Indian Stamp Act, 1899

Subject: Business Law

Prof: Kasturi
Group 7& 2



Introduction
The Indian stamp act came into existence on 1
st

July, 1899.
It is a fiscal enactment , on the basis of which
stamp duties are levied on the transactions
effected by certain instruments mentioned in the
act.
The main object of the Act is to secure revenue
for the state by levying stamp duty on certain
classes of instruments as specified in the Act.


The Act extends to the whole of India except the
state of Jammu & Kashmir. It is a central
enactment.
Parliament prescribes the rate of the stamp duty.
State Government has powers to fix stamp
duties on all documents except bill of exchange,
cheques etc. Rates prescribed by State
Government will prevail in that State.


Some Important Terms
Judicial Stamps : Judicial Stamps are used in
courts and in some offices under the provisions
of Court Fess Act.
Non Judicial Stamps : Non Judicial Stamps
are used for written transactions such as to
register contracts, agreements, deeds, wills, etc.
Adhesive Stamps : These stamps are printed on
small pieces of paper and affixed to the
insrument.
Bond : According to Section 2[c], bond is one
which imports an obligation in writing to pay
the money to deliver agricultural products to
another. Bonds can be Simple bond, Conditional
Bond & Grain bond.
Conveyance : Conveyance includes a
conveyance on sale and every instrument by
which property, whether moveable or
immoveable, is transferred inter vivos and
which is not otherwise specifically provided for
by Schedule I 5[or by Schedule I-A, as the case
may be;]

Chargeable : Chargeable means Chargeable
under the Act inforce at the date of execution of
the instrument.
Document : Document is not defined in the act.
As per the General Clauses Act, Document
includes any matter written, expressed or
described upon any substance for the purpose of
recording that matter.

Duly Stamped : Duly stamped, as applied to an
instrument, means that the instrument bears an
adhesive or impressed stamp of not less than the
proper amount, and that such stamp has been
affixed or used in accordance with the law for
the time being in force in State.
Instrument : Instrument includes every
document by which any right or liability is, or
purports to be, created, transferred, limited,
extended, extinguished or recorded.
Lease : Lease is a transfer of right to enjoy
property for a certain time in consideration of a
price paid or promised made.
Settlement : It means any non-testamentary
disposition, in writing, of moveable or
immoveable property made
1. In consideration of marriage
2. For the purpose of distributing property of the
settler among the family
3. For any religious or charitable purpose
And includes an agreement in writing.
Instruments Chargeable with
Stamp Duty
Instrument includes every document by which any right or
liability, is, or purported to be created, transferred,
limited, extended, extinguished or recorded [section
2(17) of Indian Stamp Act]. Any instrument mentioned
in Schedule I to Indian Stamp Act is chargeable to duty
as prescribed in the schedule [section 3]. The list
includes all usual instruments like affidavit, lease,
memorandum and articles of company, bill of exchange,
bond, mortgage, conveyance, receipt, debenture, share,
insurance policy, partnership deed, proxy, shares etc.
Thus, if an instrument is not listed in the schedule, no
stamp duty is payable. Instrument does not include
ordinary letters. Similarly, an unsigned draft of an
agreement is not an instrument.
Several instruments used in single
transaction : If there are several instruments
are employed for completing the transaction, the
principal instrument only shall be chargeable
with the duty prescribed in Schedule I.
Instruments relating to several distinct
matters : Any instrument relating to several
distinct matters shall be chargeable with the
aggregate amount of the duties with the seprate
instruments


Instruments coming within several
descriptions in Schedule I : If an instrument
comes within 2 or more descriptions then the
duties shall be chargeable only with the highest
of such duties.
Instruments exempted from Stamp Duty:
1. An instrument exceuted by or on behalf of or
in favour of the government.
2. Sale, transfer or other disposition of ship by
the way of mortgage or otherwise.
It is not the transaction but only the instrument
which is chargeable to stamp duty.
Stamps And Mode Of Using Them
Stamp duty can be paid by :
1. Using Stamp Paper : Stamp paper are one of
the most widely used authentication papers in
most of the judicial and civil works. Most of the
civil and judicial works have a pre-requisite of
stamp papers. So the stamp papers have become
integrated and indispensable part of our
transactions. Each stamp paper has its own
unique registered number. So it can verify the
validity of the stamp paper by checking its
registration number with the controlling
authority.

