Impounding Of Instrument Sine Qua Non For Imposing Duty Under Bombay Stamp Act: Gujarat High Court

"Impounding of the instrument is sine qua non for exercise of the powers."

The observation was made while dealing with a petition filed by Century Tiles for quashing of order of Deputy Collector of the Stamp Duty Department declaring the duty paid by the Petitioner on an instrument as deficit and requiring it to pay Rs. 1,80,000. The said duty was in connection with a document executed in lieu of loan facility availed by the Petitioner from Dena Bank.

The Petitioner preferred an appeal against the order after depositing INR 45,000 which was rejected. The loan amount was also repaid by the Petitioner.

The primary contention of the Petitioner was that the original document was not with the authority at the time of issuance of notice and the impugned order was thus in violation of Section 37B of the Act.

It was also submitted that the authority had wrongly assessed the duty by considering the instrument as one of mortgage deed and not one whereby only the title deeds relating to the property were deposited with the bank.

Agreeing with these contentions, the High Court observed on going through the document which is titled as "Memorandum of Deposit of Title Deeds", it could be gathered that it provided for handing over to and deposit with the bank the title deeds of the property.

Reliance was placed on Sumesh Prahladbhai Bakshi vs. State of Gujarat in which similar issue was dealt with and it was held that for attracting stamp duty in respect of document in the nature of Memorandum of Deposit of Title Deeds, Article of Schedule-I of the Bombay Stamp Act, 1951 would apply. It thus held that the authorities could not have adverted to Article 36 of Schedule-I for the purpose of levying stamp duty treating the documents to be a mortgaged deed.

It also agreed with the other contention that the authority under the Stamp Act, could not have exercised his powers unless there was an impounding of the document.

"A valid exercise of the powers under Section 33 read with Section 39 of the Act can only be done after the instrument is impounded. Mere securing copy of the instrument is no impounding but original document has to be taken into custody to make it an act of impounding."

Accordingly, the impugned order was set aside. The Petitioner was also entitled to refund of Rs.45,000.

Case No.: C/SCA/6640/2008

Case Title: CENTURY TILES THROUGH DIRECTOR GANPATBHAI DAHYABHAI PATEL v/s THE DEPUTY COLLECTOR & 2 other(s)

Citation: 2022 LiveLaw (Guj) 343

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