TaxTMI 
TaxTMI 
2024 (9) TMI 106
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....ent of sale dated 29.06.1999 by the respondent. The other clauses covered by the agreement are not adverted to as part of the narrative, for they are of little relevance for disposing of the Civil Appeals. 5. It is alleged that the respondent, contrary to the possession given as part performance under the suit agreement, tried to dispossess the appellant. This led to exchange of notices between the parties. The sheet anchor in the appellant's narrative is that the agreement of sale dated 29.06.1999 exists between the parties, and in part performance thereunder, the appellant was put in possession of the plaint schedule property by the respondent. Contrary to the ad idem of the parties in putting the appellant in possession, the respondent was trying to dispossess the appellant from the plaint schedule property. Therefore, the suit was filed for the relief of perpetual injunction. Briefly narrated, the possession claimed under the agreement of sale is sought to be protected through the prayer for perpetual injunction. 6. The respondent denies the execution of the agreement of sale dated 29.06.1999. The appellant, since claims possession through the agreement of sale, the suit agre....
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....stamp duty payable on the instrument at Rs. 71,200/-. The trial court, by order dated 23.01.2019, directed the appellant to pay the deficit stamp duty of Rs.71,200/- and ten times penalty on the agreement of sale dated 29.06.1999. Thus, the total levy of stamp duty and penalty is Rs. 7,83,200/-. The appellant assailed the order dated 23.01.2019 in O.S. NO. 295 of 2013 in Writ Petition No. 30734 of 2019 before the High Court. The Writ Petition was dismissed, and the appellant was granted four months' time for payment of deficit stamp duty and the penalty. The appellant filed Review Petition No. 340 of 2019, and through the impugned order dated 14.09.2021, the Review Petition was dismissed. Hence, the Civil Appeals have been filed questioning the orders dated 23.01.2019 and 14.09.2021. 8. The learned Single Judge has, in great detail, referred to all the attending circumstances, appreciated their implication vis-à-vis the statutory obligation under the Act to pay ad valorem stamp duty on an agreement of sale satisfying the definition of a conveyance under the Act and dismissed the Review Petition. The findings, in brief, are as follows: 8.1. Section 33 of the Act requires th....
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....and penalty. The District Registrar has sent a report on the stamp duty payable but has not collected the deficit stamp duty or levied the penalty on the suit agreement. It is argued that the case falls under Section 37(2) of the Act, and the impugned orders have denied the appellant the option to have the penalty decided by the District Registrar. Therefore, the trial court and the High Court have committed an illegality by exercising the jurisdiction under Section 34 of the Act. 12. The learned Amicus Curie places reliance on Gangappa and another v. Fakkirappa (2019) 3 SCC 788, Trustees of H.C. Dhanda Trust v. State of Madhya Pradesh and others (2020) 9 SCC 510, Digambar Warty and others v. District Registrar, Bangalore Urban District and another ILR 2013 KAR 2099, K. Amarnath v. Smt. Puttamma ILR 1999 KAR 4634, Suman v. Vinayaka and others (2013) SCC OnLine Kar 10138, Niyaz Ahmed Siddique v. Sanganeria Company Private Limited (2023) SCC OnLine Cal 1391, United Precision Engineers Private Limited v. KIOCL Limited (2016) SCC OnLine Kar 1077, Chilakuri Gangulappa v. Revenue Divisional Officer, Madanpalle (2001) 4 SCC 197, and Sri. K. Govinde Gowda v. Smt. Akkayamma and others ILR ....
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....nt has not argued on the applicability of the clause dealing with possession in the agreement and requirement to ad valorem pay stamp duty. The relief of injunction is sought on the basis of delivery of possession by the respondent under the suit agreement. The following Judgments are relevant and are close in circumstance to the case on hand and are referred to. 14.1. Gangappa's case (supra), analysed a situation on an insufficiently stamped document produced before a court, and compared Sections 34 and 39 of the Act and held that the discretion conferred by the provision is different by the text and the context of these provisions. This Court upheld the ratio laid in Digambar Warty (supra) and held that even though no discretion was provided to the court to impose a reduced penalty, Section 38 of the Act empowered the Deputy Collector to refund the duty so collected. In paragraph 18 of the Judgment, it is recorded that: "18. The above view of the Karnataka High Court that there is no discretion vested with the authority impounding the document in the matter of collecting duty under Section 33, is correct. The word used in the said proviso is "shall". Sections 33 and 34 clearly....
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....t stamp duty and penalty. We are confirming the findings of the High Court in this behalf. The next question for consideration is whether in the facts and the circumstances of the case, the penalty determined by the Court on the instrument instead of sending the instrument to the District Registrar for determination and collection of penalty as may be applicable is legal. POINT II 16. Chapter IV of the Act is both mandatory and regulatory. Section 33 mandates every person having by law or consent of parties authority to receive evidence and every person in charge of public office (for short, 'Every Person/Court') when an instrument insufficiently stamped is produced, the person is mandated to impound the insufficiently stamped instrument. In law, the word impound means to keep in custody of the law. (2003) 3 SCC 674 Having taken legal custody of the insufficiently stamped document, the inter-play available between Sections 33, 34, 37, 38 and 39 of the Act, as the case may be, would start operating. Sub-section (2) of Section 33 of the Act fastens an obligation to examine the instrument on the duty payable, value etc. of the instrument. Unless it is duly stamped, Section 34 of th....