2. Using Adhesive Stamps :
The following instruments are stamped with
adhesive stamps:
a) Instruments chargeable on demand and drawn
in sets.
b) Bills of exchange drawn or made out of India.
c) Entry as an advocate or attorney on the roll of
a high court.
d) Transfers by endorsement of shares in any
incorporated company or other body corporate.


Cancellation of Adhesive Stamps :
a) Adhesive Stamps must be cancelled in such a
way that thy cannot be used again. If the
instruments are not cancelled in the said
manner, they are deemed unstamped.
b) If Stamps are not cancelled, instruments are
inadmissible as evidence.
c) The person required to cancel an adhesive
stamp can do so by writing across or on the
stamp its name or initials with true date or in
any other effectual manner.
Time of Stamping Instruments
1) All instruments chargeable with duty and
executed by any person in india shall be
stamped before or at the time of execution.
2) Every instrument chargeable with duty
executed only out of india may be stamped
with 3 months after it has been first received in
India.
3) In case of Bill of exchange drawn out of india,
the first holder of such instrument shall affix
the proper stamp & then cancel at the time of
acceptance or payment.
Persons Liable To Pay Stamp Duty
Incase of Insurance policy the person
effecting the insurance.
Incase of Fire Insurance the person issuing
the policy.
Incase of a conveyance by the grantee.
Incase of a lease by the lessee
Incase of a counterpart of a lease by the
lessor.
Incase of an instrument of exchange by the
parties in equal shares.
Incase of a certificate of sale By the purchaser
of the property to which such certificate relates.
Incase of an instrument of partition By the
parties in equal ratio of their shares.
In case of instrument of partition by order of any
court by the parties in the ratio given by the
court.

Adjudication As To Stamps
Adjudication of stamps means Determining the
chargeability of stamp duty on instrument
Provisions related to adjudication of stamps :
Application for adjudication is made to collector
of stamps appointed in each district or area.
Such applications can be made to the parties of
instrument.
Application for adjudication should be
accompanied by true copy of documents to
prove that all facts affecting the chargeability of
the instrument are truly been set forth.
Collector may refuse to proceed upon any
application until the true copies of the
documents have been attached.
Evidence furnished for adjudication of stamp
duty cannot be used against any person in any
court of law, except in an enquiry to the stamp
duty.
Adjudication fee of minimum 50paise and
maximum Rs.50/- is required to be paid.
The collector cannot compel the party for
realization of stamp duty.
Instruments Not Duly Stamped
Instruments which are not duly stamped cannot be
admitted as evidence for any purpose.
If any instrument appears to be not duly stamped,
any officer who is empowered by law to receive
evidence, has the power to impound the same.
Where any receipt chargeable is tendered to, or
produced before, any officer unstamped in the
course of the audit of any public account; such
officer may in his discretion, instead of
impounding the instrument; require a duly
stamped receipt to be substituted therefore.
If the collector is of the opinion that instrument
impounded is chargeable with duty and is not
duly stamped, he is empowered to ask the
payment of the proper duty or the amount
required to make up the same along with
penalty.
Reference And Revision
Control of and Statement of case to, Cheif
Controlling Revenue- Authority:
The powers exercisable by a Collector is subject
to the control of the Chief Controlling Revenue-
authority.
If any Collector, feels doubt as to the amount
of duty with which any instrument is
chargeable, he may refer it, with his own
opinion thereon, for the decision of the Chief
Controlling Revenue-authority.
Such authority shall consider the case and
send a copy of its decision to the
Collector, who shall proceed to assess and
charge the duty (if any) in conformity
with such decision.


Statement of case by Chief Controlling
Revenue-authority to High Court :
The Chief Controlling Revenue-authority may
refer any case which is referred to it or
otherwise coming to its notice, with its own
opinion thereon, to the High Court if it arises in
the state.
Every such case shall be decided by not less than
three Judges of the High Court to which it is
referred, and in case of difference the opinion of
the majority shall prevail.
Powers of High Court to call for further
particulars as to case stated and disposing the
case :
If the High Court is not satisfied that the
statements contained in the case are sufficient to
enable it to determine the questions raised
thereby, the Court may refer the case back to the
Revenue-authority by which it was stated, to
make such additions thereto or alterations
therein as the Court may direct in that behalf.
The High Court, upon the hearing of any such
case, shall decide the questions raised
thereby, and shall deliver its judgment
thereon containing the grounds on which
such decision is founded.
The Court shall send to the Revenue-authority
by which the case was stated, a copy of such
judgment under the seal of the Court and the
signature of the Registrar; and the Revenue-
authority shall, on receiving such copy,
dispose of the case conformably to such
judgment.

Conclusion