TaxTMI 
TaxTMI 
2018 (12) TMI 2000
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.... to the Plaintiff to pay deficit duty and penalty vide order dated 27.09.2010. Plaintiffs challenged the order by means of Writ Petition Nos. 69264-65/2010 and 69263/2010 which were disposed of by the High Court vide its judgment dated 14.03.2013 directing the Principal Civil Judge to permit the Plaintiffs to place written submissions. After the order of the High Court, the Principal Civil Judge passed an order dated 22.04.2013 by which agreements to sell in question were admitted in evidence and marked for the Plaintiffs in O.S. Nos. 863 and 864 of 2008 on payment of deficit duty and penalty. Deficit duty in both the suits was determined as Rs. 12013/- and Rs. 20320/- respectively and the penalty imposed was double of the deficit duty in both the suits. 3. Aggrieved by the judgment of the Principal Civil Judge, Respondent-Defendant filed a writ petition in the High Court. The High Court disposed of the writ petition relying on a Division Bench judgment of Karnataka High Court in Digambar Warty and Ors. v. District Registrar, Bangalore Urban District and Anr., ILR 2013 KAR 2099. The High Court directed the courts below to levy the penalty at 10 times of the deficit duty as per jud....
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....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. 9. Section 34 provides that instruments not duly stamped are inadmissible in evidence. Section 34 Sub-section (1) which is relevant for the present case is as follows: 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) 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; 10. Section 38 empowers the Deputy Commissioner to refund penalty paid Under Sub-section (1) of Section 37. Section 39 relates to the Depu....
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....to ten times such duty or portion; 12. The statute envisages that when the 10 times of the amount of the proper duty or deficient portion thereof exceeds five rupees, a sum equal to 10 times of such duty or portion is the penalty. 13. The language of Section 34 provides a flat rate of penalty when the amount of proper duty exceeds five rupees i.e. 10 times of such duty or portion. There is a clear Contrast in the language of Section 34 and Section 39. Section 39 Sub-section (1) Sub-clause (b) is extracted for ready reference: 39(1)(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 portion thereof, whether such amount exceeds or falls short of five rupees: 14. The above provision indicated that if the Deputy Commissioner is of opinion that such instrument is chargeable with duty and is not duly stamped shall require the payment of the proper duty with a penalty of five rupees. The latter part of the prov....
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....t of duty and penalty levied in respect thereof, and shall send such amount to the Deputy Commissioner or to such person as he may appoint in this behalf. (2) In every other case, the person so impounding an instrument shall send it in original to the Deputy Commissioner. 16. Deputy Commissioner Under Section 38 is empowered to refund any portion of the penalty in excess of five rupees which has been paid in respect of such instrument. Section 38 Sub-section (1) again uses the expression "if he thinks fit". Thus, in cases where penalty of 10 times has been imposed, Deputy Commissioner has discretion to direct the refund of the penalty in facts of a particular case. The power to refund the penalty Under Section 38 clearly indicates that legislature have never contemplated that in all cases penalty to the extent of 10 times should be ultimately realised. Although the procedural part which provides for impounding and realisation of duty and penalty does not give any discretion Under Section 33 for imposing any lesser penalty than 10 times, however, when provision of Section 38 is read, the discretion given to Deputy Commissioner to refund the penalty is akin to exercise of the juri....
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....s correct. The word used in the said proviso is 'shall'. Sections 33 and 34 clearly indicate that penalty imposed has to be 10 times. The Division Bench of the Karnataka High Court in Digambar Warty and other (supra) has rightly interpreted the provisions of Sections 33 and 34 of the Act. We, thus, are of the view that the High Court in the impugned judgment did not commit any error in relying on the judgment of the Division Bench in Digambar Warty and others (supra). We thus has to uphold the above view expressed in the impugned judgment. 19. There is one more aspect which needs to be noted in the present case. We have seen that even though 10 times penalty has to be collected and imposed by the person impounding the document Under Section 37, Section 38 empowers the Deputy Collector to refund the duty. Learned trial court while imposing penalty at the rate of two times has given following reason: The Plaintiffs of O.S. No. 863/08 and 864/08 are stated to be agriculture and are residing at Sherewad village. The said fact is not denied by the Defendants therein. It appears that the agreements were prepared by local villagers who are not experienced in the documentation. ....