TMI Blog2018 (1) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down by the Apex Court. Liberal construction will have to be put so that it can be of a wide amplitude. The entry 63 will encompasses in itself even copies of instruments. Moreover, clause (b) of Subsection 1 of Section 7 is intended to ensure that no one evades the stamp duty payable on an instrument under the said Act by executing and stamping the original in another State where a lesser stamp duty is payable and thereafter, bring a copy thereof within the State for doing something on the basis of the rights and liabilities created by it. The legislative intent is to ensure that there is no evasion of duty on such instruments. The provision is to levy only a differential duty. There is no double taxation. We, therefore, reject the argument that Section 7 read with Section 19 in so far as the same apply to the copies of the instruments are not constitutionally valid. Hence, the petitions must fail. The writ petitions are accordingly rejected. - WRIT PETITION NO. 2519 OF 1988, 2488 OF 1988, 2534 OF 1988, 2194 OF 1988, 2280 OF 1988, 215 OF 1989, - - - Dated:- 9-1-2018 - A.S.OKA AND SMT.VIBHA V. KANKANWADI, JJ. Mr. Santosh Bharucha with Mr. Shrey Fatterpaker i/b. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in Mumbai, the charge of mortgage was required to be registered with the Registrar of Companies in Mumbai pursuant to the provisions of the Companies Act, 1956 (for short Companies Act ). In response to the query made by the second respondent the Superintendent of Stamps, the petitioners contended that the said original deed is not received in the State of Maharashtra. A demand in the sum of ₹ 3,66,220/ was made by the second respondent being the difference between the stamp duty payable on the said deed in the State of Maharashtra and the stamp duty paid in the State of Gujarat which is the subject matter of challenge in the petition. 3. In Writ Petition No.2488/1988, a similar deed was executed by the first petitioner company in the State of Gujarat. Stamp duty was paid and it was registered in the State of Gujarat. A copy of the said deed was filed with the Registrar of Companies in Mumbai for registering the charge as the registered office of the first petitioner is in the State of Maharashtra. A demand for the difference in the stamp duty payable in the State of Maharashtra and the stamp duty paid in the State of Gujarat was made by the second respondent. Tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciate the submissions made by the learned counsel for the parties, it will be necessary to make a reference to the provisions of the said Act as the same existed before it was amended by the Maharashtra Act No.XVII of 1993. The Sections which are relevant for our consideration are Sections 3, 7 and 19, which read thus: 3. Instruments chargeable with Duty. Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in Schedule I as the proper duty therefor respectively, that is to say (a) every instrument mentioned in Schedule I, which not having been previously executed by any person, is executed in the state on or after the date of commencement of this Act; (b) every instrument mentioned in Schedule I, which, not having been previously executed by any person, is executed out of the state on or after the said date, relates to any property situate, or to any matter or thing done or to be done in this State and is received in this State: Provided that no duty shall be chargeable in respect of (1) any instrument executed by or on behalf of, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any law in force in India excluding the State of Jammu and Kashmir on such instrument when it was executed; (b) and in addition to the stamps, if any, already affixed thereto such instrument shall be stamped with the stamps necessary for the payment of the duty chargeable on it under clause (a) of this section, in the same manner and at the same time and by the same persons as though such instrument were an instrument received in this State for the first time at the time when it became chargeable with the higher duty; and (c) the provisions contained in clause (b) of the proviso to sub section (3) of section 32 shall apply to such instrument as if such were an instrument executed or first executed out of this State and first received in this State when it became chargeable to the higher duty aforesaid, but the provisions contained in clause (a) of the said proviso shall not apply thereto. 9. The submissions made by the learned counsel representing the petitioners can be summarized as under: It is submitted that under Section 19(a) of the said Act, at the relevant time, the words a copy of the instrument were not present as the same were subsequently added by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of List II which deals with rates of stamp duty in respect of documents other than those specified in the provisions of List I is in relation to instruments and not any document. It was submitted that the State Legislature cannot levy stamp duty on a copy of an instrument as the relevant entry is in respect of instruments which do not include copies thereof. It was submitted that a word document used in Entry 63 of List II would have to be construed as an instrument as entry 91 of List 1 refers only to instruments and not to an ordinary document. It was submitted that even according to the provisions of the Indian Stamp Act, 1899 (for short Indian Stamp Act ), the stamp duty is leviable only on the instruments. Relying upon the decision of the Apex Court in the case of Bhopal Sugar Industries v. D.P.Dube AIR 1964 SC 1037, it was submitted that the State Legislature is powerless to enact a law providing for levy of stamp duty on a document which is not an instrument. Relying upon the decision of the Apex Court in the case of Bar Council of Uttar Pradesh v. State of U.P. (1973) 1 SCC 261, it was urged that both Entry 91 of List I and Entry 63 of List II are empowering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Schedule I prescribes the rates of stamp duty on various documents/instruments. The definition of instrument as contained in clause (l) of Section 2 of the said Act reads thus: 2. Definitions. In this Act, unless there is anything repugnant in the subject or context. .. .. .. .. .. . .. .. (l) instrument includes every documents by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded, but does not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of share, debenture, proxy and receipt 12. Firstly, we are dealing with the question whether the copies of the deeds which are the subject matter of these petitions were liable for payment of stamp duty under the said Act. In the present case, we were dealing with the said deeds styled as Debenture Trust Deeds which are executed in the State of Gujarat in respect of immovable properties in Gujarat. Under the deeds subject matter of these petitions, a mortgage of immovable properties was created in favour of a bank or a consortium of banks by way of security for the debentures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment shall, if the principal or