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Report No. 67

9.8. Payment of stamp duty and court fees in cash in the event of Shortage in the availability of non-judicial stamps and court fees stamps.-

A proposal1 had originated in the Ministry of Finance to the effect that there is need for an enabling provision in the Stamp Act and the Court Fees Act for permitting levy of the stamp duty or Court fee in cash, in the event of a shortage in the availability of non-judicial stamps and court fees stamps respectively. This suggestion was sent to various State Governments by the Ministry of Finance for their comments in the matter. The State Governments, including the Union Territory Administrations, mostly expressed themselves in favour of the suggestion.

1. S.N. 132 in Law Commission File-Extract from File No. 471/61/71-Cus. VII, Min. of Finance (Revenue & Insurance Department.)

9.9. It may also be stated in this connection that in Gujarat, the State Government, some time ago, had prepared a Bill1 to amend section 10. It was stated in the Statement of Objects and Reasons that owing to inadequate supply of non-judicial stamps from the Controller of Stamps, Nasik, acute shortage of stamps was felt frequently in different parts of the State. To meet this situation, it had been found necessary to amend section 10 of the Act so as to enable the State Government and the Collector to direct payment of stamp duties in cash in such contingencies. (The Bill does not seem to have become law).

1. S.N. 132 in law Commission file.

9.10. Recommendation to amend section 10.-

We have given careful consideration to the matter, and are of the view that as the problem is of frequently recurring nature, it should be solved by adding the following new sub-sections, to section 10, which we recommend:

Section 10(3) and (4)-(to be added)

"(3) Notwithstanding anything contained in sub-section (1), where

(i) the State Government, in relation to any area in the State, or

(ii) the Collector, in relation to any area in the district under his charge, is satisfied that on account of temporary shortage of stamps in any area, duty cannot be paid, and payment of duty cannot be indicated on instruments, by means of stamps, the State Government, or, as the case may be, the Collector, may, by Notification in the Official Gazette, direct that, in such area, the duty may be paid in cash in any Government treasury or sub-treasury, and certify by endorsement on the instrument in respect of which the stamp duty is paid, that the duty has been paid, and state in the said endorsement the amount of the duty so paid;

(4) An endorsement masse on any instrument under sub-section (3) shall have the same effect as if the duty of an amount equal to the amount stated in the endorsement had been paid in respect of, and such payment had been indicated on such instrument by means of stamps, under sub-section (1)."

9.11. Section 10A (New)-Franking machines.-

This disposes of section 10. At this stage, we may discuss a new point concerning the mode of payment. At present, the usual mode of payment of duty on documents is by affixing stamps.1 In our view, an innovation worth considering is the use of franking machines. It is well-known that such machines are allowed for postal stamps.2

It appears3 that the laws in Malaya and Singapore provide for issuing licences, authorising persons to pay the required duty on cheques, bills of exchange (not including promissory notes) and receipts, by postal franking machines. Apart from that, however, the utility of such a provision is obvious.

1. Sections 10 and 11, Stamp Act.

2. Section 17, Indian Post Office Act, 1898.

3. Sheridan Malaya and Sigapore-The Development of Laws and Constitution, (1961), p. 232.

9.12. Postage stamps to be deemed to be stamps for the purpose.-

Practical experience of a similar provision in the Post Office Act shows that such a provision would not lead to serious evasion. The provision in the Post Office Act as to Postal franking (Section 17, Post Office Act), is quoted below:1

"17. (1) Postage Stamps provided under section 16 shall be deemed to be stamps issued by Government for the purpose of revenue within the meaning of the Indian Penal Code (45 of 1860), and, subject to the other provisions of this Act, shall be used for the payment of postage or other sums chargeable under this Act in respect of postal articles, except where the Central Government directs that pre-payment shall be made in some other way.

(2) Where the Central Government has directed that pre-payment of postage or other sums chargeable under this Act in respect of postal articles may be made by prepaying the value denoted by the impressions of stamping machines issued under its authority, the impression of any such machine shall likewise be deemed to be a stamp issued by Government for the purpose of revenue, within the meaning of the Indian Penal Code (45 of 1860)."

1. Section 17, Post Office Act.

9.13. Recommendation.-

We recommend that some such provision should be inserted in the Stamp Act. Some of the replies to our Questionnaire1 favour it. Some have raised queries about the likelihood of misuse. We have dealt with that aspect already. The new section could be numbered as section 10A.

1. Questions 27.

Indian Stamp Act, 1899 Back

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