The state has the legislative competence to impose and collect stamp duty on insurance policies under the 1952 Act, as per the rate prescribed by the Parliament under Entry 91 of List I.

JUDGMENT :

Pamidighantam Sri Narasimha, J.

1. The issue for consideration is whether the state of Rajasthan has the power and jurisdiction to levy and collect stamp duty on policies of insurance issued within the state. For the reasons to follow, we have rejected the contention of the Life Insurance Corporation, the appellant herein, regarding the lack of legislative competence of the state and have also affirmed the power to levy and collect stamp duty under the Rajasthan Stamp Law (Adaptation) Act, 1952¹[Hereinafter ‘1952 Act’.] and the rules made thereunder. While dismissing the appeal, we have however set aside certain findings of the High Court and granted relief to the appellant in the facts and circumstances of the case. We will first refer to the necessary facts before analysing the provisions and drawing our conclusions.

2. Facts: The appellant issued various insurance policies within the state of Rajasthan between 1993-94 and 2001-02. As per the prevailing law relating to stamp duty, the appellant was required to affix stamps by paying stamp duty on the policies of insurance issued by it in accordance with the Indian Stamp Act, 1899, as adapted to the state of Rajasthan by the 1952 Act.

2.1 On 19.08.1991, the appellant wrote to the Collector, Jaipur regarding the non-availability of ‘Agents License Fee stamps’. On 07.10.1991, the Treasury Officer, Jaipur replied to the appellant that ‘India Insurance Stamps’ are the property of the central government and their supply and distribution is not related to their department.

2.2 On 15.04.2004 and 06.05.2004, the Inspector General (Registration and Stamps) Rajasthan, Ajmer issued a letter to the appellant to deposit a sum of Rs. 1.19 crores for causing loss of revenue to the state of Rajasthan as it had purchased insurance stamps between 1993-94 and 2001-02 from the state of Maharashtra for insurance policies that were issued within the state of Rajasthan. Pursuantly, the Additional Collector (Stamps), Jaipur issued a show-cause notice under Section 37(5) of the Rajasthan Stamp Act, 1998²[Hereinafter ‘1998 Act’.] for payment of the amount.

2.3 By order dated 16.09.2004, the Additional Collector (Stamps), Jaipur confirmed the show-cause notice and directed the appellant to deposit the amount. It was held that the correspondence between the appellant and the department pertained to Agents Fee Stamps and not India Insurance stamps that are affixed on insurance policies and were available at the relevant time. Similar orders were passed on 16.10.2004 for Rs. 1.07 crores, 11.10.2004 for Rs. 1.18 crores, 01.11.2004 for Rs. 1.87 crores, and 28.10.2004 for Rs. 43.68 lakhs. The appellant also challenged these orders by way of separate writ petitions, which have been disposed of in the judgment impugned before us.³[In D.B. Civil Writ Petition No. 3418/2006, D.B. Civil Writ Petition No. 3419/2006, and D.B. Civil Writ Petition No. 3420/2006, and D.B. Civil Writ Petition No. 8187/2004, judgment dated 21.02.2011 (‘impugned judgment’).]

2.4 The appellant filed a writ petition challenging the order of the Additional Collector dated 16.09.2004, which came to be dismissed by the High Court single judge⁴[In S.B. Civil Writ Petition No. 7013 of 2004, judgment dated 08.10.2004.], on the ground that the appellant has an alternative efficacious remedy of filing a revision under Section 65 of the Rajasthan Stamp Act.

2.5 The appellant preferred a writ appeal before the division bench, which was initially disposed of by an order dated 11.12.2004 wherein the High Court directed the Chief Secretary of the Rajasthan government to constitute a High Powered Committee under his chairmanship to decide the matter by a reasoned order. It was also held that if either party is dissatisfied with the decision of the committee, they could file for revival of the writ appeal. The Committee constituted pursuant to this order rejected the appellant’s representation, due to which the writ appeal was restored and decid