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TMI Blog1963 (1) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to advance a loan of ₹ 1,45,00,000/- on the mortgage of the Company's assets at its jute mills at Budge Budge and at Ghusuri, all situated in West Bengal, the deed of mortgage was executed at Lucknow in the State of Uttar Pradesh on March 22, 1957. To this deed the first petitioner affixed stamps of the value of ₹ 1,08,751/- purchased from the Collector of Stamps, Calcutta. It was duly registered at Calcutta on April 5, 1957. Thereafter, on March 23, 1957, by a deed executed between the first petitioner and the State of Uttar Pradesh a part of the mortgage property in West Bengal was released and in its place and stead a part of some properties of Uttar Pradesh were substituted. The deed of substitution was duly stamped and registered in Uttar Pradesh. No objection was then taken to the stamp affixed on the original deed of mortgage. In 1960 the first petitioner made a request to the state of Uttar Pradesh to release a further part of the mortgage properties included in the original mortgage deed and to accept in their place and stead the assets and properties of the Company's factory at Varanasi as substituted security. A draft deed for the substitution was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y paid stamp duty in West Bengal to the extent of ₹ 1,08,751/- after proper adjudication thereof by the Collector of stamps, Calcutta, based on the provisions of a circular dated August 2, 1954, issued by the State of West Bengal. Rule 3 of the Stamp Rules as framed by the Uttar Pradesh Government (which provided that stamps overprinted with the words Uttar Pradesh or the letters U.P. ) was also attacked as unconstitutional on the ground that it constituted an unreasonable restriction on the petitioner's fundamental rights under Art. 19(1)(f) and 19(1)(f)(g) of the Constitution. Alternatively, it was contended that the circular of the West Bengal Government dated August 2, 1954 was null and void and the State of West Bengal had illegally exacted the sum of ₹ 1,08,751/- from the petitioner without any authority of law in that behalf and had infringed the fundamental rights of the petitioner under Art. 19(1)(f) and 19(1)(g) of the Constitution. 4. The petitioner asks for (i) a writ of certiorari for the quashing of the order of the Board of Revenue dated August 11, 1961; (ii) a writ in the nature of mandamus directing respondents 3, 4 and 5, viz., Mr. Bharga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 3 of the Stamp Act creates a liability for stamp duty. Section 3 after its amendment by the U.P. legislature stands thus :- 3. Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in that Schedule as the proper duty therefore, respectively, that is to say :- (a) every instrument mentioned in that schedule which, not having been previously executed by any person, is executed in the States on or after the first day of July, 1899; (b) every bill of exchange (payable otherwise than on demand) or promissory note drawn or made of the States on or after that day and accepted or paid, or presented for acceptance or payment or endorsed, transferred or otherwise negotiated, in the States; and (c) every instrument (other than a bill of exchange, or promissory note) mentioned in that Schedule which, not having been previously executed by any person, is executed out of the States on or after that day, relates to any property situate, or to any matter or thing done or to be done, in the States and is received in the States :- Provided that, except as otherwise expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished in the official gazette and on such publication shall have effect as if enacted by the Act. Of the rules framed by the Uttar Pradesh Government it is necessary to consider in the present case Rule 3 which is in these words :- 3. Except as otherwise provided by the Stamp Act or by these rules - (i) all duties with which any instrument is chargeable shall be paid, and such payment shall be indicated on such instrument, by means of stamp issued by the Government for the purposes of the Act, and (ii) a stamp which by any word or words on the face of it is appropriated to any particular kind of instrument shall not be used for an instrument of any other kind. (2) There shall be two kinds of stamps for indicating the payment of duty with which instruments are chargeable namely; (a) impressed stamps overprinted with the words Uttar Pradesh or the letters U.P. , and (b) adhesive stamps overprinted with letters U.P. ; 11. Provided that the payment of stamp duty on instruments, executed in any part of British India other than Uttar Pradesh and governed by S. 19-A of the said Act, as amended in its application to the Uttar Pradesh, may be indicated by suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er whether when the officer found that the stamp had not been affixed or used in accordance with the law for the time being in force in Uttar Pradesh he was entitled to say also that the stamp had not been affixed or used in accordance with the law for the time being in force in India . It is pointed out that like the Uttar Pradesh legislature the Bengal legislature had also amended the stamp law and framed its own rules. The amendment of s. 3 in Bengal was by the addition of a proviso in these words :- Provided that, except as otherwise expressly provided in this Act, and notwithstanding anything contained in clause (a), (b) or (c) of this section or in Schedule 1, the amount indicated in Schedule 1-A to this Act shall, subject to the exemptions contained in that Schedule, be the duty chargeable under this Act on the following instruments, mentioned in clauses (aa) and (bb) of this proviso as the proper duty therefore respectively, (aa) every instrument, mentioned in Schedule 1-A as chargeable with duty under that Schedule, which, not having been previously executed by any person, is executed in Bengal on or after the first day of April, 1922; and (bb) every instru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in accordance with the law in force in Bihar. Should he hold that the instrument has been duly stamped, in such circumstances ? 18. Primarily, the liability of an instrument to stamp duty arises on execution. Execution in India itself made the instrument liable to stamp duty under s. 3(a) as it stood before the amendment. Under s. 3(c) execution out of India, where the instrument relates to property situated or any matter or thing done or to be done in India together with the further fact that the instrument is received in India, made the instrument chargeable with duty. In amending to Stamp Act what the State legislatures sub-stantially did was to treat the particular State as equivalent to India. Thus, after the amendment by the U.P. legislature the position in law is that execution of an instrument in Uttar Pradesh is made the primary dutiable event and liability to stamp duty arises on such execution. Apart from that, liability also arises where the instrument though executed out of Uttar Pradesh relates to property situated or any matter or thing done or to be done in Uttar Pradesh, and is received in Uttar Pradesh. It may be mentioned that the changes in the law made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amps in accordance with the law of his State. It was to avoid the hardships that may conceivably result from such a situation that the legislatures of different States enacted s. 19A of the Stamp Act. This section of the Uttar Pradesh Act runs thus :- 19A. Where any instrument has become chargeable in any part of the States other than the Uttar Pradesh with duty under this Act or under any other law for the time being in force in any part of the States and thereafter becomes, chargeable with a higher rate of duty in the Uttar Pradesh under clause (bb) of the first proviso to section 3, then, (i) notwithstanding anything contained in the first proviso to section 3 the amount of duty chargeable on such instrument shall be the amount chargeable on it under Schedule 1-A, or Schedule 1-B, less the amount of duty, if any, already paid on it in the States; and (ii) in addition to the stamps, if any, already affixed thereto, such instrument shall be stamped with the stamps necessary for the payment of the amount of duty chargeable on it under (1) in the same manner and at the same time and by the same persons as though such instrument where an instrument received in the States ..... X X X X Extracts X X X X X X X X Extracts X X X X
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