B. K. MEHTA, M. P. THAKKAR, S. OBUL REDDI, J. ( 1 ) THIS suo motu reference made by the Chief Controlling Revenue Authority under sub-sec. (1) of sec. 54 of the Bombay Stamp Act 1958 (hereinafter called the Stamp Act) as applicable to Gujarat highlights an instance of partial legislative misfire which has resulted in a situation where a document liable to stamp duty having been already acted upon the revenue is not able to collect the duty which ought to have been paid on it or to enforce its payment. This has happened because the loophole which enabled a party to escape from payment of differential stamp duty on account of the different rates of stamp duty prevailing in the State of Gujarat on one hand and the other States was plugged to an extent by making a provision for charging the duty but the Legislature failed to carry out its object completely inasmuch as it failed to make a provision in respect of collection of such duty if the document was already acted upon. ( 2 ) THE history of the matter culminating in the present reference requires to be stated briefly. The Nutan Mills Limited (hereinafter referred to as the Company) is a public limited Company having its registered office at Ahmedabad. A Charge in relation to its immovable properties situated at Ahmedabad was created in favour of the Bank of Baroda by issuance of debentures. In respect of this transaction a Debenture Trust Deed was executed between the Company on one hand and the Bank of Baroda at Bombay on the other. The Company approached the competent authority at Bombay for adjudication with regard to the proper stamp duty payable thereon in accordance with the Stamp Act applicable to the State of Maharashtra. In accordance with the adjudication stamp of Rs. 67 516 was affixed on the document in question. Now even though the properties on which the charge was created are situated at Ahmedabad it is permissible under the relevant provisions of law to have the Trust Deed registered at Bombay under the Indian Registration Act. But as per the requirement of sec. 67 516 was affixed on the document in question. Now even though the properties on which the charge was created are situated at Ahmedabad it is permissible under the relevant provisions of law to have the Trust Deed registered at Bombay under the Indian Registration Act. But as per the requirement of sec. 125 of the Indian Companies Act of 1956 the document by which the charge is created or evidenced or a copy thereof verified in the prescribed manner is required to be filed with the Registrar of Companies at Ahmedabad for registration under provisions of the Indian Companies Act. As the law provides that the Company can produce either the document in original or a copy thereof the Company produced a copy of the original instrument verified in the prescribed manner before the Registrar of Companies Gujarat at Ahmedabad. The Registrar of Companies realised that even though the original instrument was executed in Bombay inasmuch as it related to properties situated in Gujarat the instrument was liable to stamp duty in Gujarat for the amount representing the duty payable at the Gujarat rate (which was higher) and the duty payable as per the Maharashtra rate having regard to sec. 19 of the Stamp Act. It is common ground that if the original instrument had been brought to Gujarat differential duty would have been payable on the aforesaid basis as per sec. 19 of the Stamp Act and that the duty would have to be paid within three months after it was received in the State as provided in sec. 18 of the Act. But then what was produced before the Registrar of Companies was not the original instrument but a verified copy thereof as it was permissible to do so having regard to the provision contained in sec. 125 of the Indian Companies Act. So far as the copy was concerned sec. 7 (1) was attracted and on a copy of the document according to the revenue duty was payable on the same footing as was payable on the original when it was received in the State. And the copy if it vas chargeable with duty under sec. 7 read with sec. 19 was not admissible in evidence under could not have been acted upon or registered by any public Officer unless it was duly stamped. And the copy if it vas chargeable with duty under sec. 7 read with sec. 19 was not admissible in evidence under could not have been acted upon or registered by any public Officer unless it was duly stamped. Now the Registrar of Companies before whom the Company produced the copy of the Debenture Trust Deed was aware of the fact that the copy required to be stamped when it was received in Gujarat. It appears that even so instead of refusing to act upon it the Registrar of Companies registered the charge in the relevant registers maintained by him. He however sent the copy to the Superintendent of Stamps for appropriate action. The Registrar of Stamps addressed a letter to the Company on September 10 1971 (Annexure C) and called upon the Company to explain why the document was registered in Bombay though the properties were situated in Ahmedabad and to explain why the differential stamp duty was not paid up within three months of the receipt of the copy in Gujarat. After taking into account the explanation offered by the Company