Instrument not Chargeable with Stamp Duty as it was not required to be Stamped, no Bar could be imposed due to it being not Duly Stamped: SC [Read Order]

The Supreme Court observed that the Instrument not chargeable with stamp duty as it was not required to be stamped, no bar could be imposed due to it being not duly stamped. The appellant in the present matter is Vijay. The Plaintiff and Defendant entered into an agreement to sell on 04.02.1998, and pursuant to that, Plaintiff was allegedly put in possession by Defendant. When Defendant denied the existence of such an agreement, Plaintiff filed a suit for specific performance of contract.

In the said suit, Plaintiff moved an application to file a copy of the agreement to sell, among other documents, as secondary evidence. Subsequently, the Plaintiff filed a writ petition before the High Court of Madhya Pradesh challenging the review order and the constitutional validity of Section 35 of the Stamp Act. The High Court, upheld the validity of the said section and the order of the Review Court.

The present appeal is preferred against this order of the High Court. Entry 44 of List III of the Constitution of India is Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty. Under Entry 44 of List III, the power to levy stamp duty on all documents is concurrent. But the power to prescribe “the rate” of such levy is with the Parliament and subjected to the same with the State Legislature. The State Legislature is competent to levy the stamp duty under Entry 44 of List III and prescribe rates of duty under Entry 63 of List II.

However, if the instrument falls under the categories mentioned in Entry 91 of List I, the power to prescribe the rate would be only with the Parliament, and for all other instruments or documents, such power would be with the State legislature under Entry 63 of List II. A Two-Judge Bench comprising Justice Abhay S Oka and Justice Sanjay Karol observed that “If the documents sought to be admitted are not chargeable with duty, Section 35 has no application. Thus, in the present case, since the document was dated 04.02.1988, the instrument was not chargeable with duty. It follows therefrom that when such document(s) are not required to be stamped, then no bar could be imposed due to it being not duly stamped.”

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