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Judgments of Supreme Court of India and High Courts

The Indian Find Pipe Co. Ltd vs State Of Maharashtra on 9 January, 2018

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION NO. 2519 OF 1988

1. The Indian Hume Pipe Co. Ltd.,
having its registered office at
Construction House, Walchand
Hirachand Marg, Bombay- 400 038.

2. Mr.Bhaskar S. Nadkarni,
residing a 16A, K.G.S. Co-operative
Housing Society, Saraswati Baug,
Jogeshwari (East), Bombay- 400 060. … Petitioners.
V/s.
1. State of Maharashtra.

2. The Superintendent of Stamps, Bombay
having his office at Town Hall, Fort,
Bombay- 400 023. … Respondents.

WITH
WRIT PETITION NO. 2488 OF 1988
AND
WRIT PETITION NO. 2534 OF 1988

1. Reliance Industries Limited,
A Joint Stock Public Limited Company
incorporated under and governed by
the provisions of the Companies Act, 1956
(Act I of 1956) and having its registered
office at 3rd floor, Maker Chambers IV,
222, Nariman Point, Bombay- 400 021.

2. K. Sethuraman
of Bombay Indian Inhabitant, the Secretary
of the 1st Petitioner, Having his office at

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Maker Chambers IV, 222, Nariman Point,
Bombay- 400 021. … Petitioners.
V/s.
1. State of Maharashtra.

2. Superintendent of Stamps, Bombay
having his office at General Stamp Office,
Town Hall, Fort, Bombay- 400 023.

3. Collector, Bombay
Having his office at Old Customs House,
Fort, Bombay- 400 023.
* * * * * *
WITH
WRIT PETITION NO. 2194 OF 1988

1. The Antifriction Bearings Corporation
Limited, a public limited Company
incorporated under the Companies Act I
of 1956, having its registered office at
402-B, Poonam Chambers, Dr. Annie
Besant Road, Worli, Bombay- 400 018.

2. Shri S.V.Subramania Iyer,
Secretary and shareholder of the 1st
Petitioner and having his office at
402-B, Poonam Chambers, Dr. Annie
Besant Road, Worli, Bombay- 400 018. … Petitioners.
V/s.
1. State of Maharashtra.

2. The Superintendent of Stamps,
having his office at General Stamps Office,
Town Hall, Fort, Bombay- 400 023.

3. The Industrial Credit and Investment
Corporation of India Limited,

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a public limited company incorporated
under the Indian Companies Act, 1913
having its registered office at 163,
Backbay Reclamation, Bombay- 400 020. … Respondents.

WITH
WRIT PETITION NO. 2280 OF 1988

1. The Indian Hotels Co. Ltd., having their
registered office at Taj Mahal Hotel,
Apollo Bunder, Bombay- 400 039.

2. Shri V.R.Agnihotri, Indian Inhabitant,
residing a Plot 70-L, Central Avenue Road,
Chembur, Bombay- 400 071. … Petitioners.
V/s.
1. State of Maharashtra.

2. The Superintendent of Stamps, Bombay
having his office at General Stamps Office,
Town Hall, Fort, Bombay- 400 023.

3. The Recovery Officer, Collector of Bombay
having his office at Old Custom House,
Fort, Bombay. … Respondents.
WITH
WRIT PETITION NO. 215 OF 1989

1. The Dharamsi Morarji Chemicals Company
Limited, a Public Limited Company
incorporated under the Companies Act
I of 1956, having its Registered Office at
Prospect Chambers, 317/21, Dr.D.N.Road,
Fort, Bombay- 400 001.

2. Dinesh Gatulal Mehta, of Bombay Indian
Inhabitant, Secretary and Shareholder of

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the Petitioner No.1 and having its office
at Prospect Chambers, 317/21, Dr.D.N.Road,
Fort, Bombay- 400 001. … Petitioners.
V/s.
1. State of Maharashtra.

2. Superintendent of Stamps, Bombay
having his office at General Stamp Office,
Town Hall, Fort, Bombay- 400 023.

3. Central Bank of India, a body corporate
constituted under the provisions of the
Banking Companies (Acquisition
Transfer of Undertakings) Act, (V of 1970),
having its office at Chandermukhi, Nariman
Point, Bombay- 400 021, and one of its
Branches amongst others at Ashram Road,
Ahmedabad. … Respondents.

Mr.Santosh Bharucha with Mr.Shrey Fatterpaker i/b. D.F. Diwan
for the petitioners in WP No.2519/1988.

Mr.Mustafa Doctor, Senior Advocate with Mr.Abhinav Chandrachud
i/b. Mulla Mulla for the petitioners in WP No.2280/1988.

Mr.Milind Sathe, Senior Advocate with Mr.Vikramaditya Deshmukh,
Mr.Amey Nabar and Ms. Reshma Randive i/b. M/s.A.S.Dayal and
Associates for the petitioners in WP Nos.2534/1988 and 2488/1988.

Mr. Arunn Siwach with Mr.A.Sikka and Mr.B.Lalal i/b. Cyril Amarchand
Mangaldas for the petitioners in WP No.215/1989.

