TMI Blog2023 (11) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 54 of the Indian Stamp Act, 1899 (hereafter the Act ), to the extent it provides for retention of 10% of the stamp duty, be declared as ultra vires of Articles 265 and 300A of the Constitution of India. The petitioner also impugns Section 54(c) of the Act as being ultra vires of Articles 14, 265 and 300A of the Constitution of India. In addition, the petitioner assails the order dated 20.02.2019 passed by respondent no. 2, Collector of Stamps/SDM (HQ) (hereafter the Collector ) whereby, the petitioner s application for a refund against E-stamp Certificate bearing No.IN-DL94299245494081N, was 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. FACTUAL CONTEXT 2. The petitioner is a company registered under the Companies Act, 1956 and was intending to purchase a land admeasuring 18 Bighas and 09 Biswas, titled, Khasra No. 31/11/1(2-6) 20/ 1 (4-00), 23/2 (3-04),24 (4-04) and 19/1(405), at village Rawta in Delhi (hereafter the subject property ). 3. On 19.09.2014, the petitioner filed an application with the concerned authorities (ADM, Government of NCT of Delhi) seeking p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the Act. Accordingly, the petitioner withdrew the said petition with liberty to file afresh, and, to challenge Section 54 of the Act. SUBMISSIONS 10. Mr. Parvinder Chauhan, learned counsel appearing for the petitioner submitted that the provisions of Section 54 of the Act are ultra vires of Articles 265 and 300A of the Constitution of India to the extent that it provides for retention of 10% of the stamp duty. He rested his challenge on the ground that the stamp duty is a levy payable on an instrument. Since in the said case the instrument for which the stamp paper was purchased (conveyance of the agricultural property) has not been executed, the charging event attracting the levy of stamp duty had not occurred. He contended that in the circumstances withholding of stamp duty would amount to collection of tax without the authority of law and thus, would violate Article 265 of the Constitution of India. He submitted that the State cannot withhold the amount which was paid in anticipation of a levy of tax considering that the charging event has not occurred. He submitted that the same would amount to expropriating the petitioner s property without the authority of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instrument at different times, first executed; 15. Section 2(12) of the Act posits the expression executed and execution when used with refence to an instrument to mean signed and signature . 16. Section 2(14) of the Act defines the term instrument as under:- (14) instrument (a) every document, by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded; (b) a document, electronic or otherwise, created for a transaction in a stock exchange, or depository by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded; and (c) any other document mentioned in Schedule I, but does not include such instruments as may be specified by the Government, by notification in the Official Gazette; 17. 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. 18. Section 9A of the Act also specifies the instruments chargeable with duty for transactions in stock exchanges and depositories. 19. Section 10 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19(1) of the Act, a bill of exchange is required to be stamped before it is presented for acceptance of payment. 22. The provisions, as mentioned above, make it clear that the incidence of tax is on an instrument and it is to be paid within the time as specified under Sections 17,18 and 19 of the Act. The stamps and stamp paper are only the means for payment of stamp duty. 23. Section 29 of the Act specifies the persons who are liable to pay the duties. 24. The machinery provisions for collection of stamp duty are thus, sale of stamps papers / e-certificates and adhesive stamps. In terms of Section 10(1) of the Act, except as otherwise provided, all duties with which instruments are chargeable are required to be paid and such payment is required to be indicated on the instruments by means of stamps. It is thus, apparent that, the machinery provisions of the Act do provide for collection of the tax by sale of stamps and stamp duties even prior to such instruments coming into existence. 25. All taxing statutes contain provisions for levy and charge of tax, assessment of tax, collection and recovery of tax, as well as punition for evading payment tax. In almost all legisla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r may, on application made within the period prescribed in section 50, and if he is satisfied as to the facts, make allowance for impressed stamps spoiled in the cases herein after mentioned, namely: (a) the stamp on any paper inadvertently and undesignedly spoiled, obliterated or by error in writing or any other means rendered unfit for the purpose intended before any instrument written thereon is executed by any person: (b) the stamp on any document which is written out wholly or in part, but which is not signed or executed by any party thereto: (c) in the case of bills of exchange [payable otherwise than on demand] or promissory notes (1) the stamp on [any such bill of exchange] signed by or on behalf of the drawer which has not been accepted or made use of in any manner whatever or delivered out of his hands for any purpose other than by way of tender for acceptance: provided that the paper on which any such stamp is impressed, does not bear any signature intended as or for the acceptance of any bill of exchange to be afterwards written thereon: (2) the stamp on any promissory note signed by or on behalf of the maker which has not been made use of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that the instrument is given up to be cancelled. Explanation . The certificate of the Collector under section 32 that the full duty with which an instrument is chargeable, has been paid is an impressed stamp within the meaning of this section. 