original instrument, when received in the State would have been chargeable under the said Act with a higher rates of duty, be the duty with which the principal or original instrument would have been chargeable under Section 19. In the present case, the deeds have been executed and stamped in the State of Gujarat and, therefore, admittedly, the stamp duty chargeable under the said Act has not been paid on the original deeds. As stated earlier, the deeds create a mortgage in respect of immovable properties of the first petitioner Companies in Gujarat. It is also not in dispute that the deeds subject matter of these petitions, if received in the State, would have been chargeable under the said Act with a higher rate of duty. Sub section (1) of Section 7 provides that in case of a copy of any such instrument, stamp duty under the said Act will be payable which is equivalent to the duty with which the principal or the original instrument would have been chargeable under Section 19. Sub section (2) of Section 7 provides that a copy of the instrument chargeable with duty as provided in sub Section (1) shall not be received in evidence unless the duty charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies shall, so far as any security on the company' s property or undertaking is conferred thereby, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created or evidenced, or a copy thereof verified in the prescribed manner, are filed with the registrar for registration in the manner required by this Act within thirty days after the date of its creation: Provided that the Registrar may allow the particulars and instrument or copy as aforesaid to be filed within thirty days next following the expiry of the said period of thirty days on payment of such additional fee not exceeding ten times the amount of fee specified in Schedule X as the Registrar may determine, if the company satisfies the Registrar that it had sufficient cause for not filing the particulars, and instrument or copy within that period. (2) Nothing in subsection (1) shall prejudice any contract or obligation for the repayment of the money secured by the charge. (3) When a charge becomes void under this section, the money secured thereby shall immediately become payable. 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the copy of the instrument and ordering levy of duty and penalty under the provisions of Sections 33 and 39 of the Bombay Stamp Act, 1958? The first question was answered in the affirmative. Thus, in so many words the Gujarat High Court held that a copy of the instrument produced under Section 125 of the Companies Act though is not an instrument within the meaning of the said Act would be chargeable with the difference between the duty payable in accordance with sub section (1) of Section 7 read with Section 19 of the said Act and the duty payable under the Bombay Stamp Act as applicable to the State of Gujarat. The Full Bench clarified that such a copy of the original instrument cannot be called as an instrument within the meaning of Section 2 of the said Act. 17. Reliance was placed by the petitioners on a decision of the Apex Court in the case of Jupudi v. Pulavarthi (supra). The issue before the Apex Court was whether the reception of secondary evidence of a written agreement to grant a lease is barred by the provisions of Sections 35 and 36 of the Indian Stamp Act. The Apex Court considered the issue in the light of Section 33 of the Indian Stamp Act read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the constitutional validity of Section 7 in so far as it is applicable to the copies of the documents. It was pointed out that Entry 91 in List I of Schedule 7 of the Constitution of India deals with rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, etc. Entry 63 of List II deals with rates of stamp duty in respect of documents other than those specified in the entries in List I. It was submitted that the State Legislature is not competent to levy stamp duty on a copy of an instrument. It was urged that the word document used in Entry 63 of List II will have to be construed as an instrument. It was submitted that even according to the provisions of the Indian Stamp Act, stamp duty is leviable only on the instruments. Relying upon the decision of the Apex Court in the case of Bhopal Sugar Industries v. D.P.Dube (supra),it was submitted that the State Legislature is powerless to enact a law providing for levy of stamp duty on a document which is not an instrument. Relying upon the decision of the Apex Court in the case of Bar Council of Uttar Pradesh v. State of U.P (supra), it it is pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mprehensive interpretation. In order to see whether a particular legislative provision falls within the jurisdiction of the legislature which has passed it, the Court must consider what constitutes in pith and substance the true subject-matter of the legislation and whether such subject-matter is covered by the topics enumerated in the legislative list pertaining to that legislature. In the case of Offshore Holdings (P) Ltd. v. Bangalore Development Authority (2011) 3 SCC 139 , the Apex Court held thus: 67. The entries in the legislative lists are not the source of powers for the legislative constituents but they merely demarcate the fields of legislation. It is by now well-settled law that these entries are to be construed liberally and widely so as to attain the purpose for which they have been enacted. Narrow interpretation of the entries is likely to defeat their object as it is not always possible to write these entries with such precision that they cover all possible topics and without any overlapping. 69. A Constitution Bench of this Court in Ujagar Prints (2) v. Union of India [(1989) 3 SCC 488] described these entries and also stated the principles whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judgments cited above. (emphasis added) In the case of Indian Handicrafts Emporium v. Union of India (2003) 7 SCC 589 , in paragraph 62, the Apex Court held thus: 62. That the appellants used to trade in ivory stands admitted. They, thus, would come within the purview of the definition of trader also is undisputable. The manner in which despite legal ban on trade a person may not take recourse to illegal trading is a matter which squarely falls within the purview of the legislative competence. It is now well settled that Parliament can not only enact a law for avoidance or evasion of commission of an illegal trade but also may make law to see that the law is not evaded by taking recourse to machination or camouflage. The loopholes, if any, in such matters can and should be plugged. Means affecting means principle as adumbrated in United States v. Darby [312 US 100 : 85 L Ed 609 (1941)] is an illustration on the point. Both substantial and procedural provisions can be made to make a law in furtherance of the object for which the Act has been enacted and to see that what is sought to be prohibited directly may not be achieved by the traders indirectly. (e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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