Mr.Amit Borkar with Mr.Akshay Shinde for the State in all the matters
except WP No.2534/1988.

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Mr. Amitt Borkar with Ms. Geetaa Shastri, Addl.GP for the State
in WP No.2534/1988.

[As Smt. Vibha V. Kankanwadi, J is sitting at Aurangabad Bench, signed
judgment is pronounced by A.S.Oka, J as per Rule 296(iii) Chapter XX of
the Bombay High Court (Original Side) Rules.]

CORAM : A.S.OKA AND
SMT.VIBHA V. KANKANWADI, JJ.

RESERVED ON : 3rd August 2017.

PRONOUNCED ON : 9th January 2018.

JUDGMENT : (Per A.S.Oka, J.)

1 Writ Petition No.2488/1988 was not on board. By consent of

parties the said petition was taken up on the board. These petitions can be
disposed of by a common judgment. One of the common challenges in
these petitions is to the constitutional validity of section 7 of the Bombay
Stamp Act, 1958 (for short “the said Act”). A brief reference to the facts
of the case will be necessary.

2 In Writ Petition No.2519/1988, a declaration is sought that the
provisions of sections 3, 7 and 19 of the said Act to the extent to which the
same seek to levy stamp duty on the copies of the instruments executed
outside the State of Maharashtra are null and void. It is stated in the said
petition that a Debenture Trust Deed dated 6 th April 1987 (for short “the

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deed”) was executed by the first petitioner company in the State of
Gujarat. The first petitioner and the State Bank of India are the parties to
the said deed. The State Bank of India is a trustee. A mortgage of the
immovable properties of the first petitioner company was made under the
deed with a view to secure the issue and allotment of the debentures of
the first petitioner. As a substantial part of the mortgaged property was
situated in the State of Gujarat, the deed was executed in the State of
Gujarat and was stamped as per the law prevailing in the State of Gujarat
(the Bombay Stamp Act,1958-as applicable to the State of Gujarat). As
the registered office of the first petitioner company is situated in Mumbai,
the charge of mortgage was required to be registered with the Registrar of
Companies in Mumbai pursuant to the provisions of the Companies Act,
1956 (for short “Companies Act”). In response to the query made by the
second respondent- the Superintendent of Stamps, the petitioners
contended that the said original deed is not received in the State of
Maharashtra. A demand in the sum of Rs.3,66,220/- was made by the
second respondent being the difference between the stamp duty payable
on the said deed in the State of Maharashtra and the stamp duty paid in
the State of Gujarat which is the subject matter of challenge in the
petition.

3. In Writ Petition No.2488/1988, a similar deed was executed
by the first petitioner- company in the State of Gujarat. Stamp duty was
paid and it was registered in the State of Gujarat. A copy of the said deed
was filed with the Registrar of Companies in Mumbai for registering the

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charge as the registered office of the first petitioner is in the State of
Maharashtra. A demand for the difference in the stamp duty payable in
the State of Maharashtra and the stamp duty paid in the State of Gujarat
was made by the second respondent. That is how this writ petition is
filed challenging the demand. Even in this petition, there is a challenge
to the constitutional validity of the relevant provisions of the said Act in so
far as they permit levy and recovery of stamp duty in respect of copies of
instruments.

4. In Writ Petition No.2534/1988, a similar deed was executed
and registered in the State of Gujarat. A copy of the said deed was filed
in the office of the Registrar of Companies in Mumbai for registration of
charge as the registered office of the first petitioner is in Mumbai. Even
in this case, a demand is made by the second respondent for payment of
differential duty. The demand is for payment of difference between the
duty payable on the said deed in the State of Maharashtra and duty paid
in the State of Gujarat. In the petition, there is a challenge to the demand
and, in the alternative, to the constitutional validity of the provisions of
the said Act as in other petitions.

5. In Writ Petition No.2194/1988, none has appeared for the
petitioners for pressing the petition on merits. However, we find that the
challenge is similar as in the other petitions.

6. In Writ Petition No.2280/1988, a similar deed was executed

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by the first petitioner- company in the State of Gujarat. Stamp duty was
paid and the deed was registered in the State of Gujarat as in other cases.
A verified copy of the said deed was filed with the office of the Registrar of
Companies at Mumbai pursuant to the provisions of the Companies Act for
the purpose of registration of charge as the registered office of the first
petitioner is in Mumbai. In this petition, the challenge is to the similar
demand of difference in the duty. A prayer is made in the petition for
making a reference under section 54 of the said Act on the question
whether any stamp duty is payable in the State of Maharashtra on the
copy of the deed which is registered in the State of Gujarat. There is
similar challenge in Writ Petition No.215/1989.

7. Earlier, these petitions were heard on merits and were
dismissed by a judgment and order dated 9 th September 1998. The Apex
Court by judgment and order dated 2nd March 2005 remanded the matters
to this Court. The main ground on which the remand order was passed is
that the challenge to the constitutional validity of section 7 of the said Act
was not at all considered on merits.

