Report No. 67
2.7. Union Territories.-
In the Union territories, of course, there is no restriction on the competence of Parliament. It is not necessary for the purposes of the present discussion to notice the position in detail in regard to Union territories. To areas in Union territories which were part of British India, the Indian Stamp Act, 1899 extended of its own force and this position continued except where it was altered by legislative developments after independence relevant to the particular Union territory. To the Union territory of Goa, Daman and Diu, the Act was extended by Regulation 11 of 1963, and further amended in 1968. As regards Pondicherry, section 3 read with Part II of Schedule of the Pondicherry (Extension of Laws) Act, 1968 (XXVI of 1968) extended the Indian Stamp Act, 1899 as in force in the erstwhile State of Madras to the Union Territory of Pondicherry, subject to certain modifications.
The Act came into force1 in the Union Territory of Pondicherry on 9th January, 1969. In relation to Manipur and Tripura, which were previously Union territories (now States), the Union Territories Stamp & Court Fees Laws Act, 1961 (33 of 1961), section 5, dealt with the matter. Parliamentary legislation relevant to Stamp duties in some Union territories was passed2 in 1971. It introduced what is known as the surcharge for "Refugee relief. It was repealed3 in 1973, in so far as it applied to the Union territories of
(i) Andaman and Nicobar Islands;
(iii) Dadra and Nagar Haveli;
(v) Goa, Daman and Diu;
(vi) Laccadive Minicoy and Amindivi Islands;
1. Notification of the Administrator, Pondicherry published in Pondicherry Gazette Extra. No. 4, dated 9th January, 1969.
2. Act 73 of 1771.
3. Act 14 of 1973:
2.8. Observations regarding intra-territorial application of the Act.-
To revert to section 1(2), the provision in section 1(2) regarding the extent of the Act creates a somewhat confusing picture. The matter may be re-stated as follows1:
(a) In some cases2, the Central Act is the governing Act, not only far rates of stamp duties for documents in the Union List, but also for rates of duty for the documents mentioned in the State List (there having been no local variations in the stamp duties), as well as for machinery provisions for all documents.
(b) In some cases3, the Central Act applies for the purposes of determining the rates of stamp duty in respect of documents mentioned in the Union List, entry 91, and as regards the machinery provisions in respect of all documents. But it does not apply for rates for documents in the State List, these having been dealt with by a separate Schedule-usually, Schedule 1A inserted locally.
(c) In some States which have enacted their own separate Stamp Acts,4-5 the utility of the Central Act is more limited, and is confined to the rates of duty and machinery provisions for the documents mentioned in the Union List, entry 91. The self-contained Stamp Acts of the States concerned apply in regard to documents mentioned in the State List, both for determining the rate of stamp duty and for ascertaining the machinery provisions applicable to those documents.
It should be mentioned that in States which comprise Part B areas (i.e., areas previously comprised in Part B States), the Indian Stamp Act, 1899, has been extended, for matters excluded by section 1(2), by State amendment in relation to those areas.
(d) Theoretically, States could even apply their own machinery provisions even to documents in the Union List.
1. Also see para. 2.5, supra.
2. This discussion is confined to "States" proper.
3. e.g., Andhra Pradesh, Bihar, Madhya Pradesh.
4. See below, "State Acts".
5. e.g., the erstwhile State of Bombay; also Kerala and Mysore.
2.9. Recommendation as to intra-territorial application under section 1(2), Proviso.-
In our opinion, this position is very unsatisfactory. We are unable to see any justification for continuing the present state of the law under which the machinery provisions differ from document to document1 (within a State) and from State to State2. In respect of an Act like the present, uniformity of machinery provisions is, in our opinion, of considerable importance. Since we attach importance to the introduction of uniform procedure in regard to machinery provisions, we have thought it appropriate to deal with the problem.
Accordingly, we recommend to the Union Government that it should take early steps towards achieving uniformity in regard to machinery provisions. Of course, this implies-(i) repeal of State Stamp Acts, i.e. portions of those Acts which relate to machinery provisions, and (ii) Parliamentary action adopting uniform machinery provisions applicable to the whole of India. In making this recommendation, we do not wish to dispute the fact that State laws can and should properly deal with the rates of duties.
As is evident, States are at liberty to pass their own Stamp Act, by exercising the power cumulatively conferred by State List, Entry 63, and Concurrent List, entry 44. This has already been done in some States3. (Of Course, those Acts cannot deal with the rate of Stamp duty for documents mentioned in the Union List). But uniformity in respect of machinery provisions would be a better course, and there does not appear to be any constitutional hindrance in that regard. We may mention that the point was raised in our Questionnaire, and by and large opinion is favourable to what we have recommended above4.
1. Category (c), supra.
2. Categories (a) to (d), supra.
3. (a) The Bombay Stamp Act, 1958 (in force in the States of Maharashtra and Gujarat, subject to amendments subsequently made in those States);
(b)The Kerala Stamp Act, 1958,
(c) The Mysore Stamp Act, 1957.
(The list is not necessarily exhaustive).
4. Question 1 of the Questionnaire.
2.10. Extra-territorial application of the Stamp Act.-
So much as regards the intra-territorial application of the Act. Extra-territorial application of the Act is a matter on which the position now seems to be fairly certain, in view of the precise wording of the charging section1. The scheme of the Act is that, subject to certain special provisions (to be presently noticed), only an instrument executed in India2 is chargeable with duty. The special provisions relate to (i) bills of exchange3 payable otherwise than on demand or promissory notes which, though drawn or made out of India, are accepted or paid or presented or endorsed or negotiated in India4, and (ii) other instruments5executed out of India which relate to any property situate or to any matter or thing done or to be done in India and which are received in India, for various matters, arising out of or concerning these special provisions (e.g., the time of stamping etc.), the Act has provided a detailed scheme6.
1. Section 3, clauses (a), (b) and (c).
2. Section 3(a).
3. Section 3(b); see also section 32(3)(b) and section 11(b).
4. This is the rough gist of the provision.
5. Section 3(c).
6. Sections 17 to 20.
2.11. Position in England.-
It would appear that in this respect, the position is not so clear in England, and it is nowhere stated in the (English) Stamp
Act, 1891, in the charging provision that foreign document do not require to be stamped. It is only when one comes to the section providing the sanction1 that the English Act speaks of an instrument executed in the United Kingdom etc. Of course judicial decisions in England do take the view that the Act is so confined. This view has been taken in deference to the "comity of nations". In the case of Nestle & Co. Ltd. v. Internal Revenue Commissioners, (1952) 1 All ER 1388 (1392) (Danckwerts J.), on appeal (1953) Chancery 395. Danckwerts T. observed:-
"The comity of nations requires that a government must tax only those people who are under the control of its own laws."
Hence, an agreement entered into between persons living abroad with regard to property abroad does not require an English stamp if it does not relate to a matter or thing to be done in the United Kingdom2. It would also appear that, in England, a contract for the sale of immovable property situate outside the U.K. is not chargeable with duty3.
1. Section 14(4), Stamp Act, 1891 (English).
2. Gilchrist v. Herbert, (1872) 26 Law Times 381, cited in Halsbury's, 3rd Edn., Vol. 33, p. 269, footnote (c).
3. Section 59(1), Stamp Act, 1891 (English).