and hearing the advocate of the Company the Collector and Assistant Superintendent of Stamp Gujarat State Ahmedabad by his order Annexure F dated January 15 1972 directed the Company to make good the differential stamp duty of Rs. 67 500 which represented the difference between stamp duty payable at the Gujarat rate and the duty payable at the Maharashtra rate as also a sum of Rs. 32 500 by way of penalty. Thereupon the Company invoked the revisional jurisdiction of the Chief Controlling Revenue Authority (hereinafter referred to as the Revenue Authority) by way of an application under sec. 53 of the Act. The Revenue Authority was of the opinion that the determination made by the Collector was proper but in exercise of the suo motu powers under sec. 54 (1) of the Stamp Act he made a reference to the High Court and sought the opinion of the High Court on the following two questions : (1) Whether a copy of an instrument produced under sec. 125 of the Companies Act is an Instrument chargeable with duty under sec. 7 (1) read with sec. 19 and sec. 2 of Bombay Stamp Act 1958 ? (2) Whether the Collector and Assistant Supdt. 125 of the Companies Act is an Instrument chargeable with duty under sec. 7 (1) read with sec. 19 and sec. 2 of Bombay Stamp Act 1958 ? (2) Whether the Collector and Assistant Supdt. of Stamps was right in impounding the copy of the instrument and ordering levy of duty and penalty under the provisions of secs. 33 and 39 of the Bombay Stamp Act 1958 ? ( 3 ) NOW so far as the first question referred to the High Court by the Revenue Authority is concerned the question posed is in substance regarding the claim of the revenue that even a copy of an instrument creating a charge in regard to the property situated in Gujarat is liable to payment of differential stamp duty as is payable on the original instrument when it comes to Gujarat having regard to the fact that the duty payable under the Stamp Act applicable to Gujarat is higher than the duty payable under the Act applicable to Maharashtra. Now it is not in dispute that if the original instrument by which the charge was created at Bombay in respect of the property situated in Gujarat was received in Gujarat it would have been liable to differential stamp duty at the rate representing the difference between the Gujarat rate and the Maharashtra rate when the instrument is received in Gujarat having regard to secs. 18 and 19) of the Stamp Act. 18 and 19) of the Stamp Act. Sec. 19 in so far as material reads as under :19 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 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 person 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 xx xx xx xx the Original instrument creating the charge if it were received in the Gujarat State would attract the differential stamp duty Representing the difference between the Gujarat rate and the Maharashtra rate in view of the aforesaid provision. This position is not disputed by the Company for it is incapable of being disputed. In the present ease however what has been received in Gujarat is a copy of the original instrument by which charge was creaked In regard to such a copy it is claimed by the revenue that differential duty is payable even on such a copy even if the original instrument is not received in Gujarat. Reliance is placed in this connection on sec. 7 of the Act which is in the following terms:7 (1) Notwithstanding anything contained in sec. Reliance is placed in this connection on sec. 7 of the Act which is in the following terms:7 (1) Notwithstanding anything contained in sec. 4 or 6 or 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 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 sec. 19. (b) Notwithstanding anything contained in any enactment for the lime 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 this 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. ON a plain reading of sub-sec. (1) of sec. 7 it is clear that even a copy of an instrument is liable to differential duly which would be chargeable in respect of the original instrument under sec. 19. It is evident that sub- sec. (1) of see. 7 is a charging section in respect of counterparts duplicates and copies (the reference to Counterparts and duplicates is in the context of secs. 4 and 6 of the Act with which we are not concerned in the present ease. The expression copy of any instrument covers a situation like the present where instead of original instrument creating a charge a copy thereof is received. The whole purpose of sub-sec. (1) of sec. 7 appears to be to meet a situation like the present where the law provides for production of either the original instrument or a copy and in order to avoid payment of duty a party instead of producing or receiving the original instrument might produce or receive a copy thereof. The whole purpose of sub-sec. (1) of sec. 7 appears to be to meet a situation like the present where the law provides for production of either the original instrument or a copy and in order to avoid payment of duty a party instead of producing or receiving the original instrument might produce or receive a copy thereof. Learned counsel for the Company under the circumstances did not contend that the copy of the original