8 With a view to appreciate the submissions made by the
learned counsel for the parties, it will be necessary to make a reference to
the provisions of the said Act as the same existed before it was amended
by the Maharashtra Act No.XVII of 1993. The Sections which are relevant
for our consideration are Sections 3, 7 and 19, which read thus:

“3. Instruments chargeable with Duty.

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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 Schedule I as the proper duty
therefor respectively, that is to say–

(a) every instrument mentioned in Schedule I, which
not having been previously executed by any person, is
executed in the state on or after the date of
commencement of this Act;

(b) every instrument mentioned in Schedule I, which,
not having been previously executed by any person, is
executed out of the state on or after the said date,
relates to any property situate, or to any matter or
thing done or to be done in this State and is received
in this State:

Provided that no duty shall be chargeable in respect
of–

(1) any instrument executed by or on behalf of, or in
favour of, the Government in cases where, but for this
exemption, the Government would be liable to pay the
duty chargeable in respect of such instrument or where
the Government has undertaken to bear the expenses
towards the payment of the duty;

(2) any instrument for the sale, transfer or other
disposition, either absolutely or by way of mortgage or
otherwise, of any ship or vessel, or any part, interest,
share or property of or in any ship or vessel registered
under the Bombay Coasting Vessels Act, 1838, or
Merchant Shipping Act, 1958.”

(emphasis added)

“7. Payment of higher duty in respect of certain
instruments.- (1) Notwithstanding anything
contained in section 4 or 6 or it any other enactment,
unless it is proved that the duty chargeable under
this Act has been paid,–

(a) on the principal or original instrument, as the

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case may be, or

(b) in accordance with the provisions of this
section, the duty chargeable on an instrument of
sale, mortgage or settlement other than a principal
instrument or on a counterpart, duplicate or copy
of any instrument shall, if the principal or original
instrument would, when received in this State have
been chargeable under this Act with a higher rate
of duty, be the duty with which the principal or
original instrument would have been chargeable
under section 19.

(2) Notwithstanding anything contained in any
enactment for the time being in force, no instrument,
counterpart, duplicate or copy chargeable with duty
under this section shall be received in evidence unless
the duty chargeable under the section has been paid
thereon:

Provided that any Court before which any such
instrument, duplicate or copy is produced may permit
the duty chargeable under this section to be paid
thereon and may then receive it in evidence.”

“19. Payment of duty on certain instruments liable
to be increased duty in Maharashtra State.-

Where any instrument of the nature described in any
article in Schedule I and relating to any property
situate or to any matter or thing done or to be done in
this State is executed out of the State and subsequently
received in the State,–

(a) the amount of duty chargeable on such instrument
shall be the amount of duty chargeable under Schedule
I on a document of the like description executed in this
State less the amount of duty, if any already paid under
any law in force in India excluding the State of Jammu
and Kashmir on such instrument when it was
executed;

(b) and in addition to the stamps, if any, already

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affixed thereto such instrument shall be stamped with
the stamps necessary for the payment of the duty
chargeable on it under clause (a) of this section, in the
same manner and at the same time and by the same
persons as though such instrument were an
instrument received in this State for the first time at
the time when it became chargeable with the higher
duty; and

(c) the provisions contained in clause (b) of the
proviso to sub-section (3) of section 32 shall apply to
such instrument as if such were an instrument
executed or first executed out of this State and first
received in this State when it became chargeable to the
higher duty aforesaid, but the provisions contained in
clause (a) of the said proviso shall not apply thereto.”

9. The submissions made by the learned counsel representing
the petitioners can be summarized as under:

It is submitted that under Section 19(a) of the said Act, at the
relevant time, the words “a copy of the instrument” were not present as
the same were subsequently added by the Maharashtra Act No.XVII of
1993. Secondly, it was submitted that merely because a copy of the deed
or a certified or a verified copy thereof is filed in the office of the Registrar
of Companies in Mumbai as per the requirement of Section 125 of the
Companies Act, it cannot be said that the original deed was received in the
State of Maharashtra. It was urged that even the charging section i.e.
Section 3 makes it clear that the stamp duty is chargeable, provided an
instrument mentioned in Schedule-I to the said Act is executed out of the

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State and is received in the State. It was submitted that Section 7 of the
said Act has no application as the same refers to Sections 4 and 6.

Relying on the definition of ” instrument” under section 2(l)
of the said Act, it was submitted that a copy of the deed does not create
or purport to create, transfer or extinguish any right. Reliance was placed
on the decisions of the Apex Court in the case of Jupudi v. Pulavarthi 1
and Hariom Agrawal v. Prakash Chand Malviya 2. Reliance was also
placed on the decision of a Full Bench of the Gujarat High Court in the
case of Chief Controlling Revenue Authority v. Nutan Mills Ltd. 3. It
was pointed out that by Maharashtra Act No.XI of 1998, first proviso was
inserted in Section 3 which provides that stamp duty will be payable even
on a copy or facsimile image of an instrument, if full stamp duty on the
original is not paid. It was submitted that this shows that till the
Maharashtra Act No.XI of 1998 came into force, stamp duty was not
payable on a copy of an instrument. It was submitted that the
amendment made to Section 3 was not retrospective. Reliance was
placed on the decision of the Apex Court in the cases of Ruby Sales and
Services (P) Ltd. v. State of Maharashtra and others4 as well as Jupudi
Kesava Rao v. Pulavarthi Venkata Subbarao and others (supra).

