TMI Blog1976 (10) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the Legislature failed to carry out its object completely inasmuch as it failed to make a provision in respect of collection of such duty if the document was already acted upon. 2. The history of the matter culminating in the present reference requires to be stated briefly. The Nutan Mills Limited (hereinafter referred to as the Company ) is a public limited Company having its registered office at Ahmedabad. A charge in relation to its immovable property situated at Ahmedabad was created in favour of the Bank of Baroda by issuance of debenture. In respect of this transaction a Debenture Trust Deed was executed between the Company on one hand and the Bank of Baroda at Bombay on the other. The Company approach ed the competent authority at Bombay for adjudication with regard to the proper stamp duty payable thereon in accordance with the Stamp Act applicable to the State of Maharashtra. In accordance with the adjudication stamp of ₹ 67,516.50 was affixed on the document in question. Now,/even though the properties on which the charge was created are situated at Ahmedabad, it is permissible under the relevant provisions of law to have the Trust Deed registered at Bombay u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction. The Registrar of Stamps addressed a letter to the Company on September 10. 1971 (Annexure C ) and called upon the Company to explain why the document was registered in Bombay though the Properties were situated in Ahmedabad and to explain why the differential stamp duty was not paid up within three months of the receipt of the copy in Gujarat. After taking into account the explanation offered by the Company and hearing the advocate of the Company, the Collector and Assistant Superintendent of Stamp. Gujarat State, Ahmedabad, by his order, Annexure Fly, dated January 15, 1972 directed the Company to make good the differential stamp duty of ₹ 67,500/- which represented the difference between stamp duty payable at the Gujarat rate and the duty Payable at the Maharashtra rate as also a sum of ₹ 32,500/- by way of penalty. Thereupon the Company invoked the revisional jurisdiction of the Chief Controlling Revenue Authority (hereinafter referred to as the Revenue Authority ) by way of an application under Section 53 of the Act. The Revenue Authority was of the Opinion that the determination made by the Collector was Proper but, in exercise of the suo motu powers unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and at the same time and by the same person 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 x x x x x x x The original instrument creating the charge if it were received in the Gujarat State would attract the differential stamp duty representing the difference between the Gujarat rate and the Maharashtra rate in view of the aforesaid provision. This position is not disputed by the Company for it is incapable of being disputed. In the present case. however, what has been received in Gujarat is a copy of the original instrument by which charge was created. In regard to such a copy it is claimed by the revenue that differential duty is payable even on such a copy even if the original instrument is not received in Gujarat. Reliance is placed in this connection on Section 7 of the Act which is in the following terms- 7. (1) Notwithstanding anything contained in Section 4 or 6 or any other enactment, unless it is proved that the duty chargeable under this Act has been paid,- (a) on the principal or original instrument, as the case may be, or (b) in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been enacted for the manifest purpose of achieving the same goal in the context of a counterpart, a duplicate or a copy of an instrument. We have, therefore, no doubt that even a copy of any instrument which is-liable to differential stamp duty under Section 19 is liable to such duty in view of sub-section (1) of Section 7. Counsel for the Company, however, contends that though sub section (1) of Section 7 so provides for payment of duty and can be construed as a charging section, it does not provide as to when the duty would become, payable. In other words, it is argued that sub-see. (1) of S. 7 refers to the chargeability of the copy to differential duty treating it as if the original document was received in the State, the section does not provide for the time of payment of duty or the time at which the liability effective and purposeless. I would be attracted. We are unable to accede to this submission for such a construction would render the provision ineffective and purposeless. In our opinion, sub-section (1) of S. 7 clearly provides that a copy of the instrument will attract a differential duty at the same rate as provided in S. 19 and also at the same point of time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer who is charged with the duty of discharging his functions under the Companies Act and it is a part of his duty to effect registration under S. 125 in respect of a charge created by a Company. Under S. 125 the Company can produce the original instrument by which the charge is created or a copy thereof verified in the prescribed manner. When however, a copy is produced the Registrar of Companies has to examine and to satisfy himself that the document is duly stamped under the Stamp Act. If in his opinion, the document is duly stamped, he can proceed to effect the registration under S. 125 and the relevant provisions of the Companies Act. If, however, he is of the opinion that the document is not properly stamped as required by the relevant provisions of the Stamp Act, he must refuse to act on it. A public officer can refuse to take cognizance of a document which is not duly stamped in accordance with the required provisions of the Stamp Act. But the questions as to whether he can send it to the Collector and the Collector can impound it. Now, the facts as we find in the case started by the Revenue Authority would go to show that the document in question was impounded by the colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not properly stamped, could send the document to the Collector for appropriate action and unless the power to determine the question in such circumstances was located in a specific section of the Stamp Act, it cannot be said that the document had come to the Collector in the performance of his function. We are not prepared to uphold the contention urged on behalf of the Company for in our opinion there is no warrant of justification for construing the aforesaid expression in such a narrow fashion. It is not necessary that the function must be in terms spelled out by a particular section. The question must be approached in a broad common sense fashion so that the provision is not rendered ineffective and inoperative except in the context of a proceeding under S. 31. In our opinion, the question which must be posed is, is it the business of the Collector and Assistant Superintendent of Stamps to ascertain and determine the proper stamp due payable on a , document or is it a matter with which he has no concern? Is it or is not a part of his official duty to determine what is the appropriate stamp duty payable on a document? In other words, when the Collector is required to determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeds or falls short of Eve rupees: xx xx xx The expression employed by S. 39 is instrument . Now, S. 2(1) of the Stamp, Act which defines instrument is in the following terms-- 2(1) instrument includes every document 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 not, bill of lading, letter of credit, policy of insurance, transfer of share, debenture, proxy and receipt; At this - point of time it must be recalled that we have already record ed a finding to the effect that a copy of a document creating a charge is also liable to stamp duty under S. 7 read with S. 19 of the Stamp Act. The question which now arises is as to whether a copy of such an instrument can itself fall within the four walls of the expression instrument within the meaning of S. 39 read with S. 2(1) of the Stamp Act. If it answers the description of an instrument under S. 2(1), then the Collector can recover the deficit stamp duty and also impose penalty under S. 39. It must be realised that this question has arisen in the context of a penal provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has been employed in the context of a provision under which penalty can be imposed. And if the copy of the original Instrument cannot be said to be instrument within the meaning of S. 39 read with S. 2(1) of the Stamp Act, the question posed by the Revenue authority viz. whether the Collector can impound a document and order the levy of duty and penalty must be answered against the Revenue Authority. The result would be that though differential duty is payable under S. 7 read with S. 19 of the Stamp Act in respect of a copy of an instrument creating a charge, the copy cannot be possible to hold that the copy of impounded and neither the duty nor original instrument is a document the penalty can be levied, for the which by itself creates any right or counsel for the revenue is unable to liability. The right or the liability point out any provision under which as the case may be, is created by the duty or Penalty can be recovered if original instrument and not by its the copy cannot be said to be instrument copy. So also it cannot be said that within the meaning of S. 39. the copy purports to create a right or By some mischance it appears to have a. liability. The expression ins ..... X X X X Extracts X X X X X X X X Extracts X X X X
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