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Report No. 67

Chapter 14

Liability as Regards Stamp Duty-Sections 29-30 and Section 30A (New)

14.1. Introductory.-

We now come to an important question-who is liable to pay the duty? The matter is dealt with in the Act very indirectly, or in a fragmentary manner. We shall first dispose of such provisions as now exist, and then discuss the need for adding to them.

14.1A. Section 29-Introductory.-

Section 29 lays down that the onus of bearing the expenses of providing the proper stamp in the matter of particular instruments will, in the absence of an agreement to the contrary, lie on the particular party or parties as specified therein. The parties inter se may, of course, enter into an agreement to the effect that the expenses of stamp duty will be borne by a particular party. Thus, where a deed contemplated that the defendant should bear the costs incidental to the preparation of the deed of trust, the plaintiffs were held to be entitled to claim the stamp duty paid by them1. But disputes regarding payment of stamp duty on deeds of transfer which were not an essential part of the contract, cannot affect the completed agreement already arrived at.2

1. Dobson and Bart= Ltd. v. Bengal Spinning and Weaving Co., 1897 ILR 21 Born 126 (136).

2. Jainarain Ram Lundia v. Surajmull Sagarmull, AIR 1949 PC 211 {215, 216).

14.2. Section is not applicable after production.-

Section 29 is applicable only where the document is not produced before the court. Once the document has been produced before the court and tendered in evidence, the right of recovery of duty is only by virtue1 of section 44, and not under section 29. In order to entitle the plaintiff to recover under that section (section 44), the amount of the duty must have been included in the costs at the time of passing the decree; otherwise, he has no right to institute any proceedings in regard thereto2.

1. Panakala Rao v. Penuganda Numaraswami, AIR 1937 Mad 763 (764).

2. Panakala Rao v. Penuganda Numaraswami, AIR 1937 Mad 763.

14.3. Instruments of partition.-

One point concerning instruments of partition may be noted. Section 29(g) provides that in the absence of any agreement to the contrary, the expense of providing the proper stamp is to be borne by the parties thereto, in proportion to their respective shares in the property comprised therein, or, when the partition is made in execution of an order passed by a Revenue authority, or Civil Court or arbitrator, then in such proportion as such authority court, or arbitrators directs. In the old Act also, section 29(e) declared that the expenses of providing proper stamp, (in case of an instrument of partition) would be borne by the parties thereto in proportion to their respective shares in the property comprised in the instrument of partition.

By the expression "parties thereto", used in the section, must be understood not merely the party or parties applying for partition, but the whole co-sharers who must necessarily be parties in the partition proceedings and equally bear the proper stamp duty; because the effect of partition proceedings is that the property thereby loses its identity as a previously undivided property, and there is nothing unreasonable in making any instrument of partition chargeable with stamp duty pertaining to the value of the whole even though the division is limited. This was the decision in an Allahabad case1.

1. Reference by Board of Revenue, 1880 ILR 2 All 654 (664, 666) (per Sturart, C.J.).

14.4. In the same case, Pearson J. observed, that in his opinion, the entire property was the subject matter of partition, and the stamp duty should be calculated upon its value and not merely on the value of the portion assigned to the applicant for partition. The portion assigned to the applicant could only be separated and allotted to him in severally by a process which dealt with the entire property and separated and allotted the remainder of it to another party. The opinion, he further said, appeared to be supported by the terms of clause (e) of section 29-now section 29(g)-which provided that the stamp duty shall be payable, in the case of an instrument of partition, not by the applicant for partition but by the parties thereto, and the other co-sharers in the entire undivided property must be parties to the partition of it equally with the applicant for partition-in proportion to their respective shares in the property comprised therein, and it cannot be denied that the partition comprises the entire undivided property.1-2

1. Reference by Board of Revenue, 1880 ILR 2 All 654 (664, 667) (per Pearson, J.).

2. Also see Reference under Stamp Act, Section 46, 1892 ILR 15 Mad 164 (FB).

14.5. Agreement by Government.-

The position regarding cases where the Government agrees to pay the duty and the effect of that agreement on section 3, has been already considered.1

The above resume does not show any need for change in section 29. As regards instruments not mentioned in section 29, agreement usually governs the liability to bear expenses of stamps. In the absence of material regarding commercial usage, we recommend no change in the section.

1. See discussion as to section 3.

14.6. Section 30-Obligation to give receipt in certain cases.-

A very special case of liability to pay duty is dealt with in the next section-section 30. Under that section, any person receiving any money exceeding twenty rupees in amount, or any bill of exchange, cheque or promissory note for an amount exceeding twenty rupees, or receiving in satisfaction or part satisfaction of a debt any movable property exceeding twenty rupees in value, shall, on demand by the person paying or delivering such money, bill, cheque note or property, give a duly stamped receipt for the same. Under the same section, any person receiving or taking credit for any premium or consideration for any renewal of any contract of fire-insurance, shall, within one month after receiving or taking credit for such premium or consideration, give a duly stamped receipt for the same.

14.7. Penal provisions.-

The penal provisions relevant to section 30 may be noted. Under section 65, if the person concerned refuses or neglects to give the receipt when a demand has been made, as provided by section 30, he is punishable with fine which may extend to one hundred rupees1. But the obligation to give a receipt arises under section 30 only when a demand is made. Under section 62, whether a demand has been made or not, if a receipt has been given, it must be a duly stamped one2. An unstamped receipt renders the giver punishable with a fine which may extend to five hundred rupees. The offence under section 65 consists in not giving a properly stamped receipt. The offence under section 62(1)(b) consists in passing a receipt unstamped, whether one is demanded by the payer or not3. If a person required under section 30 to give a duly stamped receipt gives an unstamped receipt, (or a receipt not duly stamped), then he would be guilty of both the offences, i.e. under section 65 and under section 62.4

1. Section 65(a), Stamp Act.

2. Section 62(1), Stamp Act.

3. Girdhardas v. Emp., AIR 1933 Born 462.

4. (a) Girdhardas v. Emp., AIR 1933 Born 462.

(b) Queen-Empress v. Khettur Mehan, 1900 ILR 27 Cal 324.

Indian Stamp Act, 1899 Back

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