Case: Chief Controlling Revenue Authorityandsuperintendent Of St Vs. Maharashtra Sugar Mills Ltd

(2) The respondent company for its business borrowed money from the Central Bank of India Ltd. at Bombay. In order to secure the loan a document was executed on 22/03/1945 with a stamp of Rs.on the footing that it was a dead of hypothecation without prosecution of the goods. When the deed was sent to the Sub Register for registration without procession of same and sent it to the Stamp Office. The Assistant Superintendent of Stamps wrote to the respondent that the document was a mortgage with possession, chargeable with duty under Art. 40(a) of the Schedule and inquired why it was not duly stamped before execution. The respondents solicitors in their reply contended that the document was not and was never intended by the parties to be a mortgage with possession. They pointed out that no possession of the property had been given or was intended to be given, except in certain contingencies and therefore the document was properly stamped. In reply the Assistant Superintendent intimated that the document was chargeable with duty of Rs. 56,450 and a penalty of Rs. 5,000 had been imposed. The respondents were asked to pay amount forthwith . On 27/07/1945, the respondent filed a suit against the Central Bank contending that the document was not a mortgage with possession. It was alleged that since a doubt had arisen as to whether the document gave affect to the common intention of the parties the Courts directions were sought for and if the Court found that the document as framed did not give affect to the said common intention of the parties the instrument may be rectified. On 9/08/1945, the respondents solicitors informed the Assistant Superintendent that such a suit had been filed and requested that the demand for payment of stamp duty and penalty may not be pressed under the circumstances. In the further correspondence on behalf of the appellant, the demand was reiterated and resort to the coercive procedure of S. 48 Stamp Act was threatened. The Collector thereafter sent a letter to the respondents on 17/01/1946 demanding payment. On 26/01/1946 the wait filed by the respondent was disposed of by the Court and the rectification as prayed was ordered. The respondents solicitors immediately intimated the result of the suit to the Assistant Superintendent and sent a copy of the deed showing the rectifications made in the original document. A similar letter was also sent to the Collector of Bombay. On 1/02/1946, the respondents solicitors enquired of the Assistant Superintendent of Stamps whether he was agreeable to make a reference under S.56(b) to the appellant, as the question of liability to pay the stamp duty and penalty involved important question of law. A petition on behalf of the respondent to the appellant was also filed on 5th February in which it was prayed that either the order of the Assistant Superintendent of Stamps be rescinded or in the alternative a case may be referred under S.57, Stamp Act, for the opinion of the High Court. This petition was rejected onThe respondent thereupon filed a petition in the High Court on 19/07/1946 praying that a writ of certiorari may be issued against the appellant, or an order may be, made against him under S.45, Specific Relief Act, to cancel the levy of the stamp duty and penalty as claimed on behalf of the appellant or in the alternative the appellant may be ordered under S.57, Stamp Act, to refer the matter to the High Court for its opinion. The matter came for hearing before Blagden J. who did not grant the first relief but directed the appellant to state a case under S.57, Stamp Act, to the Court for its opinion. The appellant filed an appeal but failed. He has now come in appeal to this Court.

Reasoning: (5) In our opinion the appellants contentions are unsound. The first contention then S. 57. Stamp Act, gives only a discretion and does not cast a duty on the appellant to make a reference overlooks the fact that the appellant has not to make a reference only when he is in doubt about his decision or conclusion . In his conclusion the party liable to pay the assessed stamp duty is materially interested. The appellants decision is not necessarily based only on the reading of the entries in the Schedule to the Stamp Act. As in the present case, the question under what item stomp duty is leviable may depend on the true construction of a document . It may also involve the decision of the question, as in the present case, as to what is the effect of the Courts order directing a rectification of the instrument. it does not appear, on principle, sound to hold that these difficult questions should be left under the Stamp Act to the final decision of the appellant, and if the party affected by the assessment has a grievance there is no relief at all in law for him. The construction of a document is not always an early matter and on the ground that it is a substantial question of law, parties have been permitted to take the matter up to the highest Court. If so, it appears difficult to start with the assumption that because this is a Revenue Act the decision of the appellant should be considered final and conclusive. The provisions of S. 56 (2) and S. 60 giving power to the Collector and the Court to send a statements of case to the appellant and the High Court respectively, in our opinion, instead of helping the appellant, go against his contention. In those two sections this power is given when the referring authority has a doubt to solve for himself. The absence of the words "feels doubt as to the amount of duty to be paid in respect of an instrument" in S. 57 supports the view that the reference contemplated under that section is not for the benefit of the appellant only but ensures also for the benefit of the party affected by the assessment. In our opinion, the power contained in S. 57 in the nature of an obligation or is coupled with an obligation and under the circumstances can be demanded to be used also by the parties affected by the assessment of the stampour opinion, the observations quoted above the and principles underlying the same are applicable to the duty cast on the appellant under S. 57, Stamp Act and minor points of distinction between the schemes of the two Acts are immaterial for the present discussion. In the words of Lord Cairns the very nature of the thing empowered to be done by the appellant and the conditions under which he has to fix the amount of the duty, couple the power with the duty to state a case for the opinion of the Court. The provisions of S. 51 (1) and (3) run on the same lines as S. 59, Stamp Act. Mr. Daphtary next pointed out that there was a difference in the scheme of the Act, because when the Collector issued a certificate under S. 32, even though his assessment might be faulty and against the interest of the State, the State or the appellant had no remedy. This overlooks the provisions of the section empowering the Collector to issue the certificate. The scheme of the Stamp Act may be briefly noticed. Chapter II contains provisions about the liability of the instrument to duty, of the time of stamping instruments, of values for duty and provisions as to the officer to whom duty is payable. Chapter III which contains only two sections deals with the adjudication as to stamps. The first (s. 31) is where an instrument, whether executed or not and whether previously stamped or not, is brought to the Collector with an application to have his opinion as to the duty with which it is chargeable. For obtaining that opinion the applicant has to pay a fee. The Collector may call for information and take evidence. After he has done so he determines the amount of the stamp duty and certifies under S. 32 that the full duty with which it is chargeable has been paid. It is obvious that the party applying is interested in obtaining the opinion and therefore he cannot object to the certificate of the Collector. If the Collector himself is in doubt he has the power under S. 56(2) to ask for the opinion of the appellant. It is therefore clear that in respect of these two provisions under Chapter III no grievance could exist on either side. From S. 33 and Chapter IV onwards there are provisions in which the opinion of the Stamp Officer and of the party interested in pay the stamp duty may come in conflict. The sections in chaps. IV, V and VI ending with S. 61, deal with situations arising from such difference of opinion. S. 57(a) falls under this heading. In our opinion, therefore, this contention of the appellantIn our opinion therefore the contentions of the appellant fail