Detailed submissions were also made on the constitutional
validity of various provisions of the said Act. It was pointed out that Entry
1 AIR 1971 SC 1070
2 (2007) 8 SCC 514
3 AIR 1978 Gujarat 1
4 (1994) 1 SCC 531

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91 in List-I of Schedule VII of the Constitution of India deals with the
rates of stamp duty in respect of bills of exchange, cheques, promissory
notes, bills of lading, letters of credit, policies of insurance, etc. It was
contended that the entry 91 is only in respect of “instruments” and hence,
entry 63 of List-II which deals with rates of stamp duty in respect of
documents other than those specified in the provisions of List-I is in
relation to instruments and not any document. It was submitted that the
State Legislature cannot levy stamp duty on a copy of an instrument as the
relevant entry is in respect of instruments which do not include copies
thereof. It was submitted that a word “document” used in Entry 63 of
List-II would have to be construed as an instrument as entry 91 of List-1
refers only to instruments and not to an ordinary document. It was
submitted that even according to the provisions of the Indian Stamp Act,
1899 (for short “Indian Stamp Act”), the stamp duty is leviable only on the
instruments. Relying upon the decision of the Apex Court in the case of
Bhopal Sugar Industries v. D.P.Dube5, it was submitted that the State
Legislature is powerless to enact a law providing for levy of stamp duty on
a document which is not an instrument. Relying upon the decision of the
Apex Court in the case of Bar Council of Uttar Pradesh v. State of
U.P.6, it was urged that both Entry 91 of List-I and Entry 63 of List-II are
empowering fixation of rates of stamp duty in respect of instruments. It
was urged that a copy of an instrument is not an instrument and,
therefore, if Section 7 of the said Act is construed as empowering levy of
stamp duty on a copy of an instrument, to that extent the section will be

5 AIR 1964 SC 1037
6 (1973) 1 SCC 261

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ultra vires the Entry 63 of List-II. Relying upon the decision of the Apex
Court in the case of Sushil Kumar v. State of Haryana7, it was urged
that the word “document” can only include the original document and not
a copy thereof.

10. The learned Special Counsel for the State of Maharashtra
relied upon the decision of the Apex Court in the case of New Central
Jute Mills Co. Ltd. v. State of West Bengal 8. He relied upon paragraph-
16 of the said decision. He submitted that liability will arise when the
instrument is executed in one State is used for doing things in another
State. In such a case, the liability to pay stamp duty will arise in both the
States. Inviting our attention to Section 125 of the Companies Act, he
urged that even going by the case of the petitioners, the verified copies of
the instruments executed in the State of Gujarat were filed with the
Registrar of Companies in Mumbai for the purposes of registration of the
charge of mortgage. He invited our attention to the provisions of the said
Act as it stood in January 1992. He submitted that under clause (b) of
sub-section (1) of Section 7, a duty was always payable on a copy of the
instrument. He submitted that even without amendment to Section 3
made by adding a proviso, stamp duty was always leviable on a copy of
the instrument covered by clause (b) of sub-section (1) of Section 7 of the
said Act. He submitted that in the present case, differential duty has been
charged in accordance with Section 19 of the said Act. He submitted that
even a true copy of the instrument which is executed in one State but

7 AIR 1988 SC 418
8 AIR 1963 SC 1307

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which is used in another State will become an instrument for the purposes
of the said Act. He would, therefore, submit that Entry 63 of List-II will
cover copies of instruments to which Section 7 is applicable.

11. We have given careful consideration to the submissions.
Firstly, it will be necessary to look at the provisions of the said Act as the
same existed at the relevant time. We have already quoted Sections 3,7
and 19 of the said Act in the ealier part of this Judgment. Schedule-I
prescribes the rates of stamp duty on various documents/instruments.
The definition of “instrument” as contained in clause (l) of Section 2 of the
said Act reads thus:

“2. Definitions. In this Act, unless there is anything
repugnant in the subject or context.-

….. ….. ….. ….. ….. …. ….. …..

