Maharashtra Govt's Action In Levying Stamp Duty On 'DO' Is Within Legislative Competence Of State: Bombay High Court

The Bombay High Court has held that the action of the Maharashtra Government in levying stamp duty on delivery orders (DO) is within the legislative competence of the state.

The bench of Justice G.S. Patel and Justice Neela Gokhale has observed that the action of the State of Maharashtra in levying stamp duty on Delivery Orders (DO) as provided in Article 29 of Schedule I of the Maharashtra Stamp Act, 1958 (MSA) is well within the legislative competence of the State and does not intrude upon the legislative domain of the Parliament as reserved in Entries 41 and 83 of List I of Schedule VII of the Constitution of India and is not ultra vires Article 246(1), 286(1)(b) and 286(2) of the Constitution of India.

The petitioners/assessees assailed the imposition, levy, and collection of stamp duty by the State of Maharashtra on delivery orders under Article 29 of the Maharashtra Stamp Act, 1958 (MSA), where the supply of goods takes place in the course of import of such goods into the territory of India, as being ultra vires Articles 246(1), 286(1)(b) and 286(2), read with Entries 41 and 83 of List I of Schedule VII of the Constitution of India. The legislative competence of the state is questioned on the ground that the constitutional scheme confers exclusive legislative competence on the Union of India in respect of imports and exports across customs frontiers, and the state has breached the said legislative field.

The petitioners contended that the levy of stamp duty by the state government on DOs issued in the course of imports is illegal and unconstitutional on the ground that under Article 246(1) read with Entry 41 and 83 of List I of Schedule VII of the Constitution, The State Legislature lacks the legislative competence to levy such stamp duty on any document that is part of the import of such goods into the territory of India. The entire field of legislation in this regard is within the sole legislative competence of the Parliament.

The petitioners stated that DOs are nothing but an adjunct or extension to the BoL, and hence, in essence, they are a levy of stamp duty on a BoL that does not fall within the purview of the definition of the term 'instrument' under the MSA. It is the BOL and not the DO that transfers the title to the goods. The BOL constitutes evidence of the receipt of goods by the carrier or shipper. It is a document of title to the goods. It is evidence of the terms and conditions of the contract of carriage. The BoL is expressly excluded from the definition of the term 'instrument' as defined in Section 2(l) of the MSA, and hence, the state government lacks the power to levy stamp duty on a BoL.

The petitioner relied on the decision of the Gujarat High Court, which held BoE not chargeable to stamp duty. The BoE was held not to be a DO nor an 'instrument' as defined in Article 24 of the Gujarat Stamp Act, 1958 (GSA), and hence, not chargeable to stamp duty. Article 24 of the GSA is pari materia to Article 29 of Schedule I of the MSA.

The department contended that the challenge before the Gujarat High Court was limited to the levy of stamp duty on a BoE, which held that a BoE is a document filed with the Customs Authorities to facilitate computation of customs duty and is not an 'instrument' creating any right or liability amounting to a DO within the meaning of the MSA.

The court held that the law operating in the state of Gujarat has no application in the state of Maharashtra. The petitioners' attempt to question the legislative competence of the State of Maharashtra to levy stamp duty on a DO is spurred by judicial intervention by the Gujarat High Court in a related matter and thus fails.

A total of 132 writ petitions filed over a period of 2018 to 2023 were all disposed off.

Counsel For Petitioner: Vikram Nankani

Counsel For Respondent: Birendra B Saraf, Amit Meharia, Paramita Banerjee & Shubham Sawant

Case Title: Saurer Textile Solutions Pvt Ltd Versus The State of Maharashtra

Case No.: Writ Petition No. 1494 Of 2023

Click Here To Read The Order