Judgement

KULDIP SINGH, J.:-Section 67-H (1) of the U. P. Town Improvement Act 1919 (the Act) provides that the duty imposed by the Indian Stamp Act, 1899 (the Stamp Act) on any deed of transfer of immovable property shall, in the case of immovable property situated within an area to which the Act applies, be increased by-2 per cent on the amount or value of the consideration with reference to which the duty is calculated under the Stamp Act. The question for our consideration is whether a document, on which the stamp duty as payable under the Stamp Act has been paid but the increased duty under Section 67-H (1) of the Act has not been paid, is not subjected to the penal provisions of the Stamp Act and as such cannot be impounded under Section 33 of the Stamp Act and is further not liable to penalty under Section 40 of the said Act? The High Court has answered the question in the affirmative and in favour of the respondent. This appeal by way of special leave is by the Board of Revenue, Uttar Pradesh against the judgment dated July 10, 1979 of the Allahabad High Court (reported in AIR 1980 All 1).

2. M/s. Electronic Industries of India, the respondent herein, executed a mortgage deed dated April 7, 1973 in favour of the U. P. Financial Corporation whereby the property of the borrower situated at Ghaziabad within the area to which the Act applied, was mortgaged to secure a loan of Rs. 6 lakh 36 thousand. On September 1, 1973, the authorities under the Stamps Act examined the document and found that the stamp duty was deficient. As a consequence, the document was impounded under the provisions of the Stamp Act. The respondent paid the deficient duty under protest and thereafter submitted an application under Section 45 of the Stamp Act for its refund. That gave rise to two questions which were referred for the opinion of the High Court under Section 57 of the Stamp Act. The questions are as under:-

"1. Whether an instrument of simple mortgage (mortgage without possession of immovable property situated in an area to which the U. P. Town Improvement Act 1919 (VIII of 1919) as amended by the Local self Government Laws (Amendment) Act, 1966 (XXIX of 1966) has been made applicable is a deed of transfer of immovable property within the meaning of Section 67-H of the said Act?

2. Whether a public officer is barred from impounding (a document) under Section 33 and the Collector is barred from imposing any deficit duty and penalty under Section 40 and realising the same under Section 48 of the Stamp Act on a deed of transfer of immovable property situated in an area to which the U. P. Town Improvement Act, 1919 applied, on which stamp duty as payable under the Stamps Act only has been paid and the increased duty under Section 67-H of the Town Improvement Act has not been paid.?"

3. The first question was answered by the High Court in the affirmative and in favour of the Revenue. The correctness of the High Courts answer to the first question has not been challenged before us.

4. It would be useful to have a look at the scheme of the Stamp Act. Section 3 deals with the instruments which are chargeable with duty. Sections 10 to 15 deal with the stamps and the mode of using them. Section 27 provides that the consideration, if any, and all other facts and circumstances affecting the chargeability of any instrument with duty, or the amount of the duty with which it is chargeable, shall be fully and truly set forth therein. Section 33 deals with the examination and impounding of instruments which are not duly stamped. Section 40 empowers the Collector to assess and impose the penalty in respect of the impounded instruments or the instrument found by him not duly stamped. Section 48 provides the mode of recovery of duties and penalties. Section 64 further provides penalty for omission to comply with the provisions of Section 27 of the Stamp Act. The Stamp Act contains a comprehensive scheme about the levy, collection and realization of st