Indian Stamp Act, 1899

Subject: Business Law Prof: Kasturi Group 7& 2

Introduction
y y

The Indian stamp act came into existence on 1st July, 1899. It is a fiscal enactment , on the basis of which stamp duties are levied on the transactions effected by certain instruments mentioned in the act. The main object of the Act is to secure revenue for the state by levying stamp duty on certain classes of instruments as specified in the Act.

y y

The Act extends to the whole of India except the state of Jammu & Kashmir. It is a central enactment. Parliament prescribes the rate of the stamp duty. State Government has powers to fix stamp duties on all documents except bill of exchange, cheques etc. Rates prescribed by State Government will prevail in that State.

Some Important Terms

y

Judicial Stamps : Judicial Stamps are used in courts and in some offices under the provisions of Court Fess Act. Non Judicial Stamps : Non Judicial Stamps are used for written transactions such as to register contracts, agreements, deeds, wills, etc. Adhesive Stamps : These stamps are printed on small pieces of paper and affixed to the insrument.

Bond : According to Section 2[c], bond is one which imports an obligation in writing to pay the money to deliver agricultural products to another. Bonds can be Simple bond, Conditional Bond & Grain bond. Conveyance : Conveyance includes a conveyance on sale and every instrument by which property, whether moveable or immoveable, is transferred inter vivos and which is not otherwise specifically provided for by Schedule I 5[or by Schedule I-A, as the case may be;]

Chargeable : Chargeable means Chargeable under the Act inforce at the date of execution of the instrument. Document : Document is not defined in the act. As per the General Clauses Act, Document includes any matter written, expressed or described upon any substance for the purpose of recording that matter.

Duly Stamped : Duly stamped, as applied to an instrument, means that the instrument bears an adhesive or impressed stamp of not less than the proper amount, and that such stamp has been affixed or used in accordance with the law for the time being in force in State. Instrument : Instrument includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded.

Lease : Lease is a transfer of right to enjoy property for a certain time in consideration of a price paid or promised made. y Settlement : It means any non-testamentary disposition, in writing, of moveable or immoveable property made 1. In consideration of marriage 2. For the purpose of distributing property of the settler among the family 3. For any religious or charitable purpose And includes an agreement in writing.
y

Instruments Chargeable with Stamp Duty

Instrument includes every document by which any right or liability, is, or purported to be created, transferred, limited, extended, extinguished or recorded [section 2(17) of Indian Stamp Act]. Any instrument mentioned in Schedule I to Indian Stamp Act is chargeable to duty as prescribed in the schedule [section 3]. The list includes all usual instruments like affidavit, lease, memorandum and articles of company, bill of exchange, bond, mortgage, conveyance, receipt, debenture, share, insurance policy, partnership deed, proxy, shares etc. Thus, if an instrument is not listed in the schedule, no stamp duty is payable. Instrument does not include ordinary letters. Similarly, an unsigned draft of an agreement is not an instrument.

Several instruments used in single transaction : If there are several instruments

are employed for completing the transaction, the principal instrument only shall be chargeable with the duty prescribed in Schedule I. Instruments relating to several distinct matters : Any instrument relating to several distinct matters shall be chargeable with the aggregate amount of the duties with the seprate instruments

Instruments coming within several descriptions in Schedule I : If an instrument comes within 2 or more descriptions then the duties shall be chargeable only with the highest of such duties. y Instruments exempted from Stamp Duty: 1. An instrument exceuted by or on behalf of or in favour of the government. 2. Sale, transfer or other disposition of ship by the way of mortgage or otherwise. It is not the transaction but only the instrument which is chargeable to stamp duty.
y

Stamps And Mode Of Using Them

Stamp duty can be paid by : 1. Using Stamp Paper : Stamp paper are one of the most widely used authentication papers in most of the judicial and civil works. Most of the civil and judicial works have a pre-requisite of stamp papers. So the stamp papers have become integrated and indispensable part of our transactions. Each stamp paper has its own unique registered number. So it can verify the validity of the stamp paper by checking its registration number with the controlling authority.
y

2. Using Adhesive Stamps : The following instruments are stamped with adhesive stamps: a) Instruments chargeable on demand and drawn in sets. b) Bills of exchange drawn or made out of India. c) Entry as an advocate or attorney on the roll of a high court. d) Transfers by endorsement of shares in any incorporated company or other body corporate.