instrument was not liable to differential stamp duty under sub-sec. (1) of sec. 7 if the copy was received in Gujarat. It must be realised that the manifest purpose of sec. 19 is to discourage persons from executing document outside the State of Gujarat in relation to property situated in Gujarat merely because the duty payable in Gujarat is at a rate higher than the duty payable in other States And see. 7 has been enacted for the manifest purpose of achieving the same goal in the context of a counterpart a duplicate or a copy of an instrument. We have therefore no doubt that even a copy of any instrument which is liable to differential stamp duty under sec. 19 is liable to such duty in view of sub-sec. (1) of sec. 7. Counsel for the Company however contends that though sub-sec. (1) of sec. 7 so provides for payment of duty and can be construed as a charging section it does not provide as to when the duty would become payable. In other words it is argued that whilst sub-sec. (1) of case. 7 refers to the chargeability of the copy to differential duty treating it as if the original document was received in the State the section does not provide for the time of payment of duty or the point of time at which the liability would be attracted. We are unable to accede to this submission for such a construction would render the provision ineffective and purposeless. In our opinion sub-sec. (1) of sec. 7 clearly provides that a copy of the instrument will attract a differential duty at the same rate as provided in sec. 19 and also at the same point of time when the original would have been liable to such stamp duty viz. when received in this State. In our opinion sub-sec. (1) of sec. 7 clearly provides that a copy of the instrument will attract a differential duty at the same rate as provided in sec. 19 and also at the same point of time when the original would have been liable to such stamp duty viz. when received in this State. The Legislature has incorporated by reference the same liability in respect of a copy as existed in respect of the original instrument in the context of sec. 19 by employing the expression the duty with which the principal or original instrument would have been charged under sec. 19. So also the element as regards the point of time when the liability would arise has been incorporated by employing the expression original instrument would when received in this State have been chargeable under this Act. It is therefore clear that sub-sec. (1) of sec. 7 has enveloped both the concepts viz. as regards the rate at which the duty is payable and with regard to the point of rate at which the duty is payable by placing the liability at par with the liability attracted by the original instrument both in regard to the rate as well as in regard to the point of time. And the point of time which is contemplated by sec. 19 and sec. 7 is the point of time when the original instrument or a copy of the original instrument is received in the State of Gujarat. There is therefore no difficulty in answering the first question in the affirmative subject to the clarification that the Revenue Authority has used the expression instrument in a loose manner in framing the question for the copy of an instrument would not fall within the description instrument as defined by sec. 2 (1) of the Act. As to whether or not the document will fall within the definition of instrument under sec. 2 is another question to which we shall presently address ourselves for though no pointed question in this behalf has in terms been referred to us incidentally this aspect would require consideration in the context of the second question which has been referred to us viz. the question as to whether the Collector was right in impounding the copy of the instrument and ordering lavy of the duty and penalty under the provisions of secs. 33 and 39 of the Act. the question as to whether the Collector was right in impounding the copy of the instrument and ordering lavy of the duty and penalty under the provisions of secs. 33 and 39 of the Act. ( 4 ) THE aforesaid question the second question referred to us has arisen because the Collector of Customs appears to have impounded the copy of the document which was sent to him by the Registrar of Compa- nies for taking appropriate action. Now the Registrar of Companies is a public officer who is charged with the duty of discharging his functions under the Companies Act and it is a part of his duty to effect registration under sec. 125 in respect of a charge created by a Company. Under sec. 125 the Company can produce the original instrument by which the charge is created or a copy thereof verified in the prescribed manner. When however a copy is produced the Registrar of Companies has to satisfy himself that the document is duly stamped under the Stamp Act. If in his opinion the document is duly stamped he can proceed to effect the registration under sec. 125 and the relevant provisions of the Companies Act. If however he is of the opinion that the document is not properly stamped as required by the relevant provisions of the Stamp Act he must refuse to act on it. A public officer can refuse to take cognizance of a document which is not duly stamped in accordance with the required