Report No. 67
1.21. Lines of revision.-
Having dealt with the important preliminary aspects, we now proceed to state briefly the lines on which revision of the Act would be desirable.
1.22. The defects which were described in the Act of 1879 at the time of introduction of the Bill in Council, and the improvements which were suggested to remedy those defects, can be said to provide the justification for revising the present Act also. First, there are cases in which, for want of clarity, the law has failed in its intention. The Stamp Act is left very largely to a sort of "automatic operation", inasmuch as it is applied to citizens themselves to their own transactions as evidenced by the instruments; and the burden of its interpretation rests, not only upon the lawyer, but also upon the layman. It is all the more necessary, therefore, that the Act should, in its expression, be as clear as possible, so that people who desire to pay proper duty on their documents and who have no intention of evading the duty in any way, may clearly understand the obligations which rest upon them.
Then, there are cases where the provisions of the law, though clear, can be, and have been, evaded by carrying out the transactions in a fraudulent manner.
Thirdly, there are cases where greater facility could be given to the public to avoid petty hardships, without making.any serious inroads on the revenue.
Fourthly, there is need to introduce uniformity where divergence has arisen owing to conflict of decisions
Finally, notice has to be taken of statutory and other developments which have a bearing on stamp duties.
1.23. Scope for revision of the Stamp Act.-
The Stamp Act is a taxing statute. It is not purely a "lawyer's law"; and a revision of the tax structure raises important matters of policy. Moreover, even if revision of the rates of duty were to be embarked upon, constitutional competence of the Union in that respect is limited to the documents mentioned in entry 91 of the Union List, (except as regards Union territories). There is, however, (as already stated), considerable scope for revision of the Act in other respects, without materially affecting the rates of tax. Without claiming to be exhaustive, it may be said that even after keeping the above limitation in mind, revision is possible in respect of-
(a) the structure and arrangement of the Act;
(b) the legal labels employed in the Act, to denote the various kinds of documents;
(c) rectification of the unsatisfactory position, arising from conflicting decisions or otherwise, in regard to the charging section and connected provisions;
(d) improvement of the machinery provisions;
(e) reducing the multifarious variety of rates of stamp duty-of course to the minimum extent, so as not to affect the States' revenues; and
(f) incorporating, in the Act itself, many of the remissions granted by notifications1 under section 9,
We are satisfied that revision on the above lines would considerably simplify the Act, and bring up-to-date from the legal point of view, and would also contribute to the removal of practical difficulties felt by reason of some of the drastic provisions of the Act2.
1. e.g., see discussion as to section 2(4)-bill of lading and Article 14.
2. e.g., section 35.
1.24. Considerations kept in mind.-
At this stage, therefore, it would be proper to mention that in our consideration of the Act, we have kept before ourselves certain broad guidelines which it may be convenient to set out. In the first place, we have considered it legitimate to recommend such changes as were necessary to rationalise the law or to simplify its working, and generally to avoid difficulties in its implementation.
Our general approach in this regard is based on our firm belief that the smoother the working of the law, the better will it be for all concerned. We do not, in this context, postulate a conflict, between the interests of the revenue and the convenience of tax payers.
Secondly, in the interests of easy accessibility of the law, we have, where the circumstances so justified, suggested amendments to incorporate in the section exemptions of long standing.
Thirdly, where we found that the provisions of the Act-in particular, what can be conveniently described as the machinery provisions-have led to serious inconveniences or to unnecessary controversies in theAcourts or official circles or to avoidable delay, we have not shrunk from recommending suitable amendments. We believe that even though it may, at the first sight, appear that a particular amendment proposed by us with this object liberalises the law in favour of the citizens, yet, ultimately, the revenue will also benefit, inasmuch as ignorance or misunderstanding of the law as well as the temptation to evade the law will be minimised. Moreover, it is legitimate to point out that ordinarily speaking, a taxation law ought not to be so formulated as to encourage the raising of dishonest defences by litigants, particularly where the interests of the revenue can be safeguarded by other provisions.
We are making this observation particularly with reference to the changes which we are recommending in the law relating to instruments not duly stamped and in the provisions as to the levy of penalty. Sections 13 to 15 and section 35 are instances in point. These amendments no doubt make the law more liberal than at present; but they are not, in our view, likely to lead to a serious increase in the evasion of stamp duties-if at all they are likely to lead to any increase in the scope for evasion.
Fourthly, apart from the convenience of citizens, there are situations where wider considerations of public interest may have to override a very rigid enforcement of the revenue law. For example, the importance of detection of crime in an efficient manner and without delay justifies the legislature in making a relaxation of the ordinary rule that an unstamped document shall not be acted upon by a public officer. Acting on this principle, we have considered it proper to recommend certain amendments to section 33(1)14 The section imposes an obligation to impound documents not duly stamped but there is an exception. Our amendment seeks to widen the exception to this obligation-an exception which is, at present, confined to police officers1.
Fifthly, we have not undertaken a review, as such, of the rates of stamp duty. Incidentally, we note that as regards most of the documents to which the Act applies, the rates of stamps duty are within the State Legislative List. But even as regards other documents, our amendments are not based on any need for increase or decrease in the rates. This general approach is, of course, subject to what we have stated above.
Finally, it is our view that, as far as possible, the provisions of a statute should be so framed as to maintain logic and consistency with basic juristic principles. It may not always be easy to discover or to maintain a logical structure in every provision of the revenue laws. But that certainly should be the ideal,-at least in regard to machinery provisions; these provisions do not affect the rate of tax, and are intended to deal with details of its implementation. Lest this should sound to be too abstract a statement, let us illustrate it by stating that where the liability to pay stamp duty rests with a particular person who thus carries the primary duty, we do not consider it proper that the law should, overlooking this primary duty, impose a secondary sanction on some other person2. We have borne this consideration in mind in dealing with the vexed question of the person on whom stamp duty can be compulsorily levied under section 48 read with section 40.
1. See section 33(2), infra.
2. Section 40, infra.