TaxTMI 
TaxTMI 
2025 (3) TMI 60
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.... The appellants herein were desirous of purchasing an immovable property in New Delhi. For that purpose, they purchased the e-stamp paper dated 06.07.2016 valued at Rs. 28,10,000/- (Rupees Twenty Eight Lakh Ten Thousand Only). The money for that purpose was paid from the joint bank account of the appellants being husband and wife respectively. The e-stamp paper which came to be purchased was dated 06.07.2016. 5. We borrow the other relevant facts from the judgment and order passed by the learned Single Judge dated 20th August, 2018 more particularly, from paragraph 4.3 therein:- "4.3 Pertinently, the e-stamp paper dated 06.07.2016 purchased by the petitioners, sets down the following details: (i) Particulars of the property, which was proposed to be purchased; (ii) the names of the parties, who intended to execute the sale deed; (iii) the consideration to be paid for consummating the sale transaction; and (iv) the value of e-stamp paper. 4.4 According to the petitioners, though initially, the intention was to execute the sale deed concerning subject property in July,2016, since, there was some delay in closing ....
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....almost instantaneously; and second, the misplaced or lost estamp paper dated 6.7.2016 could not be used for any other purpose except that, which stood specified in the e-stamp paper. It was emphasized that given that fact that via a fresh e-stamp paper dated 6.8.2016, transaction qua the stamp paper dated 6.7.2016 had been consummated, the lost e-stamp paper had lost its legal efficacy and thus, could not be misused by anyone else. 5.4 As is evidence that both these assertions were made by the petitioners to allay the apprehensions of respondent No. 2. 5.5 However, the petitioners' plea for refund of stamp duty did not cut much ice with the respondents and, consequently, vide order dated 21.10.2018, the Collector of Stamps (HQ) rejected the petitioners' application dated 11.8.2016 maintained for refund of stamp duty. 6. Aggrieved by the impugned order dated 21.10.2016, the petitioners have preferred by the instant writ petition." 6. The learned Single Judge adjudicated the writ petition and ultimately thought fit to partly allow the same. The learned Single Judge issued a writ of mandamus to the respondents herein to refund a sum of Rs. 28,10,000/- wit....
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....e of tax. If that be the position, could the respondents retain money in anticipation of the taxing event occurring? Article 265 of the Constitution provides that no tax shall be levied or collected except by authority of law. Therefore, emphasis is not only on no tax being levied without the authority of law, but is also on collection of tax without authority of law. 22. Therefore, in my view, the continued retention of amount paid towards anticipated stamp duty in the hands of the respondents is illegal. The apprehension expressed by the respondents that there was a possibility of the lost e-stamp paper being misutilized seems to be tenuous for the following reasons: (i) First, the particulars of the transaction, parties and the consideration have already been incorporated in the lost e-stamp paper. (ii) Second, with the technological innovation in place, the said information would be available and anyone trying to use the lost e-stamp paper can easily be found out. In any event, the fact the lost e-stamp paper dated 06.07.2016 adverts to the same property qua which sale transaction stands effected via the new stamp paper dated 06.08.2016, the possibili....
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....re a person, inadvertently, uses on an instrument chargeable with duty, a stamp of a description other than that prescribed for such an instrument - was available to the petitioners for refund of stamp duty. According to the Court, if the date of execution of the instrument is taken as the date which would determine as to what would be the admissible stamp duty that had to be levied on the instrument (i.e. the conveyance) then, the petitioner's case would fall within the ambit of the provisions of Section 52 of the Act, as excess duty had been, inadvertently, paid by the petitioners since the notification reducing the rate of stamp duty and transfer duly stood published prior to the execution of the instrument in that case. 23.5 This apart, the Court observed that even if it is assumed that Section 52 of the Act was not applicable, the petitioners would be entitled to refund of stamp duty as the State could not retain the stamp duty in view of the provision of Article 265 of the Constitution. The relevant observations made by the Court are as follow: "....11. Even as regards applicability of Section 52 of the Act, the matter can be looked at in another perspective....