provisions of the Stamp Act. But the question is as to whether he can send it to the Collector and the Collector can impound it. Now the facts as we find in the case stated by the Revenue Authority would go to show that the document in question was impounded by the Collector and the Assistant Superintendent of Stamps and not by the Registrar of Companies. We are therefore not concerned with the question whether the Registrar could have impounded the document under sec. 33 of the Stamp Act. We are faced with the question as to whether the Collector to whom it was sent could have impounded the document upon it being sent to him by the Registrar of Companies for appropriate action. Now sub-sec. (1) of sec. 33 of the Stamp Act. We are faced with the question as to whether the Collector to whom it was sent could have impounded the document upon it being sent to him by the Registrar of Companies for appropriate action. Now sub-sec. (1) of sec. 33 is in the following terms :33 (1) Every person having by law or consent of parties authority to receive evidence and every person in charge of a public office except an officer of police before whom any instrument chargeable in his opinion with duty is produced or comes in the performance of his functions shall if it appears to him that such instrument is not duly stamped impound the same. It was argued by the learned counsel for the Company that the copy in question was not produced before the Collector by the Company and therefore it could not have been impounded by the Collector of Customs. Reliance was placed by the revenue on the expression or comes in the performance of his functions in order to contend that the document could have been impounded by the Collector as it had come before him in connection with the discharge of his functions as the collector under the Stamp Act. This argument has been countered by the counsel of the Company relaying on sec. 31 which relates to adjudication as to proper stamps and it has been contended that it is only a document which is brought to the Collector for adjudication by moving the machinery under sec. 31 that can be impounded for it is only then that it can be said that the document has come before the Collector in the performance of his functions. It is no doubt true that in the present case the document does not appear to have been brought before the Collector for adjudication under sec. 31. It was sent by the Registrar of Companies to the Collector as the Registrar of Companies thought that the document was not properly stamped with a request to the Collector to take appropriate action. Now there is no specific provision under which a public officer can send a document for appropriate action to the Collector It is in the context of this circumstance that counsel argues that it cannot be said to have come before the Collector in the performance of his functions. Now there is no specific provision under which a public officer can send a document for appropriate action to the Collector It is in the context of this circumstance that counsel argues that it cannot be said to have come before the Collector in the performance of his functions. It is argued that the function must be located in a specific section in the Stamp Act and that unless it is shown that a public officer who was of the opinion that a document produced before him was not properly stamped could send the document to the Collector for appropriate action and unless the power to determine the question in such circumstances was located in a specific section of the Stamp Act it cannot be said that the document had come to the Collector in the performance of his functions. We are not prepared to uphold the contention urged on behalf of the Company for in our opinion there is no warrant or justification for construing the aforesaid expression in such a narrow fashion. It is not necessary that the function must be in terms spelled out by a particular section. The question must be approached in a broad commonsense fashion so that the provision is not rendered ineffective and inoperative except in the context of a proceeding under sec. 31. In our opinion the question which must be posed is is it the business of the Collector and Assistant Superintendent of Stamps to ascertain and determine the proper stamp duty payable on a document or is it a matter with which he has no concern ? Is it or is it not a part of his official duty to determine what is the appropriate stamp duly payable on a document ? In other words when the Collector is required to determine the question is he being called upon to do something which he has no business to do in the performance of his duties under the Act ? In other words when the Collector is required to determine the question is he being called upon to do something which he has no business to do in the performance of his duties under the Act ? We are not prepared to say that it is not the business or function of the Collector under the Act to determine what is the proper duty payable on a document under the Stamp Act In fact that is the principal function of the Collector under the Act Whether the Collector is called upon to decide the question as regards the proper stamp duty payable on a document in the course of a