Meetesh Shiroya

The basic purpose of Indian Stamp Act, 1899 is to raise revenue for Government, and government would like to earn more money either by imposing a tax or by charging Duty and in that Duty includes the Stamp Duty, the matter is not relevant but the money is more important for government in the present scenario.

However, over a period of time, the Stamped document has obtained so much value as well as importance in the life span of People that a, ‘Stamped Document’ is considered much more authenticable and reliable rather than an un – Stamped document. And one more thing is that, in case of any litigation arises in future then only Stamp Documents will prevail in the Court. So it gives to much important to the Stamp Documents.

What are the Power of Central Government and State Government in respect of Stamp Duty ???

Power of Parliament in respect of Stamp Duty :– Parliament has the power to make law in respect of Stamp Duty. Parliament can prescribe the Rates of Stamp Duty. The Stamp Duty Rates prescribed by the Parliament in respect of Bill of Exchange, Cheques, Transfer of Shares etc. will prevail all over India subject to provision as applicable in Jammu and Kasmir. However, other Stamp Duty Rates prescribed by Parliament in Indian Stamp Act, 1899 (e.g. Stamp Duty on Agreements, Affidavit, Articles of Association of a Company, Partnership Deed, Lease Deed, Mortgage, Power of Attorney, Security Bond etc.) are valid only for Union territories. In case of States, the rates prescribed by Individual States will prevail in those States.

Powers of State Government of Stamp Duty  :-  State Government has the powers to fix Stamp Duties on all documents except Bill of Exchange, Cheques etc. as mentioned above. Rates prescribed by the State Government will be applicable only in that State. State Government has the power to make law on Stamp Duty, however State Government will also make law on other aspects of Stamp Duty such as matters other than quantum of duty. However, if there is any conflict between State law and Union law, as usual the Union law prevails over the State Law as per Article 254 of Constitution.

The Indian Stamp Act, 1839 is a Central legislation which is applicable to whole of India subject to the provisions made for the State of Jammu and Kasmir and deals with all aspects of Stamps and Stamp Duties. It applies to whole of India except the State of Jammu & Kashmir. The Act through Schedule-1 lays down the Rate of Stamp Duty payable on different instruments.

The instruments given in the Schedule-1 can be classified into two categories.

First category of instruments consisting of Bills of Exchange, Promissory Notes, Stamp Duty for Transfer of Shares, Debentures, Bills of Lading, Proxies, Letters of Credit and Receipts.

Second category of instruments consist of instruments such as Agreements, Affidavits, Articles of Association of a Company, Partnership Deed, Lease Deed, Mortgage, Power of Attorney, Security Bond etc.

Vide Entry 91 of List 1.

Central Government is empowered to levy Stamp Duty in respect of first category of instruments and Rates prescribed by Central Government will prevail over the Rates prescribed by the State Government Vide Entry 44 of List III and Entry 63 of List II, the State Governments have power to enact and levy Stamp Duty and prescribe the Rates for all other instruments not referred above.

In the case of Second category of instruments, the Rates prescribed by Individual States will be applicable in those States.

However for these instruments, the Rates prescribed in Scheudle-1 of the Indian Stamp Act, 1839 will be applicable only  for union territories.

If there is any conflict between State law and Union law, the Union law prevails as per Article 254 of Constitution.

It is clear from the scheme of legislation that fields for levy of Stamp Duty are divided between Central and State Governments. It is demarcated in such a manner so as to ensure that revenues collected through Stamp Duty are shared as per provisions of the Act.

Where it is mentioned the Validity of Stamp Paper … ???

Only under Section 52 B(a) of The Bombay Stamp Act 1958, prescribed the period of six months from the date of purchase of Stamp Paper or delivery of Stamp Paper after which the Stamps become invalid and it can’t be used after that.

This time period of six months is also quantified under the, The Bombay Stamp (Gujarat Amendment Act) 200, under Section 52C which is applicable in Gujarat also.

None of the other State Stamp Acts has such provision to limit the validity of Stamps and Stamp Papers.

