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2025 DIGILAW 1609 (RAJ)

State of Rajasthan v. Baabji Iron Industries

2025-10-10

BALJINDER SINGH SANDHU, SANJEEV PRAKASH SHARMA

body2025
JUDGMENT : 1. The short question involved in the present petition is with regard to the validity of order passed by the Tax Board, Ajmer, in Revision Petition No.16/2009/Kota dated 20.04.2012, whereby it waived 10 times penalty of the deficiency in stamp duty imposed upon the respondent and instead only imposed the penalty of Rs.100/- for the deficiency of stamp duty as penalty. 2. Mr. Vigyan Shah, learned Additional Advocate General has invited our attention to the provisions of Section 39 as well as Section 44 of the Rajasthan Stamps Act, 1988 (for short ‘the Act’), as they stood at the relevant time, to submit that once the concerned respondent had opted for impounding of the instrument and the powers to be exercised by the Collector in terms of of the Act, Collector has the power to impose penalty of Rs. 100/- or if he thinks fit, an amount not exceeding ten times the amount of the proper duty or of the deficient portion thereof. The discretion of course has to be exercised in accordance with law and based on the facts of the case, learned counsel has objected to the findings arrived at by the Tax Board wherein, the Tax Board has reached to a conclusion that the concerned respondent had not attempted to escape the payment of stamp duty. He submits that in-fact the concerned agreement had been produced in the Civil Court by the respondent without the stamp duty on the objections raised by the defendant therein. The Court held that the documents cannot be accepted in the evidence without depositing the appropriate stamp duty. The said aspect was challenged by the respondent before the High Court, which also did not agree and thereafter, the trial Court gave an option to the respondent to deposit ten times duty in terms of of the Act, or alternatively seek an adjudication from the Collector under of the Act in terms of the instrument received under Section 42 (2) of the Act. Learned counsel, therefore, submits that waiving of the penalty by the Tax Board was unjustified and the finding that the respondent had not attempted to evade the stamp duty, was incorrect. 3. Learned counsel, therefore, submits that waiving of the penalty by the Tax Board was unjustified and the finding that the respondent had not attempted to evade the stamp duty, was incorrect. 3. Per-contra, learned counsel appearing for respondent No.1 submits that as the respondent himself had prayed for sending the documents to the Collector for assessing the appropriate stamp duty, it has to be presumed that there was no attempt on his part to evade stamp duty and the penalty, therefore, was not required to be imposed upto ten times and the imposition of penalty of Rs.100/- was appropriate. 4. We have considered the submissions and carefully gone through the provisions. 5. It would be apposite to quote the provisions of Section 39 and Section 44 , which read as under: “39. Instruments not duty stamped inadmissible in evidence, etc. - No instrument chargeable with duty under this Act shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped: Provided that,- (a) any such instrument shall, subject to all just exceptions, be admitted in evidence on payment of, - (i) the duty with which the same is chargeable, or in the case of an instrument insufficiently stamped, of the amount required to make up such duty, and (ii) a penalty of one hundred rupees, or, ten times the amount of deficient portion thereof, whichever is higher. (b) where a contract or agreement of any kind is effected by correspondence consisting of two or more letters and any one of the letters bears the proper stamp; the contract of agreement shall be deemed to be duly stamped; (c) nothing herein contained shall prevent the admission of any instrument as evidence in any proceeding in a criminal court, other than a proceedings under chapter IX or Part D of Chapter X of the Code of Criminal Procedure, 1973 (Act No. 2 of 1974). (d) nothing herein contained shall prevent the admission of any instrument in any court when such instrument has been executed by or on behalf of the Government or where it bears the certificate of the Collector as provided by section 36 or any other provision of this Act; (e) nothing herein contained shall prevent the admission of a copy of any instrument or of an oral account of the contents of any instrument, if the stamp duty or a deficient portion of the stamp duty and penalty as specified in clause (a) is paid; (f) nothing herein contained shall prevent the admission of any instrument in evidence in any court when stamp duty on such instrument has already been paid in advance in the form of a consolidated lump sum; (g) nothing herein contained shall prevent the admission of any instrument in any court when such document