Report No. 67
50.11. Mysore case.-
It may be noted that the Mysore Stamp (Amendment) Act, 1962 (Mysore Act 29 of 1962) amended the Mysore Stamp Act, 1957, in detail, and one of the amendments was concerning what is Article 30 in the Central Act, namely, stamp duty on enrolment of Advocates. In the Mysore Stamp Act, 1957, by virtue of the 1962 amendment, the duty is levied "on a certificate of enrolment in the roll of an advocate, prepared and maintained by the State Bar Council under the Advocates Act, 1961," the amount of the duty being 250 rupees. The Act of 1962 was not submitted to the President for his assent. And yet, the validity of the Act of 1962 was upheld by Hedge J. as he then was) and Honniah J.1 Several points were in issue-some have been stated above. But we are concerned with only one of the propositions laid down in the judgment, namely, that the High Court held specifically that the law in question fell within State List, entry 63. The argument that the Concurrent List, entry 44, would be attracted, and that Parliament having evinced interest in the field, the 'State legislature' had no Competence to enact the impugned provision, was not pressed, and the Court also specifically held that there was no substance in that argument.
1. B.K. Mittal v. State of Mysore, AIR 1966 Mys 138 (141, 142), paras. 17 and 18 (Hegde and Honniah, JJ.).
Secondly, apart from the case law mentioned above some support is also lent to the above approach by the fact that adaptations of section 9 of the Act have all been based on a similar assumption, namely, that a modification of the text of the charging article even a modification not affecting the arithmetic of stamp duties-is for the States.
50.13. Effect of exemptions.-
Thirdly, it should also be pointed out that the creation of new exemptions under an article, or substantial modifications in the description of the instrument in the article, would, in effect, modify the rate of stamp duty, because if a new exemption is created under an article then the rate on the exempted instrument becomes nil. At least, the old rate disappears when a new exemption is created. Conversely, when an existing exemption is taken away, the rate applicable under the main article becomes applicable to the instrument now made taxable by removing the exemption. In this sense, a change in the left hand column of the Schedule of duties-textually in the main article or in the exemption-affects the right band column (which denotes the rate).
50.14. Legislative practice.-
Fourthly, it may also be noted that the legislative practice in the centre) so far has been to avoid amendment of exemptions, where the exemptions are contained below an article concerning documents in the State List.
50.15. Entry in the Concurrent List not to be given wide scope.-
It is also not to be overlooked that if a wider view is taken of the entry in the Concurrent List, then the result would be that Parliament would be competent to reduce the duty on the document mentioned in the State List to a zero, but it cannot partially reduce the rate of duty on the document. It can adopt the first mentioned course (total abolition of the duty either by textually deleting from the schedule the entry in the left hand column (description of the instrument) or by providing that no tax shall be levied on the particular instrument. If a wider construction of the entry in the Concurrent List is taken, then, from a strict legal point of view, it would be open to Parliament to freeze the taxing power of the States on Stamp duties
(i) by not mentioning in the stamp Act any other instruments other than those mentioned in the Union entry, and
(ii) by providing further that no other instrument shall be subject to stamp duty.
Such a system does not seem to have been adopted in the case of any other tax. A perusal of the taxing entries in the Constitution shows no such bifurcation in relation to the power to tax on a given subject-matter.
In the very nature of things, the legislative arrangement regarding stamp duties presents complex problems. As every aspect relating to stamp duties, except the rate of stamp duties, falls under the Concurrent List, the concurrent power assumes importance, if taken literally, The mode and manner of collection of stamp duties, the punishment for the violation of the Stamp Act and evasion of the stamp duties and other consequences flowing from non-stamping etc., can, without much controversy, be regarded as flowing from it. But does it extend to such a vital matter as the selection of the instrument for charging tax?
50.16. Rates incomplete without charge.-
Sixthly, it would be incomplete, if not meaningless, to speak of rates without the charge of tax, just as it would be incomplete to speak of rates without the tax charged. Such a position is rather unusual in taxation legislation in India, to put it at the mildest.
50.17. It is for these reasons that there is, in our view justification for reading the entry in the Concurrent List more narrowly than a literal construction would suggest, and for reading the Entry as to rate more widely than literal construction would suggest. No doubt, some of the anomalies indicated above can be answered by arguing that when the Union or a State levies tax on a particular document by way of stamp duty, it does so by a combined and simultaneous exercise of its power in the Concurrent List read with its power in the Union List or the State List, as the case may be. But what requires to be pointed out is that such simultaneous and combined recourse to both the Lists is rather unusual in the general scheme of the Constitution, in regard to the power to tax.
Therefore, so fat as the constitutional position is concerned, we are of the view that it may not be within the competence of the Parliament to implement some of the recommendations made by us in this Report in so far as their application to the Stales is concerned. We do not, in this context, pause to consider how far Article 252 of the Constitution can be utilised.
50.18. Notwithstanding what we have stated above, it is our intention, as already stated1, that those recommendation should be implemented so that at least in regard to the Union Territories the law would be reformed. Further, as regards States, we hope that the Union Government will be able to persuade the States to make similar amendments in regard to the areas of the States.
1. Para. 50.3, supra.
50.19. Finally, we may state that we are aware that no-tax can be perfect. As a poet has said1:
"Whoever hopes a faultless tax to see; Hopes, what never was, or is or ever shall be."
But it should not be difficult to introduce a certain element of rationality and equity in the provisions of the taxing law.
We would like to place on record our warm appreciation of the valuable assistance we have received from Shri Bakshi, Member-Secretary of the Commission in the preparation of this Report.
1. M. Cullock Adaptation of Pope, quoted by Mathrubhutham and Srinivasan Law of Sales Tax in India, (1954), p. 3.
P.B. Gajendragadkar, Chairman.
P.K. Tripathi, Member.
S.S. Dhavan, Member.
S.P. Sen-Varma, Member.
B.C. Mitra, Member.
P.M. Bakshi, Member-Secretary.
Dated: 1st March, 197