Cancellation of Adhesive Stamps : a) Adhesive Stamps must be cancelled in such a way that thy cannot be used again. If the instruments are not cancelled in the said manner, they are deemed unstamped. b) If Stamps are not cancelled, instruments are inadmissible as evidence. c) The person required to cancel an adhesive stamp can do so by writing across or on the stamp its name or initials with true date or in any other effectual manner.

Time of Stamping Instruments

1)

2)

3)

All instruments chargeable with duty and executed by any person in india shall be stamped before or at the time of execution. Every instrument chargeable with duty executed only out of india may be stamped with 3 months after it has been first received in India. In case of Bill of exchange drawn out of india, the first holder of such instrument shall affix the proper stamp & then cancel at the time of acceptance or payment.

Persons Liable To Pay Stamp Duty

y y y y y y

Incase of Insurance policy the person effecting the insurance. Incase of Fire Insurance the person issuing the policy. Incase of a conveyance by the grantee. Incase of a lease by the lessee Incase of a counterpart of a lease by the lessor. Incase of an instrument of exchange by the parties in equal shares.

y y y

Incase of a certificate of sale By the purchaser of the property to which such certificate relates. Incase of an instrument of partition By the parties in equal ratio of their shares. In case of instrument of partition by order of any court by the parties in the ratio given by the court.

Adjudication As To Stamps
Adjudication of stamps means Determining the chargeability of stamp duty on instrument  Provisions related to adjudication of stamps : y Application for adjudication is made to collector of stamps appointed in each district or area. y Such applications can be made to the parties of instrument. y Application for adjudication should be accompanied by true copy of documents to prove that all facts affecting the chargeability of the instrument are truly been set forth.

y y

Collector may refuse to proceed upon any application until the true copies of the documents have been attached. Evidence furnished for adjudication of stamp duty cannot be used against any person in any court of law, except in an enquiry to the stamp duty. Adjudication fee of minimum 50paise and maximum Rs.50/- is required to be paid. The collector cannot compel the party for realization of stamp duty.

Instruments Not Duly Stamped

y y

Instruments which are not duly stamped cannot be admitted as evidence for any purpose. If any instrument appears to be not duly stamped, any officer who is empowered by law to receive evidence, has the power to impound the same.

Where any receipt chargeable is tendered to, or produced before, any officer unstamped in the course of the audit of any public account; such officer may in his discretion, instead of impounding the instrument; require a duly stamped receipt to be substituted therefore.

If the collector is of the opinion that instrument impounded is chargeable with duty and is not duly stamped, he is empowered to ask the payment of the proper duty or the amount required to make up the same along with penalty.

Reference And Revision

Control of and Statement of case to, Cheif Controlling Revenue- Authority: The powers exercisable by a Collector is subject to the control of the Chief Controlling Revenueauthority.

If any Collector, feels doubt as to the amount of duty with which any instrument is chargeable, he may refer it, with his own opinion thereon, for the decision of the Chief Controlling Revenue-authority.

Such authority shall consider the case and send a copy of its decision to the Collector, who shall proceed to assess and charge the duty (if any) in conformity with such decision.

Statement of case by Chief Controlling Revenue-authority to High Court : The Chief Controlling Revenue-authority may refer any case which is referred to it or otherwise coming to its notice, with its own opinion thereon, to the High Court if it arises in the state. Every such case shall be decided by not less than three Judges of the High Court to which it is referred, and in case of difference the opinion of the majority shall prevail.

Powers of High Court to call for further particulars as to case stated and disposing the case : If the High Court is not satisfied that the statements contained in the case are sufficient to enable it to determine the questions raised thereby, the Court may refer the case back to the Revenue-authority by which it was stated, to make such additions thereto or alterations therein as the Court may direct in that behalf.

The High Court, upon the hearing of any such case, shall decide the questions raised thereby, and shall deliver its judgment thereon containing the grounds on which such decision is founded. The Court shall send to the Revenue-authority by which the case was stated, a copy of such judgment under the seal of the Court and the signature of the Registrar; and the Revenueauthority shall, on receiving such copy, dispose of the case conformably to such judgment.

Conclusion