50. Application for relief under section 49 when to be made. The application for relief under section 49 shall be made within the following periods, that is to say, (1) in the cases mentioned in clause (d) (5), within two months of the date of the instrument: (2) in the case of a stamped paper on which no instrument has been executed by any of the parties thereto, within six months after the stamp has been spoiled: (3) in the case of a stamped paper in which an instrument has been executed by any of the parties thereto, within six months after the date of the instrument, or, if it is not dated, within six months after the execution thereof by the person by whom it was first or alone executed: Provided that, (a) when the spoiled instrument has been for sufficient reasons sent out of 1 [India], the application may be made within six months after it has been received back in [India]; (b) when, fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a stamp paper. Section 54 merely provides that a person possessing a stamp paper for which he has no immediate use (which is not spoiled or rendered unfit or useless), can seek refund of the value thereof by surrendering such stamp paper to the Collector provided it was purchased within the period of six months next preceding the date on which it was so surrendered. The stipulation of the period of six months prescribed in Section 54 is only for the purpose of seeking refund of the value of the unused stamp paper, and not for use of the stamp paper. Section 54 does not require the person who has purchased a stamp paper, to use it within six months. Therefore, there is no impediment for a stamp paper purchased more than six months prior to the proposed date of execution, being used for a document. 33. Thus, there is no impediment in using the stamp paper for discharge of stamp duty payable on an instrument even after the period as specified under Section 54(c) of the Act has expired. There is considerable merit in the petitioner s contention that there is an anomaly in restricting the time period for seeking an allowance under Section 54 of the Act to only six months after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for using the same. Second, that the applicant has paid full price for the same. And third, that the stamp was purchased within the period of six months, next preceding the date on which the same were delivered. 39. In Rajeev Nohwar v. Chief Controlling Revenue Authority, Maharashtra State, Pune Ors 2021 SCC OnLine SC 863, the Supreme Court had interpreted Section 52 of the Maharashtra Stamp Act, 1958 which is similarly worded as Section 54 of the Act, in the following manner: 21. Section 52 deals with provision of allowance in case of stamps that are not required for use. There are two kinds of stamps that are not required for use. The first is where the stamp is spoiled, as covered by Section 47 of the Act. The second is where the stamp is not spoiled but the stamp is not needed since the purchaser has no use of it. Section 52 specifically excludes the first of category since it is already covered by Section 47. The provision only applies to the class in the second category. Thus, Section 52 covers stamps that are not spoiled but which are of no use to the applicant by the occurrence of any subsequent event that renders the purpose of purchase of stamp void or nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of execution of an Agreement to Sell in respect of a residential flat booked by him. Since, the disputes had arisen between the appellant and the builder and the said stamps were not used, the appellant filed a complaint before the National Consumer Redressal Forum which was disposed of on 06.05.2016 (approximately two years later). The appellant was given an option to either purchase the said residential flat or receive the refund of the amount paid along with interest and compensation. Since, the appellant elected to receive a refund from the builder and did not go ahead with the purchase of the residential unit, the E-stamp certificate purchased by him was no longer useful. He thus, applied for refund of the stamp paper immediately thereafter on 16.07.2016. The Supreme Court read the provisions of Section 50(2) of the Maharashtra Stamp Act, 1958 which, as noted above, is identically worded as Section 54 of the Act and held the same to be confined to only those cases where the applicant was aware that the stamp would not be of use within the period of six months of its purchase, either because the purpose for which the same was purchased has been abandoned, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , then such a person would have no remedy to seek any allowance in respect of the stamp paper. 45. We are unable to accept that the legislative intention of the Act was to exclude such a person from claiming any allowance in respect of an unused stamp paper. Thus, the controversy raised by the petitioner arises because of absence of any unambiguous provisions for refund in the given case. 46. Article 265 of the Constitution of India proscribes levy of collection of tax except by authority of law. The Act is a law and therefore, it is erroneous to contend that the collection of duties is without authority of law. The lack of express provisions for refund of stamp duty under the Act is required to be tested on the anvil of other provisions of the Constitution of India. Mafatlal Industries Ltd. v. Union of India: (1997) 5 SCC 537. 47. In the aforesaid regard it is relevant to refer to the case of Committee-GFIL v. Libra Buildtech Private Limited Ors. (2015)16 SCC 31. In the said case, the applicants had purchased the stamp paper and handed them over to the Committee constituted by the Supreme Court in the case of Securities and Exchange Board of India v. Golde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itored transaction, no party was in a position to take any steps in the matter without the permission of the Court. Fifthly, the applicants throughout performed their part of the contract and ensured that transaction in question is accomplished as was originally intended but for the reasons to which they were not responsible, the transaction could not be accomplished. Lastly, the applicants in law were entitled to claim restoration of all such benefits/advantages from the State once the transaction was cancelled by this Court on 26-9-2012 in the light of the principle contained in Section 65 of the Contract Act which enable the party to a contract to seek restoration of all such advantage from other party which they took from such contract when the contract is discovered to be void or becomes void. This was a case where contract in question became void as a result of its cancellation by order of this Court dated 26-9-2012 which entitled the applicants to seek restitution of the money paid to the State for purchase of stamp papers. 26. In our considered opinion, while deciding a case of this nature, we have to also bear in mind one maxim on equity, which is well settled, namely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act to enable the State to entertain the application made by the applicants seeking refund of stamp duty amount. The interpretation, which advances the cause of justice and is based on the principle of equity, should be preferred. We hereby do so. 48. In the case of National Investor Forum Regd v. Golden Forests India Ltd. CM APPL.15884/2013 in W.P.