Cancellation of Adhesive Stamps – Indian Stamp Act

Introduction

In India and numerous other nations, stamp duty is required when registering or legalizing a document. The document in question is then stamped as proof of stamp duty payment, but what are the various methods of stamp duty payment?

Before we go any further, let’s define what stamp duty is.

Stamps that are adhered to instruments after the requisite stamp duty has been paid are known as adhesive stamps. These are the most widely used stamps, which are further divided into postal and non-postal stamps.

Everyone is familiar with postal stamps, which are used for transactions with the post office. Non-postal stamps are commonly used to record transactions with courts of law, insurance companies, foreign offices, notaries, brokers, and other non-government entities.

Stamp duty is a tax paid to state governments in exchange for the registration of legal documents, and it accounts for a considerable amount of state revenue.

The Indian Stamp Act (1899) is the cornerstone of stamp duty, describing which documents are subject to stamp duty, how stamp duty is to be paid, and when stamp duty is to be paid.

The stamp laws of the state in which the instrument is registered govern the stamp duty paid on certain instruments.

Section 47 in The Indian Stamp Act, 1899

47. Power of payer to stamp bills and promissory notes received by him unstamped.—When any bill of exchange [or promissory note] chargeable [with a duty not exceeding ten naye paise] is presented for payment unstamped, the person to whom it is so presented, may affix thereto the necessary adhesive stamp, and, upon canceling the same in the manner hereinbefore provided, may pay the sum payable upon such bill [or note], and may charge the duty against the person who ought to have paid the same, or deduct it from the sum payable as aforesaid, and such bill 79 [or note] shall, so far as respects the duty, be deemed good and valid: Provided that nothing herein contained shall relieve any person from any penalty or proceeding to which he may be liable in relation to such bill [or note].

The following instruments may be stamped with adhesive stamps, namely:—

(a) instruments chargeable [with a duty not exceeding ten naye paise], except parts of bills of exchange payable otherwise than on demand and drawn in sets;

(b) bills of exchange and promissory notes drawn or made out of [India];

(c) entry as an advocate, vakil, or attorney on the role of a High Court;

(d) notarial acts; and

(e) transfers by the endorsement of shares in an incorporated company or other body corporate.

Cancellation of adhesive stamps

(a) Whoever affixes any adhesive stamp to any instrument chargeable with the duty which has been executed by any person shall, when affixing such stamp, cancel the same so that it cannot be used again; and

(b) Whoever executes any instrument on any paper bearing an adhesive stamp shall, at the time of execution, unless such stamp has been already canceled in manner aforesaid, cancel the same so that it cannot be used again.

(2) Any instrument bearing an adhesive stamp that has not been canceled so that it cannot be used again, shall, so far as such stamp is concerned, be deemed to be unstamped.

(3) The person required by subsection (1) to cancel an adhesive stamp may cancel it by writing on or across the stamp his name or initials or the name or initials of his firm with the true date of his so writing, or in any other effectual manner.

Adhesive stamps can be used instead of stamp sheets, however, they must be canceled by officers designated under the stamp laws. Managers and agents of Scheduled Commercial Banks are included in the definition of ‘Proper Officer’ in several states, such as Kerala. In such states, sticky stamps might be used instead of non-judicial stamp sheets.

Every stamp on a document must be canceled in such a way that it cannot be used again, according to the Indian Stamp Act. The simplest approach to canceling adhesive stamps is for the executant to sign across the adhesive stamp. The stamp is classified as unstamped if it is not effectively/properly canceled. All stamps should be canceled if more than one is used. It is possible to cancel a non-judicial stamp paper by writing on the stamp’s face.

Documents that have not been properly stamped are inadmissible in court. Payment of the obligation and penalty gives possibilities for correction under the law.

If a document isn’t properly stamped, it can’t be fixed by simply annexing the stamp paper with the missing value. In the event that a document was not properly stamped by mistake, it must be presented to the Collector of Stamps. The situation can be addressed by paying the deficit after establishing that the omission was made by error or accident. The document must be delivered to the Collector of Stamps within one year of the date of execution in such situations.

If the one-year time has elapsed or the omission was not due to an accident or error, the only way to rectify the situation is to pay the deficiency duty and penalty in court when they are shown in support of the claim.

In certain jurisdictions, the Stamp Act allows for the scrutiny of papers and the impounding of poorly stamped documents while they are being inspected. In certain states, improperly stamped papers may be seized by the Stamp Authority if they are produced. The stamp of suitable description and value should be used to treat a document as duly stamped.

References

https://indiankanoon.org/doc/23227078/

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