(l) “instrument” includes every documents by which
any right or liability is, or purports to be, created,
transferred, limited, extended, extinguished or
recorded, but does not include a bill of exchange,
cheque, promissory note, bill of lading, letter of credit,
policy of insurance, transfer of share, debenture, proxy
and receipt”

12 Firstly, we are dealing with the question whether the copies of the
deeds which are the subject matter of these petitions were liable for
payment of stamp duty under the said Act. In the present case, we were
dealing with the said deeds styled as Debenture Trust Deeds which are
executed in the State of Gujarat in respect of immovable properties in
Gujarat. Under the deeds subject matter of these petitions, a mortgage of

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immovable properties was created in favour of a bank or a consortium of
banks by way of security for the debentures and the interest payable
thereon. Stamp duty was paid on the deeds in the State of Gujarat. We
may note here that Chapter-II of the said Act has the heading “Stamp
Duties”. Chapter-II has five sub-headings. Under sub-heading (A) styled
as “Of the Liability of Instruments to Duty”, Sections 3 to 9 are included.
Section 3 which we have quoted above specifically states that subject to
the provisions of the said Act and the exemptions contained in Schedule-I,
the instruments set out in clauses (a) and (b) are chargeable with duty of
the amounts indicated in Schedule-I as the proper duty therefor
respectively. It is true that Section 3, at the relevant time, did not refer to
a copy of an instrument and it referred to only an instrument. It is also
true that at the relevant time, the proviso to Section 3 which deals with
the copies of the instruments was not on the statute book. Section 4
provides that where, in case of any sale or mortgage or settlement, several
instruments are employed for completing the transaction, only the
principal instrument is chargeable with duty prescribed in Schedule-I and
each of the other instruments shall be chargeable with a duty of ten
rupees instead of the duty prescribed for it in the Schedule-I. Section 5
provides that any instrument comprising or relating to several distinct
matters shall be chargeable with the aggregate amount of the duties with
which separate instruments, each comprising or relating to one of such
matters, would be chargeable under the said Act. Section 6 provides that
subject to the provisions of Section 5, an instrument so framed as to come
within two or more of the descriptions in Schedule-I shall be chargeable

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only with the highest of such duties when the duties chargeable are
different. Section 7 has a title “Payment of higher duty in respect of
certain instruments”. Sub-section (1) of section 7 starts with a non-
obstante clause which seeks to override Sections 4 and 6 or any other
enactment. Thus, in a way, this Section is by way of an exception to
Sections 4 and 6. It provides that unless it is proved that the duty
chargeable under the said Act has been paid, (a) on the principal or
original instrument, as the case may be, or (b) in accordance with the
provisions of this section, the duty chargeable on instrument of sale,
mortgage or settlement, other than a principal instrument or a copy of
any instrument shall, if the principal or original instrument, when received
in the State would have been chargeable under the said Act with a higher
rates of duty, be the duty with which the principal or original instrument
would have been chargeable under Section 19. In the present case, the
deeds have been executed and stamped in the State of Gujarat and,
therefore, admittedly, the stamp duty chargeable under the said Act has
not been paid on the original deeds. As stated earlier, the deeds create a
mortgage in respect of immovable properties of the first petitioner
Companies in Gujarat. It is also not in dispute that the deeds subject
matter of these petitions, if received in the State, would have been
chargeable under the said Act with a higher rate of duty. Sub-section (1)
of Section 7 provides that in case of a copy of any such instrument, stamp
duty under the said Act will be payable which is equivalent to the duty
with which the principal or the original instrument would have been
chargeable under Section 19. Sub-section (2) of Section 7 provides that a

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copy of the instrument chargeable with duty as provided in sub-Section
(1) shall not be received in evidence unless the duty chargeable under the
said section has been paid thereon. Section 7 is also a charging section
which comes under sub-heading (A) “Of the Liability of Instruments to
Duty”. Sub-section (1) of Section 7 specifically provides for payment of
duty on a copy of the instrument. The duty is payable, provided if the
principal or the original instrument executed outside the State, when
received in the State, would have been chargeable for stamp duty under
the said Act with a higher rate of duty. It is true that Section 19 by itself
does not provide for payment of stamp duty on a copy of the instrument.
But sub-section (1) of Section 7 which is a charging section, by a legal
fiction makes Section 19 applicable to a copy of an instrument to which
clause (b) of sub-section (1) of Section 7 is applicable. That is how, in
the case of a copy of the instrument to which provisions of clause (b) of
sub-section (1) of Section 7 are applicable, the duty as provided under
Section 19 will be chargeable. Section 19 comes under the sub-heading
(C) “Of the time of Stamping Instruments”. Section 19 is applicable to
an instrument of the nature described in any article in Schedule-I and
relating to any property situate or to any matter or thing done or to be
done in the State is executed out of the State and is subsequently
received in the State. In such a case, an amount of duty chargeable on
such instrument shall be the amount of duty chargeable under Schedule-I
on a document of the like description executed in this State less the
amount of duty, if already paid under any law in force in India. As stated
earlier, Section 7 which is a charging section specifically provides that the

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duty under Section 19 will be payable on a copy of the instrument to
which provisions of clause (b) of sub-section (1) of Section 7 are
applicable.