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.... agreement can be "cured." 17.2. In Hindustan Steel Limited v. Dilip Construction Company (1969) 1 SCC 597, this Court held that the Indian Stamp Act, 1899 is a fiscal measure intended to raise revenue, and the stringent provisions of the Stamp Act cannot be used as a weapon to defeat the cause of the opponent. The relevant paragraph reads thus: "7. The Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instruments: It is not enacted to arm a litigant with a weapon of technicality to meet the case of his opponent. The stringent provisions of the Act are conceived in the interest of the revenue once that object is secured according to law, the party staking his claim on the instrument will not be defeated on the ground of the initial defect in the instrument. Viewed in that light the scheme is clear." 17.3. The ratio in District Registrar and Collector v. Canara Bank (2005) 1 SCC 496 and State of Maharashtra v. National Organic Chemical Industries Limited (2024) SCC OnLine SC 497 and Chiranji Lal v. Haridas (2005) 10 SCC 746 reiterated that the Indian Stamp Act, 1899 is a piece of fiscal legislation, and not a remedial statute enacted o....
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....is set in motion, resulting in the instrument being sent to the District Registrar, and calling for a report. 19. A Three-Judge Bench of this Court in Trustees of HC Dhandha Trust v State of Madhya Pradesh (2020) SCC OnLine SC 753 held that in case of deficiency of Stamp Duty the Collector of Stamps cannot impose ten times penalty under Section 40(1)(b) of the Indian Stamp Act, 1899 (analogous to Section 39(1)(b) of the Act) automatically or mechanically. The relevant paragraph reads thus: " 22. The purpose of penalty generally is a deterrence and not retribution. When a discretion is given to a public authority, such public authority should exercise such discretion reasonably and not in oppressive manner. The responsibility to exercise the discretion in reasonable manner lies more in cases where discretion vested by the statute is unfettered. Imposition of the extreme penalty i.e. ten times of the duty or deficient portion thereof cannot be based on the mere factum of evasion of duty. The reason such as fraud or deceit in order to deprive the Revenue or undue enrichment are relevant factors to arrive at a decision as to what should be the extent of penalty under Section 40(1)(b....
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....or Chapter XXXVI of the Code of Criminal Procedure, 1898; (b) in the case of a Judge of the High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf. (3) For the purposes of this section, in cases of doubt, the Government may determine,- (a) what offices shall be deemed to be public offices; and (b) who shall be deemed to be persons in charge of public offices. , 34 Section 34: Instruments not duly stamped inadmissible in evidence, etc.- No instrument chargeable with duty shall be admitted in evidence for any purpose 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 public officer, unless such instrument is duly stamped: Provided that,- (a) any such instrument not being an instrument chargeable 1[with a duty not exceeding fifteen naye paise]1 only, or a mortgage of crop [Article 1[35]1 (a) of the Schedule] chargeable under clauses (a) and (b) of section 3 with a duty of twenty-five naye paise shall, subject to all just exceptions, be admitted in evidence on payment of the duty ....
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.... 1[Deputy Commissioner]1. [1. Substituted by Act 29 of 1962 w.e.f. 1.10.1962.] , and 39 Section 39: 1[Deputy Commissioner]1's power to stamp instruments impounded.- (1) When the 1[Deputy Commissioner]1 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 1[with a duty not exceeding fifteen naye paise]1 only or a mortgage of crop [Article 1[35]1 (a) of the Schedule] chargeable under clause (a) or (b) of section 3 with a duty of twenty-five naye paise, he shall adopt the following procedure:- [1. Substituted by Act 29 of 1962 w.e.f. 1.10.1962.] (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; an amount not exceeding ten times the amount of the proper duty or of the deficient porti....
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....Section 34 of the Act is titled instruments not duly stamped inadmissible in evidence. This provision bars the admission of an instrument in evidence unless adequate stamp duty and the penalty are paid. Every person so authorised to collect deficit stamp duty and penalty has no discretion except to levy and collect ten times the penalty of deficit stamp duty. 21.3. Section 35 of the Act is titled admission of instrument where not to be questioned. Section 35 prohibits questioning the admission of an insufficiently stamped instrument in evidence. 21.4. Section 37 of the Act is titled instruments impounded, how dealt with. This Section arises when the party pays the deficit duty and penalty, the Court is to impound the instrument under Section 33 of the Act and has to forward the instrument to the Deputy Commissioner/District Registrar. Subsection (2) of Section 37 of the Act deals with cases not falling under Section 34 and 36, and the person impounding an instrument shall send it in original to the Deputy Commissioner. This includes the exigencies set out in paragraph 21.1.1. 21.5. Being a regulatory and remedial statute, a party who follows the regulation, and pays the stamp du....