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Report No. 67

Chapter 2

Section 1-territorial Application

2.1. Introductory.-

We propose to deal in this chapter with the territorial application of the Act - first, the intra-territorial application, and next, the extra-territorial application. Section 1-Intro-territorial application.-By virtue of the proviso to section 1(2), the Act, as it stands at present, does not apply to areas which were previously comprised in Part B States, except in respect of rates of stamp duties on documents mentioned in the Constitution, Seventh Schedule, Union List, entry 91. This is the position emerging by reason of the narrow lines on which the Amendment Act of 1955, which extended the Act to areas of the erstwhile Part B States, was drawn. In this connection history of the Act is of interest.

2.2. History of section 1(2).-

Section 1, sub-section (2), as originally enacted, ran thus:

"It extends to the whole of British India, inclusive of British Baluchistan, the Santhal Parganas and the Pargana of Spiti. The term "British India" was held to include the Agency Tracts included in the Scheduled Districts.1

Certain later amendments extended the Act to Scheduled districts and scheduled areas; but they are not material for the present purpose.

1. Collector of vizagopatnam v. K.C.K. Patnaik, ILR 52 Mad 1: AIR 1928 Mad 1181 (F13).

2.2A. Adaptations.-

By the India (Adaptation of Existing Indian Laws) Order, 1947, the expression "the whole of British India" in section 1(2) was replaced by the expression "all the Provinces of India". Expressions like "British Baluchistan" etc. were dropped by the Indian Independence (Adaptation of Central Acts and Ordinances) Order, 1948.

By the Adaptation Order, 1948, the words "all the Provinces" were substituted for the words "British India". The Adaptation Order of 1950 also made certain verbal changes in this part of section 1(2). The clause as substituted by the Adaptation of Laws Order, 1950, read as follows: "It extends to the whole of India except Part B States." Paragraph 8 of the Adaptation of Laws Order, 1950 enacted that notwithstanding the amendment about the extent of law, the law should not be deemed to have been extended to any area to which it did not extend immediately before the appointed day (26th January, 1950).

By the Merged States (Laws) Act, 1949 (59 of 1949), the Act was extended to certain merged areas; but that extension is no material for the present purpose. By the Part C States (Laws) Act, 1950, the Act was extended to Manipur, Tripura and Vindhya Pradesh. To the erstwhile territory of Cooch-Bihar, the Act was extended by the Cooch-Bihar (Assimilation of Laws) Act, 1950.

2.2B. Amendment of 1955-Part B States.-

The Amendment Act of 1955 extended the Act to Part B States to the very limited extent indicated by the section as it now stands.

2.3. In 1956, on the reorganisation of States, the proviso was adapted. The expression "Part B States" in that proviso was replaced by the words "the territories which immediately before the 1st November, 1956, were comprised in Part B States, by the Adaptation of Indian Laws No. (2) Order, 1956.

The proviso now reads as follows:

"Provided that it shall not apply to the territories which, immediately before the 1st November, 1956, were comprised in Part B States excluding the State of Jammu and Kashmir except to the extent to which the provisions of this Act relate to rates of stamp duty in respect of the documents specified in entry 91 of List I in the Seventh Schedule to the Constitution."

The territories which were comprised in Part B States before the 1st November, 1956 were:-

(1) Hyderabad, now forming parts of Andhra Pradesh State, Mysore State and Maharashtra State;

(2) Madhya Bharat, now forming parts of the Madhya Pradesh State and the Rajasthan State;

(3) Mysore, forming part of the bigger State of Mysore as reorganised now re-designated as Karnataka;

(4) Patiala and East Punjab States Union, now forming part of the Punjab State;

(5) Rajasthan, now forming part of the Rajasthan State as reorganised and Madhya Pradesh State;

(6) Saurashtra, now forming part of the Gujarat State;

(7) Travancore-Cochin, now forming parts of the Tamil Nadu State and the Kerala State.

2.4. Part B States.-

Thus, to areas formerly comprised in Part B States, the Act applies only to the extent to which its provisions relate to rates of stamp-duty on documents specified in the Union List, entry 91, i.e., promissory notes, bills of exchange, proxies etc. The Part B States' areas are, so far as machinery provisions of the Act are concerned, left to be dealt by the laws for the time being in force in the particular areas. It is assumed by the Legislature that some law or other will always be in force containing the machinery provisions to govern stamps: (i) on documents mentioned in the Union List, as well as (ii) on other documents.

2.5. State-wise position analysed.-

Now, it should be stated here, that under the Constitution1, Parliament, when it dealt with the territorial extent of the Act in 1955, (i.e. when the Act was extended to Part B States), could have extended the machinery provisions of the Act to stamps on

(i) documents mentioned in the Union List; and

(ii) other documents. But this has not been done.

The present position as to the application of the Act to various local areas, as deducible from section 1(2) of the Act, is therefore, as follows:-

(1) In the whole of India except the State of Jammu and Kashmir, the Act extends so far as it deals with rates of stamp duties on documents in the Union List, entry 91.

(2) In the whole of India except the State of Jammu & Kashmir and except the areas in former Part B States, the Act, subject to what is stated below, extends so far as it deals with-

(a) rates of stamp duty on other documents; and

(b) machinery provisions in respect of all documents.

(3) But proposition (2) above is subject to important qualifications:

(a) In some States, there have been extensive local amendments in respect of the rates of stamp duty on other documents, the usual procedure being to insert a separate Schedule in lieu of the entries in the existing Schedule2, or to increase the duties in the existing Schedule3; and

(b) Some States have enacted a self-contained Stamp Act of their own, to deal with the rates of stamp-duty on documents in the State List and also with the machinery provisions as to documents in the State List4.

(c) Some States have, while enacting a self-contained law of their own governing the rates and machinery provisions for documents in the State List, applied the Indian Stamp Act as regards machinery provisions in respect of documents in the Union List. Thus, Kerala, which comprises mostly areas of the former Part B State of Travancore, Cochin and the Malabar district of the former Madras State, has, enacted a Stamp Act5 of its own, but as regards documents in the Union List, the machinery provisions of the Indian Stamp Act are made applicable. The gap has, thus, been closed.

1. See discussion under "Constitutional position", para. 1.17, supra.

2. (a) Andhra Pradesh;

(b) Bihar;

(c) Haryana and Punjab;

(d) Madhya Pradesh;

(e) Orissa;

(f) Rajasthan;

(g) Uttar Pradesh; and (h)West Bengal.

3. (a) Assam; and (b)Tamil Nadu.

4. e.g. (a) Bombay Stamp Act, 1958-sections 74 and 75 and Schedule 2 (for Maharashtra and Gujarat);

(b) Mysore Stamp Act, 1957-section 72.

5. Kerala Stamp Act, 1959-sections 72 and 73.

2.6. The Amendment Act of 1955 could have gone further, and extended the provisions of the Act even to the areas previously comprised in Part B States, in so far as the provisions relate to matters mentioned in the Constitution, seventh Schedule, Concurrent List, entry 44 (stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty1), that is to say, machinery provisions. However, that has not been done, so that "rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts2" constitute the only subject in respect of which the Indian Stamp Act applies by virtue of its own force to the areas of what were previously Part B States3. As regards the areas of former Part A States, the Indian Stamp Act, 1899, applies to those areas, except where, by separate laws or amendments introduced by a particular State, its application has been modified or abrogated. At this stage4, it is not proposed to enter into details of the state laws.

1. See also discussion as to section 1(2), Infra,

2. Constitution, Seventh Schedule, Union List, entry 91.

3. Section 1.

4. See infra.



Indian Stamp Act, 1899 Back




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