13. There is no dispute that in the present petition, the copies of
the deeds were received in the State. The verified copies were brought
into the State for registration of charge as provided in Section 125. Sub-
sections (1), (2) and (3) of Section 125 of the Companies Act which are
relevant, which read as under:

“125. Certain charges to be void against
liquidator or creditors unless registered.– (1)
Subject to the provisions of this Part, every charge
created on or after the 1st day of April, 1914 , by a
company and being a charge to which this section
applies shall, so far as any security on the company’ s
property or undertaking is conferred thereby, be void
against the liquidator and any creditor of the company,
unless the prescribed particulars of the charge,
together with the instrument, if any, by which the
charge is created or evidenced, or a copy thereof
verified in the prescribed manner, are filed with the
registrar for registration in the manner required by
this Act within thirty days after the date of its creation:
Provided that the Registrar may allow the particulars
and instrument or copy as aforesaid to be filed within
thirty days next following the expiry of the said period
of thirty days on payment of such additional fee not
exceeding ten times the amount of fee specified in
Schedule X as the Registrar may determine, if the
company satisfies the Registrar that it had sufficient
cause for not filing the particulars, and instrument or
copy within that period.

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(2) Nothing in subsection (1) shall prejudice any
contract or obligation for the repayment of the money
secured by the charge.

(3) When a charge becomes void under this section,
the money secured thereby shall immediately become
payable.”

14. As pointed out earlier, Section 3 as well as Section 7 of the
said Act are charging sections. The deeds in this case relate to a thing
done or to be done in the State of Maharashtra. The thing done or to be
done in the State of Maharashtra is the registration of charge under
Sections 125 read with 130 of the Companies Act. The registration of
the charge is to be made as provided in sub-section (1) of Section 125 by
submitting the instrument with prescribed particulars or a copy thereof
verified in a prescribed manner. Such a charge is required to be entered by
the Registrar of Companies in a Register of charge as provided in Section
130 of the Companies Act. Thus, in the cases in hand, copies of the deeds
executed outside the State were brought into State for a thing to be done
in the State. In the circumstances, in view of Section 7 read with Section
19 of the said Act, differential stamp duty was payable on the verified
copies of the deeds in question brought into the State and submitted to
the Registrar of Companies at Mumbai in accordance with Section 125
read with section 130 of the Companies Act.

15. Though we are not concerned with the proviso which was

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added by the Maharashtra Act No.XI of 1998 to Section 3, we may note
here that the effect of the proviso is that a copy or extract or a facsimile
image or otherwise of the original instrument on which stamp duty is
chargeable under the provisions of this section, shall be chargeable with
full stamp duty as provided in Schedule-I, if the proper duty payable on
such original instrument is not paid. The proviso operates in a
completely a different field. It will apply when the original document is
executed in the State but stamp duty is not paid on the same. In such a
case, stamp duty will be payable on a copy of such instrument.

16 At this stage, we may make a useful reference to the decision
of the Full Bench of the Gujarat High Court in the case of Chief
Controlling Revenue Authority v. Nutan Mills Ltd. (supra). There were
two questions framed which were referred to the Full Bench, which read
thus:

“(1) Whether a copy of an instrument produced under
Section 125 of the Companies Act is an Instrument
chargeable with duty under Section Section 7(1) read
with Section 19 and Section 2 of the Bombay Stamp Act,
1958?

(2) Whether the Collector Assistant Supdt. Of
Stamps was right in impounding the copy of the
instrument and ordering levy of duty and penalty under
the provisions of Sections 33 and 39 of the Bombay
Stamp Act, 1958?

The first question was answered in the affirmative. Thus, in
so many words the Gujarat High Court held that a copy of the instrument

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produced under Section 125 of the Companies Act though is not an
instrument within the meaning of the said Act would be chargeable with
the difference between the duty payable in accordance with sub-section
(1) of Section 7 read with Section 19 of the said Act and the duty payable
under the Bombay Stamp Act as applicable to the State of Gujarat. The
Full Bench clarified that such a copy of the original instrument cannot be
called as an instrument within the meaning of Section 2 of the said Act.

17. Reliance was placed by the petitioners on a decision of the
Apex Court in the case of Jupudi v. Pulavarthi (supra). The issue
before the Apex Court was whether the reception of secondary evidence of
a written agreement to grant a lease is barred by the provisions of Sections
35 and 36 of the Indian Stamp Act. The Apex Court considered the issue
in the light of Section 33 of the Indian Stamp Act read with Section 35.
Both the sections deal with the instruments chargeable with duty.
Section 33 deals with power of every person having by law or by consent
of parties an authority to receive evidence. It confers power on such
person, if he finds that the instrument produced before him is not duly
stamped, to impound the said document. Section 35 provides that no
instrument chargeable with the duty shall be admitted in evidence for any
purpose by any person having by law an authority to receive evidence
unless such document is duly stamped. It is in this context, that the Apex
Court in paragraph 13 has held that there is no scope for inclusion of a
copy of a document as an instrument for the purpose of the Stamp Act. It
was held that Section 35 only deals with original instruments and not the

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copies thereof. In the case in hand, under sub-section (2) of Section 7 of
the said Act, even a copy of the instrument covered by clause (b) of sub-
section (1) of Section 7 cannot be received in evidence unless duty
chargeable thereon is fully paid. Therefore, the said decision will not help
the petitioners.