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.... Statute and can, therefore, only operate within its periphery, has to be answered, in my opinion, in the same vein. While one cannot quibble with the proposition that the statutory authority has to necessarily act within the ambit of the statute which forms the basis of its nativity, the extent and amplitude of its power will, however, be governed by the provision of the Constitution. There being no prohibition in the Act for grant of refund for lost stamp paper, surely the Collector of Stamps cannot collect or retain what lawfully does not belong to the State. 24. Interestingly, our neighbouring country i.e. Pakistan, which has a somewhat similar Statute, dealing with the levy collection and refund of stamp duty, is beset with difficulties which are akin those faced by applicant(s), in our country, seeking refund of stamp duty on account of loss of stamp paper. This aspect, I came across upon a judgment dated 23.02.2016, delivered by the Lahore High Court, in Writ Petition No. 27935 of 2012, titled: Aziz Ullah Khan Vs. Government of the Punjab etc., being brought to my notice. 24.1 The Court in that case was faced with a question as to whether refund of stamp du....
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....ach should be followed. As far as the case in hand is concerned, when a via media has been provided in the event of loss of Stamp Papers during transit by the public functionaries, how the petitioner can be deprived of such facility. It is not the case of the respondents that the case of the petitioner is not covered under Rule 32 of the Rules, 1954. The apex Court of the country, in H.R.C. No.40927-S of 2012 Application by Abdul Rehman Farooq Pirzada (PLD 2013 SC 829) while highlighting the principles of interpretation of statutes by the superior Courts has inter-alia held as under:- "The interpretation cannot be narrow and pedantic but the Courts' efforts should be to construe the same broadly, so that it may be able to meet the requirements of an ever changing society. The general words cannot be construed in isolation but the same are to be construed in the context in which they are employed. In other words, their colour and contents are derived from the context." Further, a Full Bench of this Court in the case of Rub Nawaz Dhadwana Advocate etc. v. Rana Muhammad Akram Advocate etc. (W.P. No. 16793 of 2014) while dealing with the powers of the superior Cou....
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....ther sum of more than one million rupees for the same purpose. 12. Learned Additional Advocate General has forcefully argued that worth of the Stamp Papers is equal to those of currency notes and no refund against the currency notes is permissible in case where the original are not produced. To the extent of worth of Stamp Papers equal to currency notes, I agree with the learned law officer, however, to the extent of criteria explained by him regarding refund of currency notes I have contrary view for the reason that in case of currency notes its custodian is always considered its lawful owner and it cannot be proved as to which specific currency note was in possession of a particular person whereas in the case of Stamp Papers entitlement of a person can be certified firstly from the National Exchequer where price of the Stamp Papers has been deposited, secondly from the register of Stamp Vendor and thirdly from the authorities before whom the same was presented. Insofar as the case in hand is concerned, all the authorities have admitted that the Misplaced Stamp Papers were issued to the petitioner after payment of consideration and those were never utilized for any other ....
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...." The afore-quoted portion of the judgment of apex Court of the country renders it more than clear that nobody can be left remediless. Moreover, while dealing with the matters of masses they cannot be penalized due to stagnant attitude of the legislator about new Issues. Insofar as case in hand is concerned, request of the petitioner deserves sympathetic consideration for the reason that after completion of codal formalities his request has been turned down mainly on the ground that original Stamp Papers have not been produced. At the cost of repetition it is observed that when the legislator itself has held that Collector can refer matter of refund against unused stamp papers even without producing the original one the stubbornness on the part of competent authority in this regard is not understandable. Public functionaries are supposed to eliminate difficulties of public-at-large but when they themselves try to impede their way to have their legitimate right the entire threadbare of our society would be devastated. 17. Now taking up plea of learned Additional Advocate General that if refund is allowed even in cases where the original Stamp Papers are not produce....
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....f Section 6D of the aforementioned Act. It is in this context that the Court observed that Section 6D was a self-contained provision. In my view, there is nothing in the judgment, which would help the cause of the respondents. 26.2 Likewise, the judgment of the Supreme Court rendered in State of Maharashtra & Ors. case, does not support the respondent's case. This was a case where the respondent company, which was the owner of multiplex cinema theatre had collected entertainment tax at rate of 45% during the period when it was either not liable to pay such tax or was required to pay tax at a concessional rate i.e., 25%. The State attempted to reclaim the benefit, which had accrued to the respondent company as they had recovered excess entertainment tax from the cinema goers. Consequently, demand notices were issued by the State in that behalf. The demand notices issued were challenged. The High Court allowed the writ petition. The Supreme Court reversed the decision of the High Court. 26.3 While doing so, the Supreme Court made an interesting distinction between the doctrine of unjust enrichment as opposed to doctrine of retention. While drawing a distinction ....
