Lawstreet Journal

10 Times Penalty for Deficit Stamp Duty Under Indian Stamp Act, 1899 Cannot Be Mechanically Possible: Supreme Court [READ JUDGMENT]

Lawstreet Journal 20 Sep 2020 2:52am

Image courtesy: Lawstreet Journal Judiciary 10 Times Penalty for Deficit Stamp Duty Under Indian Stamp Act, 1899 Cannot Be Mechanically Possible: Supreme Court [READ JUDGMENT]

The Supreme Court has observed that the penalty of 10 times prescribed under section 40 (1)(b) of the Indian Stamp Act cannot be mechanically imposed. The three-judge bench of the Supreme Court comprising of Justice Ashok Bhushan, M R Shah, and R. Subhash Reddy observes that the reason for the tenth time prescribed penalty is fraud or deceit in order to deprive or undue enrichment to arrive at a decision under Section 40 (1)(b). 

According to Section 40 (1) (b) of the Indian Stamp Act, 1899 if the collector is of the opinion that such instrument is chargeable with duty and is not duly stamped he shall require the payment of the proper duty on the amount required to make up the same a together with a penalty of 500 rupees; or if things with an amount not exceeding 10 times the amount of the proper duty or of deficient portion thereof. This particular case while impounding the documents the collector has imposed 10 times penalties (Rs 12,80, 97,000/-) on the ground that “the party has not mentioned the actual nature of document with the intension to escape the duty".

Referring to Section 40 and other sections of the Indian Stamp Act, 1899 where statute transfer discretion to an authority, the discretion is to be an exercise in the furtherance of the object of the enactment. Section 35 of the Indian Stamp Act, 1899 talks about when 10 times the amount of proper duty of or deficient portion thereof exceed 500 rupees,… Continue Reading...


Tagged: Supreme Court of India  
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