1970 (3) TMI 182 - HC - Income Tax

Summary

Issues:
1. Whether an affidavit, where the deponent swears and not affirms, requires a stamp duty of Re. 1/- as prescribed in Article 4 of Schedule I-B of the Stamp Act.
2. Competence of the State Legislature to amend Article 4 of Schedule I-B of the Stamp Act.
3. Definition and scope of "affidavit" under various enactments or rules.
4. Whether an affidavit not duly stamped under Article 4 of Schedule I-B of the Stamp Act has to be impounded and sent to the Collector or can be admitted in evidence on payment of the deficit stamp duty and penalty.
5. Interpretation of "instrument" under Sections 33, 35, and 36 of the Stamp Act.
6. Conditions for an instrument to be considered duly stamped.

Detailed Analysis:

1. Stamp Duty on Affidavits:
The primary issue is whether an affidavit, where the deponent swears and not affirms, requires a stamp duty of Re. 1/- as per Article 4 of Schedule I-B of the Stamp Act, amended by the U. P. Taxation Laws Amendment Act, 1969. The amended Article 4 specifies that an affidavit, including an affirmation or declaration, requires a stamp duty of Re. 1/- if filed or used in any Court, and Rs. 4.50 in any other case. Prior to the amendment, such affidavits were exempt from duty, but the amendment introduced a chargeable stamp duty at a lower rate for court-related affidavits.

2. Competence of State Legislature:
The contention is whether the U. P. Taxation Laws Amendment Act, 1969, specifically Article 4 of Schedule I-B, is within the competence of the State Legislature. The Seventh Schedule of the Constitution, particularly Items 91 and 97 of List I (Union List), Item 63 of List II (State List), and Item 44 of List III (Concurrent List) are relevant. The State Legislature has the power to amend stamp duty rates for documents not specified in Item 91 of List I. Item 44 of List III allows the State to amend the Stamp Act for documents chargeable with stamp duty, excluding judicial stamps. The U. P. Taxation Laws Amendment Act, 1969, received the President's assent and is valid and operative from October 1, 1969.

3. Definition and Scope of "Affidavit":
The term "affidavit" is defined in Section 4(3) of the U. P. General Clauses Act to include affirmation and declaration for persons allowed to affirm or declare instead of swearing. Section 6 of the Oaths Act, 1873, indicates that making an oath is the general rule, with affirmation as an exception for certain individuals. Thus, an affidavit can be a document where facts are either sworn or affirmed. The expression "including an affirmation or declaration" in Article 4 of Schedule I-B clarifies that affidavits with affirmed facts are also covered, making the term "affidavit" inclusive and not restrictive.

4. Impounding and Admissibility of Unstamped Affidavits:
The issue is whether an unstamped affidavit must be impounded and sent to the Collector or can be admitted in evidence upon payment of the deficit stamp duty and penalty. Sections 33, 35, and 36 of the Stamp Act are pertinent. An "instrument" under Section 2(14) includes documents creating, transferring, limiting, extending, extinguishing, or recording rights or liabilities. Affidavits generally do not create or transfer rights but recite them. However, for Sections 3, 33, 35, and 36, an "instrument" means one chargeable with duty, irrespective of the definition in Section 2(14). An unstamped affidavit can be admitted in evidence on payment of the deficit stamp duty and penalty as per Section 35, and must be impounded under Section 33.

5. Interpretation of "Instrument":
The term "instrument" in Sections 33, 35, and 36 refers to any document chargeable with duty under Section 3, even if it does not fall within the definition in Section 2(14). Therefore, affidavits chargeable under Article 4 of Schedule I-B are considered instruments for these sections. An unstamped affidavit can be admitted in evidence upon payment of the deficit stamp duty and penalty, and must be impounded and sent to the Collector for further action.

6. Conditions for Duly Stamped Instrument:
An instrument is duly stamped if the prescribed stamp duty is paid, an impressed stamp (not adhesive) is used within the prescribed limits, and the document is stamped before or at the time of execution as per Section 17 of the Stamp Act.