18 In the case of Hariom Agrawal v. Prakash Chand Malviya
(supra), the Apex Court was dealing with a photostat copy of the
instrument/ agreement produced as a secondary evidence when on the
original document proper stamp duty was not paid. The question was
whether such a copy can be impounded under the provisions of the Indian
Stamp Act as amended by the Madhya Pradesh amendment. After
considering the provisions of Sections 33 and 35 of the Indian Stamp Act,
the Apex Court came to the conclusion that a copy of the instrument
cannot be impounded. Even this decision will have no application as the
issue which arises in the cases in hand never arose before the Apex Court.
In the cases in hand, Section 7 of the said Act which is a charging Section
provides for levy of stamp duty on a copy of an instrument to which
clause (b) of Sub-section 1 thereof is applicable.

19 Therefore, we find that the difference of duty was payable on the
copies of deeds, which were filed under Section 125 of the Companies Act,
in the light of the provisions of Section 7 read with Section 19 of the said
Act. In fact none of the decisions interpret Section 7 of the said Act or a
provision which is pari materia thereto.

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20 Now, the other issue survives for our consideration is regarding the

constitutional validity of Section 7 in so far as it is applicable to the copies
of the documents. It was pointed out that Entry 91 in List-I of Schedule 7
of the Constitution of India deals with rates of stamp duty in respect of
bills of exchange, cheques, promissory notes, bills of lading, letters of
credit, policies of insurance, etc. Entry 63 of List-II deals with rates of
stamp duty in respect of documents other than those specified in the
entries in List-I. It was submitted that the State Legislature is not
competent to levy stamp duty on a copy of an instrument. It was urged
that the word "document" used in Entry 63 of List-II will have to be
construed as an instrument. It was submitted that even according to the
provisions of the Indian Stamp Act, stamp duty is leviable only on the
instruments. Relying upon the decision of the Apex Court in the case of
Bhopal Sugar Industries v. D.P.Dube (supra),it was submitted that the
State Legislature is powerless to enact a law providing for levy of stamp
duty on a document which is not an instrument. Relying upon the decision
of the Apex Court in the case of Bar Council of Uttar Pradesh v. State
of U.P (supra), it it is pointed out the Apex Court has observed that both
Entry 91 of List-I and Entry 63 of List-II are empowering fixation of rates
of stamp duty only in respect of instruments and not in respect of any
document. It was urged that a copy of an instrument is not an instrument
and, therefore, if Section 7 of the said Act is construed as empowering
levy of stamp duty on a copy of the instrument, to that extent, the section
will be ultra vires the Entry 63 of List-II. Relying upon the decision of

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the Apex Court in the case of Sushil Kumar v. State of Haryana (supra),
it was urged that the word "instrument" can only include the original
document and not a copy thereof.

21. Entry 91 of List-I reads thus:

"91. Rates of stamp duty in respect of bills of exchange,
cheques, promissory notes, bills of lading, letters of credit, policies of
insurance, transfer of shares, debentures, proxies and receipts."

Entry 66 of List-II reads thus:

"63. Rates of stamp duty in respect of documents other
than those specified in the provisions of List I with regard
to rates of stamp duty."

Both the entries do not contain the word "instrument". It is true
that the Apex Court in the case of Bar Council of UP vs. State of UP has
observed that Entry 91 of List-I refers to "instruments". There are judicial
pronouncements which hold that the word "instrument" occurring in the
definition clauses of both the Indian Stamp Act and the said Act refers
only to an original instrument and not to a copy of an instrument. The
argument is that both the above entries in Schedule VII relate only to
instruments and not the copies thereof and therefore, the provision of
section 7 of the said Act lacks legislative competence in so far as it seeks to
levy stamp duty on copies of instruments.

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22. In several decisions, the Apex Court has laid down the law
relating to the interpretation of various entries in the Lists in the Schedule
VII. The Apex Court in the case of State of Gujarat v. Akhil Gujarat
Pravasi V.S. Mahamandal9, in paragraph 10 held thus:

"10. In interpreting the scope of various entries in the
legislative lists in the Seventh Schedule, widest-possible
amplitude must be given to the words used and each general
word must be held to extend to ancillary or subsidiary matters
which can fairly be said to be comprehended in it. The entries
should, thus be given a broad and comprehensive
interpretation. In order to see whether a particular legislative
provision falls within the jurisdiction of the legislature which has
passed it, the Court must consider what constitutes in pith and
substance the true subject-matter of the legislation and whether
such subject-matter is covered by the topics enumerated in the
legislative list pertaining to that legislature."

In the case of Offshore Holdings (P) Ltd. v. Bangalore
Development Authority10, the Apex Court held thus:

"67. The entries in the legislative lists are not the source of
powers for the legislative constituents but they merely
demarcate the fields of legislation. It is by now well-settled law
that these entries are to be construed liberally and widely so

9 (2004) 5 SCC 155
10 (2011) 3 SCC 139

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as to attain the purpose for which they have been enacted.
Narrow interpretation of the entries is likely to defeat their object as
it is not always possible to write these entries with such precision
that they cover all possible topics and without any overlapping.

