TaxTMI 
TaxTMI 
2018 (1) TMI 567
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....wadi, J is sitting at Aurangabad Bench, signed judgment is pronounced by A.S.Oka, J as per Rule 296(iii) Chapter XX of the Bombay High Court (Original Side) Rules.] JUDGMENT : (Per A.S.Oka, J.) 1. Writ Petition No.2488/1988 was not on board. By consent of parties the said petition was taken up on the board. These petitions can be disposed of by a common judgment. One of the common challenges in these petitions is to the constitutional validity of section 7 of the Bombay Stamp Act, 1958 (for short "the said Act"). A brief reference to the facts of the case will be necessary. 2. In Writ Petition No.2519/1988, a declaration is sought that the provisions of sections 3, 7 and 19 of the said Act to the extent to which the same seek to levy stamp duty on the copies of the instruments executed outside the State of Maharashtra are null and void. It is stated in the said petition that a Debenture Trust Deed dated 6th April 1987 (for short "the deed") was executed by the first petitioner company in the State of Gujarat. The first petitioner and the State Bank of India are the parties to the said deed. The State Bank of India is a trustee. A mortgage of the immovable properties ....
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....e on the said deed in the State of Maharashtra and duty paid in the State of Gujarat. In the petition, there is a challenge to the demand and, in the alternative, to the constitutional validity of the provisions of the said Act as in other petitions. 5. In Writ Petition No.2194/1988, none has appeared for the petitioners for pressing the petition on merits. However, we find that the challenge is similar as in the other petitions. 6. In Writ Petition No.2280/1988, a similar deed was executed by the first petitioner­ company in the State of Gujarat. Stamp duty was paid and the deed was registered in the State of Gujarat as in other cases. A verified copy of the said deed was filed with the office of the Registrar of Companies at Mumbai pursuant to the provisions of the Companies Act for the purpose of registration of charge as the registered office of the first petitioner is in Mumbai. In this petition, the challenge is to the similar demand of difference in the duty. A prayer is made in the petition for making a reference under section 54 of the said Act on the question whether any stamp duty is payable in the State of Maharashtra on the copy of the deed which is registere....
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....or it any other enactment, unless it is proved that the duty chargeable under this Act has been paid,­­ (a) on the principal or original instrument, as the case may be, or (b) in accordance with the provisions of this section, the duty chargeable on an instrument of sale, mortgage or settlement other than a principal instrument or on a counterpart, duplicate or copy of any instrument shall, if the principal or original instrument would, when received in this State have been chargeable under this Act with a higher rate of duty, be the duty with which the principal or original instrument would have been chargeable under section 19. (2) Notwithstanding anything contained in any enactment for the time being in force, no instrument, counterpart, duplicate or copy chargeable with duty under this section shall be received in evidence unless the duty chargeable under the section has been paid thereon: Provided that any Court before which any such instrument, duplicate or copy is produced may permit the duty chargeable under this section to be paid thereon and may then receive it in evidence." "19. Payment of duty on certain instruments liable to be increased duty in ....
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....and 6. Relying on the definition of " instrument" under section 2(l) of the said Act, it was submitted that a copy of the deed does not create or purport to create, transfer or extinguish any right. Reliance was placed on the decisions of the Apex Court in the case of Jupudi v. Pulavarthi AIR 1971 SC 1070 and Hariom Agrawal v. Prakash Chand Malviya (2007) 8 SCC 514. Reliance was also placed on the decision of a Full Bench of the Gujarat High Court in the case of Chief Controlling Revenue Authority v. Nutan Mills Ltd. AIR 1978 Gujarat 1. It was pointed out that by Maharashtra Act No.XI of 1998, first proviso was inserted in Section 3 which provides that stamp duty will be payable even on a copy or facsimile image of an instrument, if full stamp duty on the original is not paid. It was submitted that this shows that till the Maharashtra Act No.XI of 1998 came into force, stamp duty was not payable on a copy of an instrument. It was submitted that the amendment made to Section 3 was not retrospective. Reliance was placed on the decision of the Apex Court in the cases of Ruby Sales and Services (P) Ltd. v. State of Maharashtra and others (1994) 1 SCC 531 as well as Jupudi Kesava Rao....
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....tate of West Bengal AIR 1963 SC 1307. He relied upon paragraph16 of the said decision. He submitted that liability will arise when the instrument is executed in one State is used for doing things in another State. In such a case, the liability to pay stamp duty will arise in both the States. Inviting our attention to Section 125 of the Companies Act, he urged that even going by the case of the petitioners, the verified copies of the instruments executed in the State of Gujarat were filed with the Registrar of Companies in Mumbai for the purposes of registration of the charge of mortgage. He invited our attention to the provisions of the said Act as it stood in January 1992. He submitted that under clause (b) of sub­section (1) of Section 7, a duty was always payable on a copy of the instrument. He submitted that even without amendment to Section 3 made by adding a proviso, stamp duty was always leviable on a copy of the instrument covered by clause (b) of sub­section (1) of Section 7 of the said Act. He submitted that in the present case, differential duty has been charged in accordance with Section 19 of the said Act. He submitted that even a true copy of the instrument wh....