In the case of  Thiruvengada Pillai vs Navaneethammal & Anr passed on 19 February, 2008 by the bench Bench: R V Raveendran, P. Sathasivam (2008 (4) SCC 530). The Hon’ble Supreme Court said that, “The Indian Stamp Act, 1899 nowhere prescribes any expiry date for use of 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.”

The stipulation of the period of six months prescribed in section 54 of The Indian Stamp Act, 1899, for the purpose of seeking refund of the value of the unused Stamp paper is also contained in most State Stamp Acts under Chapter V – Allowances for Stamps in Certain Cases. However, there is no time period limiting the validity of Stamps to six months except under the Bombay Stamp Act, 1958.

Further, under The Indian Registration Act, 1908: All documents except Wills have to be registered within four months from the date of execution (signature).

As per Section 23, If a document is executed out of India, the period of four months will be counted from the date of its receipt in India.

As per Section 34, In the event of a delay, the Act provides that the document may be presented within another four months along with penalty of maximum of ten times of the registration fees, if the District Registrar grants permission. It prescribes four months time to the executable for appearing before the registering officer to admit execution thereof.

We considered that, this is the main reason why people state that, Stamps are valid for only six months.
The judgment passed by the Supreme Court has now set the point clear.

However, in Bombay and Gujarat State, since there is conflict between Central Act and State Act, then vide Article 254, I believe Central Act will prevail.

Though at present most People do not use the Stamp Paper after expiration of Six Months, especially in Gujarat and Bombay State. However the logically we can say that there is no validity but if the Authority denies for Accepting the same then there is no other option available for us to accept the validity of Stamp Paper.

Though it is the Clear from the judgment passed by the Supreme Court, then also there is ambiguity in the State of Gujarat and Bombay Stamp Act. So we can say that the Provisions made under Section 52 B(a) of The Bombay Stamp Act 1958, which prescribed the period of six months from the date of purchase of Stamp Paper or delivery of Stamp Paper and The Bombay Stamp (Gujarat Amendment Act) 200, under Section 52C which is applicable in Gujarat will prevails in that State. As per this discussion    we can say that, the Validity of Stamp Paper provided in the State of Gujarat and Bombay has an overriding effect over Central.

As per Article 254 of Constitution, if there is any conflict between State law and Union law, the Union law prevails but if we concentrate logically and practically as we have discussed above things we can say that, the State Law will prevail over the Union Law. Even though it has an overriding effect over an Union Law.

In the Presence of Supreme Court Judgment and as per Provisions of Indian Stamp Act, 1839, there is too much contradict between the Validity of Stamp Paper even Government Authority also denied for the accepting the Stamp Paper whose validity is more then Six Months, and in the State of Gujarat and Maharashtra people is used to with that things, only because of their work is not interrupted.

So at Last I can say that, all Laws and Judgments on Stamp Paper are available as well as applicable in whole of India, but if there is no specific guidelines for that then how one can override that things and put that things into practicality, because if they put that things in practically then also there is no use.

Since long, people of State of Gujarat and Maharashtra was used to or think that the Validity of Stamp Paper is Six Month Period as per the Bombay Stamp Act, 1958 though legally it is not valid in the Eyes of Law but  practically and logically it is valid in the Eyes of Law. So we can said that as Per Provisions of Indian Stamp Act, 1839 and as per the Supreme Court Judgment, there no validity of Stamp Paper on Paper, but in actual the Validity of Stamp Paper is Six Months Practically off paper especially in the State of Gujarat and Maharashtra. This trend continue at presently also in the State of Gujarat and Maharashtra.

Hope you understand the Loop holes of the Act which are present in the Current Scenario and people also used to with those things.

(Author can be reached at meetesh.shiroya@gmail.com)

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  • CSPallavi

    So, basically, its the officials of the state govt who do not accept the documents and hence it becomes a practical difficulty to comply with the Constitution of India. Its definitely a Violation of the Constitution then.

    Kindly correct the error regarding the Indian Stamp Act “1839” 🙂

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