69. A Constitution Bench of this Court in Ujagar Prints (2) v.
Union of India [(1989) 3 SCC 488] described these entries and also
stated the principles which would help in interpretation of these
entries. While enunciating these principles, this Court held as under:
(SCC pp. 512-13, para 48)

"48. Entries to the legislative lists, it must be recalled, are not
sources of the legislative power but are merely topics or fields of
legislation and must receive a liberal construction inspired by a
broad and generous spirit and not in a narrow pedantic sense. The
expression 'with respect to' in Article 246 brings in the doctrine of
'pith and substance' in the understanding of the exertion of the
legislative power and wherever the question of legislative
competence is raised the test is whether the legislation, looked at as
a whole, is substantially 'with respect to' the particular topic of
legislation. If the legislation has a substantial and not merely a
remote connection with the entry, the matter may well be
taken to be legislation on the topic."

70. This Court, while referring to the principles of interpretation of
entries in the legislative lists, expanded the application to all
ancillary or subsidiary matters in Jijubhai Nanabhai Kachar v. State
of Gujarat [1995 Supp (1) SCC 596] and held as under: (SCC p. 609,
para 7)

"7. It is settled law of interpretation that entries in the Seventh
Schedule are not powers but fields of legislation. The legislature
derives its power from Article 246 and other related articles of the
Constitution. Therefore, the power to make the Amendment Act is
derived not from the respective entries but under Article 246 of the
Constitution. The language of the respective entries should be
given the widest scope of their meaning, fairly capable to meet
the machinery of the Government settled by the Constitution.

Each general word should extend to all ancillary or subsidiary
matters which can fairly and reasonably be comprehended in
it. When the vires of an enactment is impugned, there is an
initial presumption of its constitutionality and if there is any

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difficulty in ascertaining the limits of the legislative power, the
difficulty must be resolved, as far as possible in favour of the
legislature putting the most liberal construction upon the
legislative entry so that it may have the widest amplitude."
This line of interpretation had been stated in Hoechst
Pharmaceuticals Ltd. v. State of Bihar [(1983) 4 SCC 45] and followed
in different judgments of this Court including the judgments cited
above."

(emphasis added)

In the case of Indian Handicrafts Emporium v. Union of India 11,
in paragraph 62, the Apex Court held thus:

62. That the appellants used to trade in ivory stands admitted.
They, thus, would come within the purview of the definition of
trader also is undisputable. The manner in which despite legal ban
on trade a person may not take recourse to illegal trading is a
matter which squarely falls within the purview of the legislative
competence. It is now well settled that Parliament can not only
enact a law for avoidance or evasion of commission of an
illegal trade but also may make law to see that the law is not
evaded by taking recourse to machination or camouflage. The
loopholes, if any, in such matters can and should be plugged.
"Means affecting means" principle as adumbrated in United
States v. Darby [312 US 100 : 85 L Ed 609 (1941)] is an illustration
on the point. Both substantial and procedural provisions can
be made to make a law in furtherance of the object for which
the Act has been enacted and to see that what is sought to be
prohibited directly may not be achieved by the traders
indirectly.

(emphasis added)

23. We are dealing essentially with a deed/an instrument which
is executed and stamped in another State where the stamp duty payable
is less than the stamp duty payable on a similar deed executed in the State
11 (2003) 7 SCC 589

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of Maharashtra. The said deed is used in the State of Maharashtra for
registering a charge by lodging a verified copy of the deed in the office of
the Registrar of Companies in accordance with sections 125 read with 130
of the Companies Act. The deeds were chargeable in the State of Gujarat
as the same are executed in the said State. Copies of the same are received
in the State of Maharashtra for registering a charge in the office of the
Registrar of Companies. The entries in the Schedule VII extend to all
ancillary or subsidiary matters which can fairly and reasonably be
comprehended in it. If the entry 63 applies to instruments, it will extend
to all subsidiary and ancillary matters connected with the said entry.
Section 7 of the said Act which deals with copies of the instruments has a
direct and substantial connection with the said entry 63. The said entry
cannot be given a restricted meaning and interpretation which is contrary
to the law laid down by the Apex Court. Liberal construction will have to
be put so that it can be of a wide amplitude. The entry 63 will
encompasses in itself even copies of instruments.

24. Moreover, clause (b) of Sub-section 1 of Section 7 is intended to
ensure that no one evades the stamp duty payable on an instrument under
the said Act by executing and stamping the original in another State
where a lesser stamp duty is payable and thereafter, bring a copy thereof
within the State for doing something on the basis of the rights and
liabilities created by it. The legislative intent is to ensure that there is no
evasion of duty on such instruments. The provision is to levy only a
differential duty. There is no double taxation.

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25 We, therefore, reject the argument that Section 7 read with Section

19 in so far as the same apply to the copies of the instruments are not
constitutionally valid.

26. Hence, the petitions must fail. The writ petitions are accordingly
rejected. Rule is discharged with no order as to costs. The interim/ad-
interim orders operative till today are extended by a period of ten weeks
from today.

       (VIBHA V. KANKANWADI, J.)                                             (A.S.OKA, J.)

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