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....n 3, at the relevant time, did not refer to a copy of an instrument and it referred to only an instrument. It is also true that at the relevant time, the proviso to Section 3 which deals with the copies of the instruments was not on the statute book. Section 4 provides that where, in case of any sale or mortgage or settlement, several instruments are employed for completing the transaction, only the principal instrument is chargeable with duty prescribed in Schedule­I and each of the other instruments shall be chargeable with a duty of ten rupees instead of the duty prescribed for it in the Schedule­I. Section 5 provides that any instrument comprising or relating to several distinct matters shall be chargeable with the aggregate amount of the duties with which separate instruments, each comprising or relating to one of such matters, would be chargeable under the said Act. Section 6 provides that subject to the provisions of Section 5, an instrument so framed as to come within two or more of the descriptions in Schedule­I shall be chargeable only with the highest of such duties when the duties chargeable are different. Section 7 has a title "Payment of higher duty in res....
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....­section (1) of Section 7 which is a charging section, by a legal fiction makes Section 19 applicable to a copy of an instrument to which clause (b) of sub­section (1) of Section 7 is applicable. That is how, in the case of a copy of the instrument to which provisions of clause (b) of sub­section (1) of Section 7 are applicable, the duty as provided under Section 19 will be chargeable. Section 19 comes under the sub­heading (C) "Of the time of Stamping Instruments". Section 19 is applicable to an instrument of the nature described in any article in Schedule­I and relating to any property situate or to any matter or thing done or to be done in the State is executed out of the State and is subsequently received in the State. In such a case, an amount of duty chargeable on such instrument shall be the amount of duty chargeable under Schedule­I on a document of the like description executed in this State less the amount of duty, if already paid under any law in force in India. As stated earlier, Section 7 which is a charging section specifically provides that the duty under Section 19 will be payable on a copy of the instrument to which provisions of clause (b) ....
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....r of Companies in a Register of charge as provided in Section 130 of the Companies Act. Thus, in the cases in hand, copies of the deeds executed outside the State were brought into State for a thing to be done in the State. In the circumstances, in view of Section 7 read with Section 19 of the said Act, differential stamp duty was payable on the verified copies of the deeds in question brought into the State and submitted to the Registrar of Companies at Mumbai in accordance with Section 125 read with section 130 of the Companies Act. 15. Though we are not concerned with the proviso which was added by the Maharashtra Act No.XI of 1998 to Section 3, we may note here that the effect of the proviso is that a copy or extract or a facsimile image or otherwise of the original instrument on which stamp duty is chargeable under the provisions of this section, shall be chargeable with full stamp duty as provided in Schedule­I, if the proper duty payable on such original instrument is not paid. The proviso operates in a completely a different field. It will apply when the original document is executed in the State but stamp duty is not paid on the same. In such a case, stamp duty will....
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.... in paragraph 13 has held that there is no scope for inclusion of a copy of a document as an instrument for the purpose of the Stamp Act. It was held that Section 35 only deals with original instruments and not the copies thereof. In the case in hand, under sub­section (2) of Section 7 of the said Act, even a copy of the instrument covered by clause (b) of subsection (1) of Section 7 cannot be received in evidence unless duty chargeable thereon is fully paid. Therefore, the said decision will not help the petitioners. 18. In the case of Hariom Agrawal v. Prakash Chand Malviya (supra), the Apex Court was dealing with a photostat copy of the instrument/ agreement produced as a secondary evidence when on the original document proper stamp duty was not paid. The question was whether such a copy can be impounded under the provisions of the Indian Stamp Act as amended by the Madhya Pradesh amendment. After considering the provisions of Sections 33 and 35 of the Indian Stamp Act, the Apex Court came to the conclusion that a copy of the instrument cannot be impounded. Even this decision will have no application as the issue which arises in the cases in hand never arose before the Ap....
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....a), it was urged that the word "instrument" can only include the original document and not a copy thereof. 21. Entry 91 of List­I reads thus: "91. Rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts." Entry 66 of List­II reads thus: "63. Rates of stamp duty in respect of documents other than those specified in the provisions of List I with regard to rates of stamp duty." Both the entries do not contain the word "instrument". It is true that the Apex Court in the case of Bar Council of UP vs. State of UP has observed that Entry 91 of List­I refers to "instruments". There are judicial pronouncements which hold that the word "instrument" occurring in the definition clauses of both the Indian Stamp Act and the said Act refers only to an original instrument and not to a copy of an instrument. The argument is that both the above entries in Schedule VII relate only to instruments and not the copies thereof and therefore, the provision of section 7 of the said Act lacks legislative competence in so far as it seeks to levy stamp ....
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....wer and wherever the question of legislative competence is raised the test is whether the legislation, looked at as a whole, is substantially 'with respect to' the particular topic of legislation. If the legislation has a substantial and not merely a remote connection with the entry, the matter may well be taken to be legislation on the topic." 70. This Court, while referring to the principles of interpretation of entries in the legislative lists, expanded the application to all ancillary or subsidiary matters in Jijubhai Nanabhai Kachar v. State of Gujarat [1995 Supp (1) SCC 596] and held as under: (SCC p. 609, para 7) "7. It is settled law of interpretation that entries in the Seventh Schedule are not powers but fields of legislation. The legislature derives its power from Article 246 and other related articles of the Constitution. Therefore, the power to make the Amendment Act is derived not from the respective entries but under Article 246 of the Constitution. The language of the respective entries should be given the widest scope of their meaning, fairly capable to meet the machinery of the Government settled by the Constitution. Each general word should extend to ....