Stamp duty refund rules for unused e-stamp paper must be read to avoid arbitrary denial where no duty became payable.

Stamp duty is a statutory levy on instruments, and refund of unused e-stamp paper depends on the statute rather than any inherent constitutional entitlement. The challenge to the 10% deduction under Section 54 of the Indian Stamp Act, 1899 on Articles 265 and 300A was rejected, because the State's retention was authorised by law. Section 54(c), however, was read harmoniously with the Act's refund scheme so that the six-month limit does not defeat relief where the purchaser only later discovered the stamps had no immediate use and no charging event had occurred. On that construction, the refund refusal was set aside and the refund claim allowed, subject to statutory conditions.

---

---

Issues: (i) Whether retention of 10% of the stamp duty under Section 54 of the Indian Stamp Act, 1899 and the restriction in Section 54(c) violated Articles 265 and 300A of the Constitution of India; (ii) Whether Section 54(c) could be construed so as to permit refund of unused stamp paper where the purchaser discovered after six months that the stamps had no immediate use and the charging event had not occurred.

Issue (i): Whether retention of 10% of the stamp duty under Section 54 of the Indian Stamp Act, 1899 and the restriction in Section 54(c) violated Articles 265 and 300A of the Constitution of India.

Analysis: Stamp duty is a levy on instruments and the statute permits collection through stamps and e-stamp certificates even before execution of the instrument. The right to refund is wholly statutory and there is no inherent right to refund merely because the instrument was not ultimately executed. On that basis, the challenge founded on Articles 265 and 300A could not succeed merely because the State retained a statutory deduction.

Conclusion: The challenge based on Articles 265 and 300A was rejected.

Issue (ii): Whether Section 54(c) could be construed so as to permit refund of unused stamp paper where the purchaser discovered after six months that the stamps had no immediate use and the charging event had not occurred.

Analysis: Sections 49 and 50 show that the Act itself contemplates refund or allowance in situations where the stamp is spoiled, unfit, or where the transaction does not materialise, and the period of six months in Section 54(c) cannot be read as extinguishing the remedy where the purchaser had no knowledge within that period that the stamps would not be used. A construction that bars refund even when no duty became payable and the cause for refund arose only later would create an arbitrary distinction and offend Article 14. The provision was therefore read harmoniously so that the limitation runs from the point when the claimant becomes aware that the stamps have no immediate use, provided the statutory conditions of bona fide purchase and full payment are satisfied.

Conclusion: Section 54(c) was construed to permit refund in the petitioner's case, and the refusal of refund was set aside.

Final Conclusion: The petition succeeded in part: the statutory provision was saved by interpretation, but the petitioner was held entitled to refund of 90% of the e-stamp duty and the Collector was directed to process the claim.

Ratio Decidendi: A refund-limiting provision governing unused stamp paper must be construed so that it does not arbitrarily deny relief where the stamp duty was never chargeable and the claimant first became aware of the lack of immediate use only after the stipulated period, provided the purchase was bona fide and for full consideration.

---