviso a) there is provision for Certificate of Collector the
collector shall endorse the instrument by a certificate that a full duty with
which an amount is chargeable is duly stamped and paid or the instrument is
already duly stamped with requisite amount of duty. After receiving the
endorsement u/s 32 for an instrument brought to the collector u/s 31 the
instrument can be relied as evidence or may be acted upon for registration
Provided, that any such
instrument shall only be considered for endorsement only if the same has been
brought to the collector within one month after from the date of its first
execution.
Where section 17 of the Act
provides that an instrument chargeable with duty and executed by any person in
India shall be stamped before or at the time of its execution then it is best
to apply u/s 31 before the execution of such instrument and thereafter a
certificate u/s 32 should be sought by the applicant
Once a matter is sent for
adjudication u/s 31 and 32 of the Act and endorsement is issued, the instrument
shall be treated as duly stamped.
However, the Hon’ble Supreme
Court in the case of Government of Uttar
Pradesh v. Mohd. Amir Ahmad Khan (AIR 1961 SC 787) decided as follows:
“The
scheme of the Act shows that where a person is simply seeking the opinion of
the Collector as to the proper duty in regard to an instrument, he approaches
him under s. 31. If it is properly stamped and the person executing the
document wants to proceed with effectuating the document or using it for the
purposes of evidence, he is to make up the duty and under s. 32 the Collector
will then make an endorsement and the instrument will be treated as if it was
duly stamped from the very beginning. But if he does not want to proceed any
further than seeking the determination of the duty payable then no consequence
will follow and an executed document(beyond time limit) is in the same position
as an instrument which is unexecuted and unstamped and after the determination
of the duty the Collector becomes functus officio and the provisions of s. 33
have no application. The provisions of that section are a subsequent stage when
something more than mere asking of the opinion of the Collector is to be done.”
Therefore nothing prohibits the
person seeking an opinion for the proper stamp duty on an instrument from
applying to the collector u/s 31 of the Act.
CONCLUSION
Therefore, it is advisable to always apply
under section 31 for the adjudication and payment of deficient stamp duty
because in such case the penalty chargeable u/s 38 shall not be charged provided
the same has been brought to Collector within one month from the date of
execution of the instrument.
II. WHEN AT THE STAGE OF CIVIL SUIT PROCEEDINGS
Legal Provisions Involved
33. Examination and impounding of
instruments-
(1) 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 in force in 3[India] when
such instrument was executed or first executed :
Provided
that-
nothing herein contained shall be
deemed to require any Magistrate or Judge of a 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
40. 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
section38, sub-section (2), not being an instrument chargeable 2[with
a duty not exceeding ten naye paise] only or a bill of exchange or promissory
note, 3[or acknowledgement or delivery order], 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 not 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 1[an
amount not exceeding] ten times the amount of the proper duty or of the
deficient portion thereof, 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 matter stated therein.
(3) Where an instrument
has been sent to the Collector under section 38, sub-section (2), the Collector
shall, when he has dealt with it as provided by this section return it to the
impounding officer.
DISCUSSION-
The Hon’ble Supreme Court in the
case of Government of Uttar Pradesh v.
Mohd. Amir Ahmad Khan (AIR 1961 SC 787) observed:
“Section
33 empowers every person in charge of a public office before whom an instrument
chargeable with duty is produced or comes in the performance of his functions
to impound the instrument if it is not duly stamped. When an instrument is
presented to the Collector under s. 31 for determination of duty it cannot be
said that it "is produced or comes in the performance of his
functions" as contemplated by S. 33. These words refer firstly to
production before judicial or other officers performing judicial functions as
evidence of any fact to be proved, and secondly refer to other officers who
have to perform any function in regard to those instruments when they come
before them, e.g., registration”
“Section 33 of the Act to means "that production of the
instrument concerned in evidence or for the purpose of placing reliance upon it
by one party or the other."
Chapter IV of the Act which deals
with instruments not duly stamped and which contains as. 33 to 48, provides for
impounding of documents, how the impounded documents are to be dealt with,
Collector's powers to stamp instruments impounded and how the duties and
penalties are to be recovered.
CONCLUSION
The stage of section 33 commences
(i) after expiry of one month from date of execution of document; or (2) when
the document is relied upon as evidence. The subsequent section for impounding (s.35) and
for penalty (s.38) operates only at this stage. Whereas at section 40 the
jurisdiction to adjudicate upon proper stamp duty and charge penalty for the
same lies with the concerned collector.
Therefore, the Stamp Act, 1899
suffers from this narrow statutory scheme limited by the time of one month
where a person if is inclined to make good his instrument by paying the deficit
amount of duty to government, can do so only after giving the penalty for the
same, subsequent to impoundment.
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