M/S. Axis Securities Ltd. vs State Of MP

The present petition is arising out of order dated 31/01/2012 passed by the Collector of Stamps by which a penalty under section 40(1)(b) of the Indian Stamp Act has been inflicted upon the petitioner.

Contention of the petitioner is that he is a stock broker registered as a company and is a Member of Bombay Stock Exchange and National Stock Exchange. The petitioner is providing services to his client and the dispute relates to sale, purchase of shares listed on Bombay Stock Exchange / National Stock Exchange during the period 2009 to May, 2011. The petitioner has further stated that the State of Madhya Pradesh vide notification dated 6/2/2008 has reduced the Stamp Duty payable on delivery based transaction. The petitioner has further stated that during the period w.e.f. 1/4/2009 to 31/5/2011 the petitioner has carried out business transactions in respect of shares, both on delivery based and non delivery based in the State and the stamp duty payable on such transaction under Article 41(b) of Schedule 1A of the Indian Stamp Act amounts to Rs.18,13,193/-. The contention of the petitioner is that the petitioner on his own has submitted a Draft vide letter dated 23/9/2011 tendering Demand Draft in respect of stamp duty payable and the respondents instead of accepting the Demand Draft has initiated action against the petitioner and finally an order has been passed under section 40(1B) of the Act imposing penalty.

The contention of the petitioner is that once the petitioner on his own has approached the authority and has volunteered the payment of stamp duty, the question of payment of penalty does not arise.

A reply has been filed in the matter and the respondent State has defended the order of the Collector. It has been stated that once the petitioner has not paid the stamp duty, the Collector of Stamps, Indore was justified in imposing the penalty u/S. 40(1)(b) of the Act. The respondent have also stated that the question of imposition of duty is not in dispute. Learned counsel for the petitioner has also categorically stated before this Court that the company is liable to pay duty but the question is whether the penalty can be imposed or not.

This Court has very carefully gone through the writ petition and the reply filed by the respondents.

Undisputedly in the present case, the duty was payable in respect of transactions relating to sale and purchase of shares. Section 30, 31, 33 and 40 of the Indian Stamp Act, 1899 reads as under:

Obligation to give receipt in certain cases. - Any person receiving any money exceeding twenty rupees in amount, or any bill of exchange, cheque or promissory note for an amount exceeding twenty rupees, or receiving in satisfaction or part satisfaction of a debt any moveable property exceeding twenty rupees in value, shall, on demand by the person paying or delivering such money, bill, cheque, note or property, give a duly stamped receipt for the same.

Any person receiving or taking credit for any premium or consideration for any renewal of any contract of fire-insurance, shall, within one month after receiving or taking credit for such premium or consideration, give a duly stamped receipt for the same.

Adjudication as to proper stamp. -(1) When any instrument, whether executed or not and whether previously stamped or not, is brought to the Collector, and the person bringing it applies to have the opinion of that officer as to the duty (if any) with which it is chargeable, and pays a fee of such amount (not exceeding five rupees and not less than [fifty naye paise]) as the Collector may in each case direct, the Collector shall determine the duty (if any) with which, in his judgment, the instrument is chargeable.

(2) For this purpose the Collector may require to be furnished with an abstract of the instrument, and also with such affidavit or other evidence as he may deem necessary to prove that all the facts and circumstances affecting the chargeability of the instrument with duty, or the amount of the duty with which it is chargeable, are fully and truly set forth therein, and may refuse to proceed upon any such application until such abstract and evidence have been furnished accordingly:

Provided that-

(a) no evidence furnished in pursuance of this section shall be used against any person in any civil proceeding, except in an inquiry as to the duty with which the instrument to which it relates is chargeable; and

(b) every person by whom any such evidence is furnished, shall, on payment of the full duty with which the instrument to which it relates, is chargeable, be relieved from any penalty which he may have incurred under this Act by reason of the omission to state truly in such instrument any of the facts or circumstances aforesaid.

Examination and impounding of instruments. - (1) Every person having by law or consent of parties authority to receive evidence, and every person in charge of a pubic office, except an officer of police, before whom any instrument, chargeable, in his opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same.

(2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain whether it is stamped with a stamp of the value and description required by the law in force in [India] when such instrument was executed or first executed: Provided that- (a) nothing herein contained shall be deemed to require any Magistrate of Judge of a Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (V of 1989); (b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf. (3) For the purposes of this section, in cases of doubt, - (a) 2 [the 3 [State Government] may determine what offices shall be deemed to be public offices; and the [State Government] may determine who shall be deemed to be persons in charge of public offices.

Collectors power to stamp instruments impounded.- (1) When the Collector impounds any instrument under section 33, or receives any instrument sent to him under section 38, sub-section (2), not being an instrument chargeable with a duty not exceeding ten naye paise] only or a bill of exchange or promissory note, he shall adopt the following procedure: -

(a) if he is of opinion that such instrument is duly stamped or is not chargeable with duty, he shall certify by endorsement thereon that it is duly stamped, or that it is not so chargeable, as the case may be;

(b) if he is of opinion that such instrument is chargeable with duty and is not duly stamped, he shall require the payment of the proper duty or the amount required to make up the same, together with a penalty of five rupees; or, if he thinks fit, [an amount not exceeding] ten times the amount of the proper duty or of the deficient portion thereof, whether such amount exceeds or falls short of five rupees:

Provided that, when such instrument has been impounded only because it has been written in contravention of section 13 or section 14, the Collector may, if he thinks fit, remit the whole penalty prescribed by this section.

(2) Every certificate under clause (a) of sub-section (1) shall, for the purposes of this Act, be conclusive evidence of the matters stated therein.

(3) Where an instrument has been sent to the Collector under section 38, sub-section (2), the Collector shall, when he has dealt with it as provided by this section, return it to the impounding officer.

The aforesaid statutory provision of the law makes it very clear that the petitioner was liable to pay the stamp duty, however, the petitioner for the reasons best known to him at the time of purchase / sale has not paid the duty and in those circumstances the proceedings were initiated against the petitioner and keeping in view Section 30 and 40 B even though ten times penalty is provided, the respondent Collector has taken a very lenient view in the matter. He has simply imposed only one time penalty upon the petitioner.

This Court has very carefully gone through the order of the Collector and does not find any reason to interfere with the same. It has been passed in consonance with the statutory provisions as contained under the Indian Stamp Act, 1899.

Resultantly, the admission is declined.