Impounding of Instrument Important for Imposing Duty Under Bombay Stamp Act: Gujarat High Court

Impounding of Instrument Important for Imposing Duty Under Bombay Stamp Act: Gujarat High Court

Only after an instrument is lawfully impounded that the jurisdiction would vest in Stamp authorities to proceed under Section 33 and 39 of the Bombay Stamp Act for the purpose of charging document and assessing the same for stamp duty, as clarified by the Gujarat High Court in its recent judgement.

Placing reliance on Tata Tele Services Limited Vs State of Gujarat, reiterated:

"Impounding of the instrument is sine qua non for exercise of the powers."

The observation was made while dealing with a petition filed by Century Tiles for quashing of order of Deputy Collector of the Stamp Duty Department declaring the duty paid by the Petitioner on an instrument as deficit and requiring it to pay Rs. 1,80,000. The said duty was in connection with a document executed in lieu of loan facility availed by the Petitioner from Dena Bank.

The Petitioner preferred an appeal against the order after depositing INR 45,000 which was rejected. The loan amount was also repaid by the Petitioner.

The High Court observed on going through the document which is titled as "Memorandum of Deposit of Title Deeds", it could be gathered that it provided for handing over to and deposit with the bank the title deeds of the property.

It held that the authorities could not have adverted to Article 36 of Schedule-I for the purpose of levying stamp duty treating the documents to be a mortgaged deed.

"A valid exercise of the powers under Section 33 read with Section 39 of the Act can only be done after the instrument is impounded. Mere securing copy of the instrument is no impounding but original document has to be taken into custody to make it an act of impounding."

Accordingly, the impugned order was set aside. The Petitioner was also entitled to refund of Rs.45,000.