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....od conscience belongs to someone else. It must be directed to restitute that part of the benefit to which it was not entitled to. 37. We, therefore, direct that the State shall realise the amount to the extent the respondent had unjustly enriched itself and pay the same to a voluntary or a charitable organisation, which according to it is a reputed civil society organisation and had been rendering good services to any section of the disadvantaged people and in particular women and children. We would request the Hon'ble the Chief Minister of the State to take up the responsibility in this behalf so that full, proper and effective utilisation of the amount in question is ensured..." (Emphasis is mine) 26.4 Insofar as Mafatlal Industries Ltd. case is concerned, the Supreme Court was considering the scope, ambit and extent to which doctrine of unjust enrichment would apply, the Court laid down various propositions of law, which I need not advert to as none of them, in my opinion, would help the cause of the respondent. 26.5 I may, however, indicate that the Court, inter alia, ruled that where the provisions of a statute provided for refund, the r....
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....Single Judge. 8. Counsel for the respondent has pointed out that the issue of interest was never raised by the appellant(original petitioner) when the writ petition was argued by the original petitioner." 11. The appeal Court seems to have taken the view that the issue as regards payment of interest was sought to be raised for the first time in appeal and had not been seriously raised before the learned Single Judge. 12. In such circumstances, referred to above, the appellants are here before this Court with the present appeal. 13. We heard Mr. Abhishek Puri, the learned counsel appearing for the appellants and Ms. Jyoti Mehandiratta, the learned counsel appearing for the respondents. 14. The short point that falls for our consideration is whether in the facts and circumstances of the case, the appellants herein are entitled to claim interest on the refunded amount of Rs. 28,10,000/- referred to above. 15. The submission of the learned counsel appearing for the respondents that there is no provision in the statute for the payment of interest on refund of the amount of the e-stamp paper that was lost by the appellants herein, is without any merit. The subject....
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....e Code. 21. The essence of interest as held in the case of Lord Wright in Riches v. Westminister Bank Ltd., 1947 (1) ALL ER 469, at page 472, is that it is a payment, which becomes due because the creditor has not had his money at the due date. It may be recorded either as representing the profit he might have made if he had had the use of the money, or, conversely, the loss he suffered because he had not that use. 22. In the case of Commissioner of Income Tax v. Dr. Sham Lal Narula, AIR 1963 Punjab 411, a Division Bench of the High Court of Punjab articulated the concept of interest as under:- "The words 'interest' and 'compensation' are sometimes used interchangeably and on other occasions they have distinct connotation. "Interest" in general terms is the return or compensation for the use or retention by one person of a sum of money belonging to or owed to another. In its narrow sense, 'interest' is understood to mean the amount which one has contracted to pay for use of borrowed money. ......... In whatever category "interest" in a particular case may be put, it is a consideration paid either for the use of money or for forbearance in demanding it, after it has f....
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....ase, the doctrine of restitution is attracted, interest should follow. Restitution in its etymological sense means restoring to a party on the modification, variation or reversal of a decree or order what has been lost to him in execution of decree or order of the Court or in direct consequence of a decree or order. The term "restitution" is used in three senses, firstly, return or restoration of some specific thing to its rightful owner or status, secondly, the compensation for benefits derived from wrong done to another and, thirdly, compensation or reparation for the loss caused to another. 26. In Hari Chand v. State of U.P., 2012 (1) AWC 316, the Allahabad High Court dealing with similar controversy in a stamp matter held that the payment of interest is a necessary corollary to the retention of the money to be returned under order of the appellate or revisional authority. The High Court directed the State to pay interest @ 8% for the period, the money was so retained i.e. from the date of deposit till the date of actual repayment/refund. 27. In the case of O.N.G.C. Ltd. v. Commissioner of Customs Mumbai, JT 2007 (10) SC 76, (para 6), the facts were that the assessment ord....
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....lity if such be the result; remuneration for the injury directly, and proximately caused by at breach of contract or duty; remuneration or wages given to an employee or officer." 29. In the case of Union of India through Director of Income Tax v. Tata Chemicals Ltd., (2014) 6 SCC 335, this Court held that when the collection is illegal, the Revenue is obliged to refund such amount with interest as money so deposited was retained and enjoyed by it. No discrimination can be shown between the assessee and Revenue in paying interest on the refund of tax. Money received and retained without right, carries with it the right to interest. There being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, the Government cannot shrug off its apparent obligation to reimburse the deductors lawful monies with accrued interest for the period of undue retention of such monies. Obligation to refund money received and retained without right implies and carries with in the right to interest. The relevant observations are as under:- "Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or adva....