proceeding under sec. 31 or whether he is called upon to do so otherwise than under sec. 31 as the Collector is empowered to determine this question it must be said that the document has come to him in the performance of his functions The question whether or not it is his function does not depend on whether he has approached through the channel of sec. 31 or otherwise. Sec. 31 is only one of the modes of bringing the document to him. It cannot be said that that is the only way in which the document can be brought to him. Inasmuch as it is his function to determine this question it cannot be said that merely because the document has not come to him by way of a proceeding under sec. 31 it is not his function to determine the question as to whether or not the document is properly stamped. In this view of the matter we are of the opinion that the document had come to the Collector in the course of the performance of his duties. But then the next question which arises is as to whether he could impound the document under secs. 39 and whether he can require the payment of deficit duty and impose a penalty under sec. 39 of the Stamp Act. For this purpose sec. 39 in so far as it is material requires to be examined. It reads as follows:39 When the Collector impounds any instrument under sec. 33 or receives any instrument sent to him under sub-sec. (2) of sec. 39 of the Stamp Act. For this purpose sec. 39 in so far as it is material requires to be examined. It reads as follows:39 When the Collector impounds any instrument under sec. 33 or receives any instrument sent to him under sub-sec. (2) of sec. 37 not being an instrument chargeable with a duty of twenty naye paise or less he shall adopt the following procedure : xx xx xx xx (B) If he is of opinion that such instrument is chargeable with duty and is not duly stamped he shall require the payment of proper duty or the amount required to make up the same together with a penalty of five rupees; or if he thinks fit an amount not exceeding ten times the amount of the proper duty or of the deficient portion thereof whether such amount exceeds or falls short of five rupees: xx xx xx the expression employed by sec. 39 is instrument. Now sec. 2 (i) of the Stamp Act which defines instrument is in the following terms :2 instrument includes every document 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 at this point of time it must be recalled that we have already recorded a finding to the effect that a copy of a document creating a charge is also liable to stamp duty under sec 7 read with sec. 19 of the Stamp Act. The question which now arises is as to whether a copy of such an instrument can itself fall within the four walls of the expression instrument within the meaning of sec. 39 read with sec. 2 (1) of the Stamp Act. If it answers the description of an instrument under sec. 2 (1) then the Collector can recover the deficit stamp duty and also impose penalty under sec. 39. It must be realised that this question has arisen in the context of a penal provision and therefore the question requires to be examined closely and carefully. If it answers the description of an instrument under sec. 2 (1) then the Collector can recover the deficit stamp duty and also impose penalty under sec. 39. It must be realised that this question has arisen in the context of a penal provision and therefore the question requires to be examined closely and carefully. The expression instrument is an inclusive one and takes within its sweep every document by which any right of liability is created or purported to be created or recorded Now it cannot be said that the copy of the original instrument creates a right or a liability. The right or the liability as the case may be is created by the original instrument which is executed and registered at Bombay on payment of appropriate stamp duty payable in Maharashtra. It is that document which creates the right or the liability in respect of the charge on the immovable properties at Ahmedabad. The document with which we are concerned is a copy of this instrument. Now a copy of an instrument can also fall within the description of a document. But then it is not possible to hold that the copy of the original instrument is a document which by itself creates any right or liability. The right or the liability as the case may be is created by the original instrument and not by its copy. So also it cannot be said that the copy purports to create a right or a liability. The expression instrument in sec. 2 (1) refers to a document which itself creates a right or liability or purports to create a right or liability. It cannot refer to a copy of any such instrument. If the document creates or purports to create a right or liability it would fall under the description of an instrument but the copy of such a document cannot fall within the description of instrument for it is not the copy which creates or purports to create a right but the original which creates or purports to create a right. The expression instrument as used in sec. 7 draws a clear distinction between the original instrument and a copy thereof. We need not reproduce the section at this stage for it has been quoted in the earlier portion of the judgment. The expression