Report No. 67
45.12. Recommendation as to Article 48(f).-
We are of the view that the conveyance subsequently executed in pursuance of the power of attorney referred to in clause (f) should not be chargeable, except for the excess consideration that is received. We recommend an amendment of the article accordingly.
45.12. Further Conveyance.-
Accepting a suggestion made by a Law Society1, we recommend that there should be no duty on a further conveyance after the levy of duty under Article 48(f) except where extra consideration is received by the person as the seller. It is our intention that the proposed exemption should cover all sales in pursuance of the power, as also a sale between the parties to the power, i.e.,
(i) sale deed between the principal and the agent, and also
(ii) sale deed between the agent and third persons.
In our opinion, the principle ought to be that the transfer having been subjected once to tax, should not be taxed again, except insofar as further monetary gain accrues after the execution of the power of attorney. We regard the power of attorney as, in substance, though not in form, a transfer of the property. That in fact, is the rationale underlying the ad valorem duty.
1. Incorporated Law Society, Calcutta.
The next point concerns proxies. In a Madras case,1 it was held that a proxy which empowered a person to vote at a particular meeting of a company "or at any other meeting" fell within Article 48(g). Assuming that a proxy is a general power of attorney, the Court considered the question whether clauses (d), (e) and (g) of Article 48 would apply. First, it was said that clause (g) had to be read with clause (e). Then, clause (d) applies when the authority is given to not more than five persons, and relates to "more than one transaction or generally". Following an unreported judgment,2 the Court held a proxy which empowered a person to vote at a particular meeting and then at any other meeting during that year would fall under clause (g) of Article 48. It was stated that if such a construction were not adopted, "a power of attorney in favour of one person, in respect of more than one transaction, would escape stamp duty altogether." It is suggested that it is possible to take the view that the instrument would fall under clause (d), and not under clause (g). The opposite view is based perhaps, on the words "jointly and severally" in clause (d), which are not quite appropriate for one person. This misunderstanding could be removed by a slight verbal change in clause (d).
1. Narayan v. Kamleshwar Mills Ltd., ILR 1952 Mad 218 (256).
2. Referred case No. 15 of 1905, cited in the Madras Stamp Manual.
There seems to be no specific entry in the Schedule as to the revocation of a power of attorney. The revocation would, if attested, apparently, fall under the entry relating to Instrument of cancellation.1
1. Article 17.
In order to simplify and amend the provisions of Article 48 on the lines discussed above, we recommend the following re-draft of the article:
"48. Power of attorney [as defined by section 2(21), not being a proxy (No. 52)]
"(a) When authorising one person or more to act in a single transaction, including1 a power of attorney executed for the sole purpose of procuring the registration of one or more documents in relation to a single transaction or for admitting execution, of one or more such documents.
[Existing clauses (a) and (c); Existing clause (b) omitted]
|(b) when authorising one person to act in more than one transaction or generally2or not more than persons to act jointly and severally in more than one transaction generally;||One rupee for each person authorised but not less that five rupess.|
|[Existing clause (d)]|
|(c) when given for consideration and authorising the attorney to sell any immovable property;||The same duty as a conveyance (No. 23) for the amount of the consideration.|
|[Existing clause (f)]|
|(d) in any other c||One rupee for each person authorised.|
|[Existing clause (g)]|
Explanation 1.-For the purpose of this Article, more persons than one when belonging to the same firm shall be deemed to be one person.
Explanation 2.-The term 'registration' includes every operation incidental to registration under the Indian Registration Act, 1908.
Explanation 3.-Where, under clause (c), duty has been paid on a power of attorney relating to any property, no duty shall be chargeable on a conveyance of that property executed in pursuance of the power of attorney or between the granter of the power and the grantees, except in so far as the consideration for the conveyance exceeds the consideration for the power of attorney."
1. The specific mention of power of attorney in relation to registration etc. contained in the present Act may be desirable, since more than one document is involved.
2. This case is even now regarded as falling within Article 48(d); but the words "jointly and severally" are not appropriate. Hence a specific provision.
45.16. Difference in duty under existing section and revised section.-
It may be convenient to summarise the salient points affecting the rate of duty with reference to the re-draft recommended by us:
(i) Under the re-draft, there will be an increase of duty from 50 N.P. to one rupee, in cases covered by Article 48(a), i.e., power of attorney executed for the sole purpose of procuring registration, etc. Though arithmetically the duty will be doubted, the burden will not, it is hoped, be resented by the class of persons who have to bear it.
(ii) In the case of a general power of attorney in favour of six, seven, eight or nine persons, the stamp duty, at present, is under Article 48 (e), ten rupees, while, under the proposed re-draft, it will be six, seven, eight and nine rupees respectively. But such cases will be rare, and the reduction in duty is not likely to affect the revenue substantially.
(iii) A special provision will govern conveyances executed in pursuance of, or after (be power to sell, referred to in Article 48(f).
45.17. Article 49-Promissory Notes.-
This takes us to Article 49. Under Article 49, the stamp duty on a promissory note is regulated by two sets of provisions. If the note is payable on demand, then, under sub-article (a) fixed rates (as given in the sub-article) apply, depending on amount of value (entered in the promissory note). This part of the article presents no difficulty.
45.18. Recommendation as to Article 13.-
But, if the note is payable otherwise than on demand, the duty is the same as the duty for a Bill of Exchange for the same amount payable otherwise than on demand. Now, the duty for such Bills is to be calculated according to a very complicated scale1. If the duty on Bill of Exchange can be simplified-as we have recommended2, than it would indirectly result in a simplification of the application of Article 49 also. It may be noted that in England, now, the duty on an inland bill of exchange or a promissory note has been simplified3as follows:-
"Bill of Exchange or Promissory Note of any kind whatsoever (except a bank note)-drawn, or expressed to be payable, or actually paid of endorsed; or in any manner negotiated in the United Kingdom."
The duty is two pence.
1. Article 13(b).
2. See discussion relating to Article 13, supra.
3. Section 33, Finance Act, 1961 (English).
45.19. Even if our recommendation to simplify the duty on a bill of exchange is not accepted, we would emphasise the fact that the present figures of duty as mentioned in the Act, in Article 49(b), do not reflect the real position. This is for the reason that there have been important reductions.
45.20. Recommendation to make the article self-contained.-
In our view, it is desirable that Article 49 should, in the interests of simplicity, be revised and made self-contained. We, therefore, recommend that the substance of the relevant notifications should, in a suitable form, be incorporated in the article. This recommendation is in addition to our recommendation for simplifying Article 13.
45.21. Article 50.-
Article 50 levies duty on a protest of a bill or note. This is a notarial act1, but has been excluded from the general articles-Article242-dealing with notarial acts. The duty charged under Article 42 (notarial act) and Article 50 (protest of bill or note) is, however, the same, viz., Re. 1.
Under the Negotiable Instruments Act3, where a promissory note or bill of exchange has been dishonoured by non-acceptance of non-payment, the holder may, within a reasonable time, cause such dishonour to be noted and certified by a notary public. Such certificate is called a protest.
Such noting and protest is not made compulsory but is left to the option of the holder, except in the case of foreign bills4.
No difficulty appears to have been caused by Article 50, which needs no change.
1. Section 8(d), Notaries Act, 1952.
2. The articles in the Stamp Acts of 1879 and 1860, corresponding to the present Article 42, included protests falling under present Article 50.
3. Section 100, Negotiable Instruments Act, 1881.
4. Section 104, Negotiable Instruments Act.