INTRODUCTION
Stamp duty is a kind of tax levied by the state for payment of registration of a document – usually created on basis of an agreement or transaction. For buying or selling of a property, copyrights, patents, land, and marriage licenses, a stamp duty of valid proof is of utmost necessity.
With regard to India herein, it must be noticed that amount and rate of Stamp Duty Tax are formulated and decided by the State Government to keep up with the necessities as deemed important. However, this remains one of the taxes whose roots go way back to when India was under the British Raj.
WHY STAMP DUTY IS A NECESSARY DOCUMENT?
Prior to the introduction of stamp duty, people used verbal application for asserting possession of something, but, due to the subsequent introduction of stamp duty, the transaction will be validated for the stamp paper acting as a justifying document. Possession of physical transfer of property is not sufficient -one needs legal ownership at the time of registration and also has to pay the stamp duty to prove the admissibility of the document.
Stamp duty is paid only by transferee or buyer.
In India, two types of stamp papers upon stamp duties are levied, viz. (1) used in papers carrying impressed stamps, and (2) e-stamp facilities.
The validation of stamp paper is only for six months without being used.
THE IMPORTANCE AND BENEFITS OF STAMP DUTY IN THE LEGAL SYSTEM OF INDIA
The stamp duty is the tax for valid stamp paper and it is similar to income tax for collecting money.
Stamp duty is payable under Section 3[1] of the Indian Stamp Act;1899, according to which stamp duty must be paid at that time. There is no allowance for the delay of payment. However, if someone delays the payment then he shall attract the penalty. Stamp duty shall be charged on the basis of the instrument. There are some differences in charging of stamp duty in different charges, like in adoption deed, buying and selling of property, indemnity bond, and lease agreement – all depending upon which amount of stamp paper is being used.
When presented in court three things must be there, that is,
- Whether the stamp paper ensures payment for stamp duty or not
- Notarization of the stamp paper
- Registration of the document
As per the Evidence Rule, misplacement of any amongst these three will lead to the stamp paper to be not accepted as a document in court. Stamp paper plays the most important role in the Evidence Act inadmissibility of the documents in courts to verify that document is perfectly sealed like a notary stamp and registered too.
PENALTY IN INDIAN STAMP ACT
Section 62[2] of the Indian Stamp Act, where any non-payment of stamp duty shall lead to a penalty of 500 rupees. A new amendment came up in section 62A[3], where the transfer of stamp duties done in a timely manner was focused upon and collection of stamp duty was equally emphasized. Any person failing to collect and transfer the stamp duty within fifteen days of the expiry be liable to a punishment of one lakh rupees and transfer of stamp duties also defaults. Section 63[4] states upon failure to cancel adhesive stamps: As per Section 12[5], any person affixing such stamp will have to pay the penalty because a stamp paper once used cannot be used again.
In the stamp paper scam case of Abdul Karim Telgi v/s Union of India and others[6], the accused was involved in printing duplicate stamp papers and selling them to banks and other institutions. Once proved guilty, he was thus sentenced to imprisonment of thirteen years and a penalty of 202 crores. Section 69[7] contains provisions for breaking of rules relating to the sale of unauthorized stamps.
In the case of Sushil Thomas Abraham vs Skyline Builders[8], the plaintiff was entitled to file a suit as an “Indigent person”. As per order 44[9] of CPC, an indigent person who is not able to pay the security deposit for the civil suit comes under the decision of the Court with regard to his financial condition. Any court fees paid for Civil suits comes under Stamp Duty.
In the hypothetical situation where one person is given a loan from another person against the jewelry along with an extra loan amount without a mortgage. Both loans were on different deeds. The loaning party filed a recovery suit as the borrower was unable to repay the amount. At the time of giving the loan, however, an agreement was made on stamp paper and signed by a notary public- were the same person signing both the agreements put the same stamp, but different signatures. Subsequently, the person who had taken the loan repaid his share and got signature by a notary without knowing the fact that the paper was forged. Therefore, a series of complications landed the man in trouble – from this it can be found that whenever one document is created, the points contained must be read carefully and the signature and seal must be verified properly.
CONCLUSION
Stamp duty, being one of the features of the Indian legal system since before India even achieved independence, remains integral in all righteousness even till date. Stamp Duty has to be paid for the legal claim to become functional. From the Indian Stamp Act of 1899 to today, the utility of this act has been forever increasing, along with being one of the most common provisions of the Indian legal system that most citizens come across at some point or the other in life. Therefore, it can be considered that awareness regarding this duty is one that needs to be in knowledge of the citizens, in light of which the above discussion stands as an elaboration of “Stamp Duty in India” and its various nuances.
References
[1] Indian stamp act
[2] Indian stamp act 1899
[3] Indian stamp act 1899
[4] Indian stamp act 1899
[5] Indian stamp act 1899
[6] Karnataka high court Crml. Appeal no.1085 of 2010
[7] Indian stamp act 1899
[8] AIR 2001 SC2277
[9] CODE OF CIVIL PROCEDURE 1908
This article is authored by Dishant, student of final year B.A.LL.B at Vivekananda Institute of Professional Studies
