The discretion of the Collector in imposing stamp duty penalties must be reasoned and based on substantial evidence, not arbitrary.

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. 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 du