Point of law: 1957 Act the adjudicating authorities such as courts, arbitrators, etc., do not have discretion to disobey the legislative command to recover the deficit stamp duty along with the prescribed “ten times penalty” thereon

ORDER :

This Review Petition seeks to recall the judgment dated 23.8.2019 whereby Review Petitioner in W.P.No.30734/2019 (GM-CPC) was disposed off granting him a period of four months for paying the deficit stamp duty & penalty concerning the subject instrument levied in terms of sections 33 & 34 of the Karnataka Stamp Act, 1957; after service of notice, the respondent having appeared through his private counsel opposes the Review Petition making submission in justification of the subject judgment.

2. FACTS IN BRIEF:

(a) Review Petitioner happens to be the plaintiff and the respondent is the defendant in an injunctive suit in O.S.No.295/2013; the suit has been founded inter alia on the ‘Agreement for Sale’; the admission of this instrument to evidence was objected to by the respondent on the ground of inadequacy of stamp duty paid thereon contending that it cannot be looked into for any purpose whatsoever; the learned Judge of the court below vide order dated 23.1.2019 agreed with the submission of the respondent.

(b) The learned trial Judge vide order dated 10.11.2016 had found the subject instrument to be insufficiently stamped and therefore, had referred the same to the District Registrar for ascertaining the deficit duty and the consequent penalty, as well; there was some issue as to absence of name of the village concerned in the said document and ultimately, matter had landed before a Co-ordinate Bench in W.P.No.8506/2018 filed by the Review Petitioner; the said Writ Petition was allowed on 10.8.2018 directing the trial Judge to send the name of village i.e., Kavoor in Mangalore Taluka, so that the District Registrar would determine the insufficiency of stamp duty.

(c) Pursuant to above impoundment order dated 10.11.2016, the Deputy Registrar submitted his Report stating that the instrument was insufficiently stamped and the deficit stamp duty was Rs.71,200/-; accordingly, the learned trial Judge levied the deficit stamp duty along with penalty at the rate of ten times thereof which in all was quantified at Rs.7,83,200/-, vide order dated 23.1.2019.

(d) The Review Petitioner had applied for review of the said order and the same came to be rejected by the learned trial Judge by the impugned order essentially holding that the scheme of Chapter IV of the Act does not vest any discretion in the court to waive or reduce penalty which is statutorily prescribed as ten times the deficit stamp duty; challenge to this order in W.P.No.30734/2019 came to be negatived by this Court vide judgment dated 23.8.2019 which is now put in review; since some important questions of law arose, Sri. S.P. Shankar, Sr. Advocate was appointed as Amicus Curiae to assist the court which he did with alacrity & grace; learned Addl. Advocate General Mr. Subramanya too assisted the court.

3. Having heard the Bar and having perused the Petition Papers, this court framed the following questions of law for consideration:

(i) Whether in terms of the provisions of Chapter IV of the 1957 Act, discretion lies with the adjudicating authorities to waive or reduce the penalty which the legislature has fixed at ten times the deficit stamp duty payable on the instrument impounded... ?

(ii) Whether the adjudicating authorities have discretion to grant reasonable time for the payment of deficit stamp duty on it’s quantification and the penalty thereon depending upon the circumstances of the case... ?

(iii) Whether the State & it’s authorities should be notified and heard by the adjudicatory authorities if question as to inadequacy of stamp duty concerning an instrument should arise for consideration…?

This Court answers Question No.1 in the negative and Question Nos.2 & 3 in the affirmative for the following reasons:

(a) The power to levy stamp duty by way of tax constitutionally avails to the States vide Entry 44, LIST III, SEVENTH SCHEDULE of the Constitution, is not in dispute; 1957 Act is a fiscal law enacted by the State Legislature and therefore, ordinarily its provisions w