instrument as used in sec. 7 draws a clear distinction between the original instrument and a copy thereof. We need not reproduce the section at this stage for it has been quoted in the earlier portion of the judgment. Suffice it to say that secs 7 (1) and 7 (2) in terms draws a distinction between the original instrument which attracts the differential duty on one hand and a copy of such an instrument liable to stamp duty. Sec. 7 itself therefore recognises the clear distinction between an instrument and its copy and under the circumstances it is not possible to hold that the instrument which creates a charge as also its copy both would fall within the amplitude of the expression instrument particularly so when the expression instrument has been employed in the context of a provision under which penalty can be imposed. And if the copy of the original instrument cannot be said to be instrument within the meaning of sec. 39 read with sec. 2 (1) of the Stamp Act the question posed by the Revenue Authority viz. whether the Collector can impound a document and order the levy of duty and penalty must be answered against the Revenue Authority. The result would be that though differential duty is payable under sec. 7 read with sec. 19 of the Stamp Act in respect of a copy of an instrument creating a charge the copy cannot be impounded and neither the duty nor the penalty can be levied for the counsel for the revenue is unable to point out any provision under which duty or penalty can be recovered if the copy cannot be said to be instrument within the meaning of sec. 29. By some mischance it appears to have escaped the attention of the competent authority to make suitable amendments in secs. 2 7 33 34 and 39 when the Legislature enacted sec. 7 (1) in order to meet a situation where parties would be encouraged to execute documents outside the State if it was permissible to do so in view of the higher rate of duty obtaining in the State in respect of such documents The result will no doubt be unfortunate for by imposing a higher rate of duty even the duty which would have been recovered at the rate obtaining in the other States would be lost to the State. But then the remedy lies in amending secs. 2 7 33 and 39. In the absence of a clear provision empowering the competent authority to impound such a copy and empowering the competent authority to collect the deficit duty and to impose a penalty thereon recourse cannot be made to secs. 33 and 39. It gives us no pleasure to hold that while duty is payable it cannot be recovered under any provision of the Act. But then it is a malady which can be cured by the Legislature by making suitable amendment and if there is no provision in the Stamp Act we cannot do anything in the matter on our part unfortunate as the result might appear to us to be. That is why we have said that it is a case of a partial legislative misfire. It is for the competent authority to take appropriate measures to remedy the situation with retrospective effect in so far as it can be legally and legitimately done if it so desires. Of course merely because the duty though payable under the Act is not recoverable under the machinery of the Act it need not deter the Company from paying it. And if the Company does so it need not feel ashamed of it for it will only be showing its awareness of its national duty to pay the legitimate taxes (which might in any case have had to be paid if the Registrar of Companies was vigilant and had declined to act on the unstamped copy) and awareness of its obligation to listen to the counsel of its ethical conscience rather than to the counsel of its legalistic conscience. On our part we have no option but to answer question No. 2 in the negative. ( 5 ) IN the result the questions referred to us are answered as under:q. 1: Whether a copy of an instru Ans. In the affirmative with the ment produced under sec. 125 clarification that whilst a of the Companies Act is an copy of the original instru Instrument chargeable with ment cannot be called an duty under sec. 7 (1) read with instrument within the sec. 19 and sec 2 of Bombay meaning of the Act such Stamp Act 1958 ? a copy would be liable to stamp duty under sec. 7 (1) read with sec. 7 (1) read with instrument within the sec. 19 and sec 2 of Bombay meaning of the Act such Stamp Act 1958 ? a copy would be liable to stamp duty under sec. 7 (1) read with sec. 19 of the Act q. 2: Whether the Collector and Assi Ans. In the negative. stant Supdt. of Stamps was right in impounding the copy of the instrument and ordering levy of duty and penalty under the provisions of secs. 33 and 39 of the Bombay Stamp Act 1958 ? ( 6 ) REFERENCE answered accordingly. Parties will bear their own costs. ( 7 ) MR. Gandhi for the Company has made an oral application for certificate of fitness to appeal to the Supreme Court under Article 133 (1) of the Constitution. We are unable to certify that any substantial question of law of general importance which in our opinion requires to be decided by the Supreme Court arises in this case. Certificate is refused. We would also like to point out that question No. 2 which really matters from the point of view of the opponent Company has in fact been answered in favour of the opponent Company. .