(C) No.1399/2010 decided on 26.09.2014, GFIL Committee invited bids for the purchase of 1398 kanal and 3 marla of land in district Panchkula, which included a partially constructed tourist complex. The applicant in the said case was the highest bidder and the bid was confirmed in its favour. The applicant had thereafter deposited ₹2,50,02,000/- towards the stamp duty and the stamp paper for the aforesaid amount was also purchased. However, the transaction fell through as 21 kanal and 12 marla of land were not included in the site plan of the parcel of land on which the resort was to be constructed and was advertised for sale. The sale confirmed in favour of the applicant was cancelled and GIFL Committee was directed to refund the consideration received. The applicant also applied to the Sub-Divisional Magistrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n reckoned from the date when the cause for refund arose, and not from the date when the stamp paper was produced. 10. Even otherwise, this Court is of the opinion that the larger principle of restitution would apply and the SAS cannot be visited with prejudice for an act of Court by application of principle, actus curiae neminem gravabit, i.e. the act of Court can prejudice none. (Emphasis Added) 49. In Dr. Poornima Advani s case, the applicant sought a refund of the stamp duty amount of ₹28,10,000/- on account of the loss of Estamp certificate. The said application was rejected on the ground that the there was no provision in the Act for the refund of stamp duty in cases wherein, the E-stamp was lost. The learned Single Judge had construed the expression obliterate as used in Section 49(a) of the Act to include the cases where the stamp paper had been lost. The Court also referred to the principle that it would be open for the Court to supplement the text of the statute to give effect to the legislative intent. 50. The Government of NCT of Delhi appealed the decision of the learned Single Judge before the Division Bench of this Court. However, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s observed by the Supreme Court in Rajeev Nohwar s case, Section 52 of the Maharashtra Stamp Act, 1958 (which is similarly worded as Section 54 of the Act) is applicable only in cases where the applicant had knowledge that the stamp purchased would not be used within a period of six months from the date of purchase. Thus, the words immediate use as used were read in the context of the limitation period as prescribed by the said provision. The words immediate use are interpreted to mean the permanent abandonment of the purpose for which the stamps were purchased or a delay of more than six months for the purpose for which it was purchased. 53. We are of the view that 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 rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reluctant to substitute words in a Statute, or to add words to it, and it has been said that they will only do so where there is a repugnancy to good Sense. 57. In Ahmedabad Municipal Corporation and Anr. v. Nilaybhai R. Thakore and Anr. (1999) 8 SCC 139 , the Supreme Court upheld the view of the Gujarat High Court that Rule 7 of the said rules for admission to Smt. N.H.L. Municipal Medical College was violative of Articles 14 and 15 of the Constitution of India insofar as it confined the definition of the local students to students who had passed their SCC examination and the qualifying examination from the institutions located within the limits of Ahmedabad Municipal Corporation. Thus, the students who had completed their qualifying education located just outside the municipal limits were not treated as local students and thus, were excluded from seeking admission as local students. However, the Supreme Court effectively re-wrote Rule 7 of the concerned rules, to save the same from the vice of Article 14 and also included students who had completed their qualifying education from schools and colleges situated within the Ahmedabad Urban Development Area within the defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent the written word so as to give force and life to the intention of the legislature. A Judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do as they would have done. A Judge must not alter the material of which the Act is woven, but he can and should iron out the creases. This statement of law made by Lord Denning has been consistently followed by this Court starting in the case of M. Pentiah v. Muddala Veeramallappa [AIR 1961 SC 1107] and followed as recently as in the case of S. Gopal Reddy v. State of A.P. [(1996) 4 SCC 596, 608 : 1996 SCC (Cri) 792 : AIR 1996 SC 2184, 2188] (SCC at 608 : AIR at p. 2188). Thus, following the above rule of interpretation and with a view to iron out the creases in the impugned rule which offends Article 14, we interpret Rule 7 as follows: Local student means a student who has passed HSC (sic SSC)/New SSC Examination and the qualifying examination from any of the high schools or colleges situated within the Ahmedabad Municipal Corporation limits and includes a permanent resident student of the Ahmedabad M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is procured. 60. The question that arises is that what would be the period of limitation if the provisions of Section 54(c) of the Act are inapplicable. In State of Punjab Ors. v. Bhatinda District Cooperative Milk Producers Union Ltd. (2007) 11 SCC 363 , the Supreme Court held that in cases where the period of limitation is not prescribed, the application must be made within a reasonable period. In case no time is provided for an Act, the same must be done in a reasonable period. What would be a reasonable period must be construed in the context of the provisions of the Act. Section 54(c) of the Act and Section 50 of the Act indicate that the legislative intent to confine the period for seeking allowance to not exceed six months after the cause of action has arisen. Thus, in cases where the applicant applies for refund of unused stamps/stamp certificate within a period of six months of becoming aware that he has no immediate use of the same, the claim for refund cannot be stated to be delayed and must be admitted. This is, obviously, subject to the applicant satisfying clauses (a) and (b) of Section 54 of the Act the Stamps must have been purchased for full consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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