Stamp duty applies only to a taxable instrument, not to a debenture conversion transaction without an issued certificate.

Stamp duty under the Bombay Stamp Act is chargeable only on an identifiable instrument, not on the underlying transaction itself. The article explains that letters of offer and allotment were not debenture certificates, and no separate debenture certificate had been issued, so the State could not levy duty on the allotment or conversion of fully convertible or partly convertible debentures. It also notes the strict approach to stamp law, under which duty cannot be imposed unless the transaction is embodied in a taxable document. Share certificates issued on conversion had already borne the relevant duty, making the additional demands unsustainable.

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Issues: Whether stamp duty could be levied on the allotment or conversion of fully convertible and partly convertible debentures in the absence of an issued debenture certificate, and whether the State could demand duty on the transaction itself rather than on an instrument.

Analysis: Under the Bombay Stamp Act, stamp duty is chargeable on an instrument, and the Act defines chargeability and instrument in a manner that confines the levy to documents that create, transfer, limit, extend, extinguish, or record rights or liabilities. The letter of offer and allotment letter were not treated as debenture certificates, and no separate debenture certificate had in fact been issued in either matter. The court also relied on the settled principle that stamp law must be applied strictly, so that duty cannot be imposed on a transaction unless it is embodied in a taxable instrument. The material showed that the share certificates issued on conversion had already suffered the appropriate duty, while the impugned demands sought to tax the underlying debenture arrangement itself.

Conclusion: Stamp duty was not leviable on the bare allotment or conversion transaction in the absence of a debenture certificate, and the additional demands were unsustainable.

Final Conclusion: The demands of additional stamp duty were quashed and the petitions were allowed, with the existing share-related duty treated as sufficient.

Ratio Decidendi: Stamp duty under the Bombay Stamp Act is payable only on an identifiable instrument and cannot be imposed merely because a transaction or contemplated conversion of securities has taken place without such an instrument.

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