has been executed by or on behalf of the Government or where it bears the Certificate of the Collector as provided by section 36 or any other provision of this Act. 44. Collector's power to stamp instrument impounded- (1) When the Collector,- (a) Impounds any instrument under section 37, or (b) receives any instrument sent to him under sub-section(2) of section 42, and such instrument is chargeable with a duty under this Act, he shall adopt the following procedure,- (i) if he is of opinion that such instrument is duly stamped or is not chargeable with duty, he shall certify by endorsement thereon that it is duly stamped, or that it is not so chargeable, as the case may be; (ii) 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 one hundred 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 one hundred rupees: Provided that, when such instrument has been impounded only because it has been written in contravention of section 13 or section 14, the Collector may, if he thinks, fit, remit the whole penalty prescribed by this section. (2) Every certificate under clause (a) of sub-section (1), shall for the purpose of this Act, be conclusive evidence of matters stated therein. (3) Where an instrument has been sent to the Collector under sub-section (2) of section 42, the Collector shall, when he has dealt with it as provided by this section, return it to the impounding officer.” 6. From the perusal of the aforesaid provisions, it is apparent that while Section 39 allows a person to place on record any documents in evidence by depositing the penalty of Rs.100/- or ten times where stamp duty payable, whichever is higher in the concerned Civil Court. Option is also available to him in terms of Section 44 of the Act to get the Collector’s power exercised with respect to impounding of the stamp instrument and assessing the duty required to be paid. 7. In terms of Section 44 (1)(b)(ii) of the Act., it is apparent that the discretion lies with the Collector to consider the facts of the case and decide as to what penalty should be imposed, apart from the duty payable. It can raise from Rs.100/- to ten times the amount of the proper duty or ten times of deficient portion of the stamp duty payable. The discretion cannot be whimsical and has to be based on facts. Reasons have to be assigned for arriving to such conclusion, as held by the Hon’ble Supreme Court in Avinash Kumar Chauhan Vs. Vijay Krishna Mishra , 2009 DNJ (SC) 364 as well as Full Bench judgment passed by Madhya Pradesh High Court in Balkrishna Bihari Lal Vs. Board of Revenue & Others, AIR 1970 MP 74 .. 8. In a recent judgment of Hon’ble Apex Court in the case of Trustees of H.C. Dhanda Trust Versus State of Madhya Pradesh and Others , (2020) 9 Supreme Court Cases 510, while exercising a similar provision, the Apex Court has held as under: “ 26 . No other reasons have been given either by the Collector or by the High Court justifying the imposition of maximum penalty of ten times. It is not the case of the Collector that the conduct of the appellant was dishonest or contumacious. No other reasons have been given either by the Collector or by the High Court justifying the imposition of maximum penalty of ten times. It is not the case of the Collector that the conduct of the appellant was dishonest or contumacious. The High Court it its judgment has noticed that although the resolution was passed on 6-4-2005 to execute the deed of transfer by trustees in favour of Jogesh Dhanda and Ishan Dhanda, but later on they deliberately executed the deed in the name of deed of assent on a stamp paper of Rs.200. For the reason given by the Collector as well as by the High Court that there was intention to evade the stamp duty in describing the document as deed of assent the imposition of the penalty was called for but in the facts and circumstances and the reasons which have been given by the Collector of stamps as noticed above, we are satisfied that this was not a case of imposition of extreme penalty of ten times of deficiency of stamp duty. Taking into consideration all facts and circumstances of the case, we are of view that ends of justice will be served in reducing the penalty imposed to the extent of the half i.e. five times of deficiency in the stamp duty.” 9. Taking cue thereof, we also propose similarly to impose penalty of five times the deficient amount of duty, which was required to be paid. 10. It is informed by learned counsel for the respondent that the amount of penalty of ten times was deposited along with the interest. 11. Considering the view as taken above, we direct for refund of five times amount of stamp duty paid in excess. However, the refund amount shall carry interest @ 12% p.a. from the date it was deposited. 12. Accordingly, the writ petition is allowed to the aforesaid extent. Compliance shall be made within a period of one month from the date of submission of this order. 13. No order as to costs.