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2023 (11) TMI 1158 - HC - Indian LawsRefund of stamp duty - Stamp papers purchased for registration of immovable property but the same could not be executed - Retention of 10% of the stamp duty - Constitutional Validity of Section 54 of the Indian Stamp Act, 1899 - ultra vires of Articles 265 and 300A of the Constitution of India or not - challenge to Section 54(c) of the Act as being ultra vires of Articles 14, 265 and 300A of the Constitution of India. The refund claim rejected on the ground that the said application was filed beyond the period of six months from the date of purchase of the E-stamp Certificate. HELD THAT:- It is settled law that stamp duty is chargeable on the instruments as stipulated in the said Schedule and not the transactions in respect of which the instrument is executed - It is apparent that, the duties in respect of which instruments are chargeable are to be reflected by stamps on those instruments. In terms of Section 11 of the Act, certain instruments may be stamped with adhesive stamps. Section 12 of the Act mandates that adhesive stamps be cancelled once used so that the same cannot be used again. It is well settled that the right to refund the tax collected is governed by the statute governing the said tax. An assessee who has paid tax does not have any inherent right for refund of tax paid. In view of the above, the petitioner’s contention that the provisions of Section 50(2) of the Act, which provides for retention of 10% of the allowance for stamps is ultra vires to Article 265 of the Constitution of India or falls foul of Article 300A of the Constitution of India, is unmerited. Section 49 of the Act provides for allowance for spoiled stamps. In terms of Clause (a) of Section 49 of the Act, a Collector can make an allowance in respect of a stamp inadvertently and undesignedly spoiled, obliterated or by error in writing or any other means rendered unfit for the purpose intended, prior to the instrument being executed. Further, an application for allowance is required to be made within the period as prescribed under Section 50 of the Act - Although, a Collector can make an allowance for the stamp paper only if an application is made within the period as prescribed. The life of the stamp paper is not circumscribed by Section 54(c) of the Act. In the present case, the petitioner has been denied the refund as the condition under Section 54(c) of the Act has not been satisfied. However, if the stamp papers available with the petitioner are inadvertently obliterated or spoiled, the petitioner would have two months thereafter to apply for a refund of the stamp paper due. In our view, if the provisions of Section 54 of the Act are read in the aforesaid manner, the same are clearly arbitrary and unreasonable and are liable to be declared as ultra vires Article 14 of the Constitution of India - It is a well settled that a legislative enactment is presumed to be constitutionally valid unless it is found to be contrary. Additionally, it is also a well settled principle that the courts will, in so far as possible, construe a statute in a manner so that it does not fall foul of the constitution. The denial of refund of the stamp duty collected even though no duty is payable because the charging event has not occurred and the cause of action for claiming the refund has not arisen, militates against the scheme of providing for allowance of stamps. Clearly, if the provisions of the Act are construed in a manner so as to permit collection and retention of stamp duty, which is not chargeable without any recourse for refund whatsoever, it would run contrary to the scheme of the Act. If Section 54 of the Act is read as restricting the right for seeking refund in a case such as the present one, it would suffer from the vice of arbitrariness and fall foul of Article 14 of the Constitution of India. The present petition is disposed off by directing the Collector to process the petitioner’s claim for the refund of stamp paper (to the extent of 90% of the E-stamp paper) within a period two weeks from date.
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