Instruments not duly stamped- treatment and consequences (impounding)- Indian Stamp Act

Introduction

“instrument” includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished, or recorded;

Instrument not duly stamped – ‘Instrument’ means ‘any right or responsibility is transferred,’ and ‘duly stamped’ means ‘instrument bears an adhesive stamp of suitable amount as specified by law,’ therefore ‘Instrument not duly stamped’ means ‘instrument bear a stamp of the lesser amount as fixed by law.’

Penalty for not properly stamping an instrument – When correct stamp duty is not paid on an instrument, the collector imposes a penalty. This punishment may be as simple as paying the inadequate stamp duty and a fee of Rs. 500, or it could be as severe as a fine of up to ten times the insufficient stamp duty.

At the district level, the collector has the most influence in terms of income. He has the authority to punish, fine, and take away property.

Penalty for Executing Not Duly Stamping Instrument

When a person thinks about stamp duty, the words penalty come to mind first, followed by sections 32A and 33A. This section deals with the penalty for paying less stamp duty. Many times, there is an error in computing the stamp duty, resulting in the government receiving less stamp duty. When less duty is paid, the process of instrument registration is halted, or if it is completed, a notice is sent to pay the duty; in this case, they must pay a fine determined by the collector. Let’s have a look at the basic provisions of sections 32A and 33A.

Section 32A 

Instrument of conveyance, etc. undervalued how to be dealt with.- (1) Every instrument of conveyance, exchange, gift, certificate of sale, deed of partition, or power of attorney to sell the immovable property when given for consideration, deed of settlement, or transfer of lease by way of assignment, presented for registration under the provisions of Registration Act, 1908, shall be accompanied by a true copy thereof :

For sub-section (1), an extract of the instrument to be taken from the registration record shall be deemed to be the true copy accompanying the instrument, presented for registration on or after the 4th July 1980, up to the date of commencement of the Bombay Stamp (Amendment) Act, 1985. (1).

(2)(a) If any officer registering such instrument has reason to believe, based on the information available to him in this regard, that the market value of the immovable property that is the subject matter of such instrument has not been accurately set forth therein, he may, immediately after presentation of such instrument, give notice to the person who is liable to pay the stamp duty under section 30, requiring such person to pay the stamp duty deficit amount. The registration officer will accept payment of the amount of the deficiency stamp duty and penalty if the individual is prepared to pay it. The method outlined in section 10’s subsection (3) applies mutatis mutandis to such payment;

(b) If such person fails to make the payment within one month of receiving the notice referred to in clause (a), the registering officer shall refer the true copy of the instrument to the Collector of the District for determination of the true market value of such property and the proper duty payable on the instrument before registering it;

(c) Where the true market value of the immovable property that is the subject of such instrument has not been determined by the Collector of the District, it shall be lawful for the registering officer to issue similar notices in respect of the instrument presented for registration before the date of commencement of the Maharashtra Tax Laws (Levy, Second Amendment, and Validation) Act, 1996. If the person liable to pay the stamp duty makes such payment within one month of receiving the notice and also pays the fixed penalty of rupees 250, he shall not be liable to make any further payment of penalty at the rate of 2% of the deficient portion of the stamp duty, for each month or part thereof from the date of execution, and the reference already made to the Collector of the District shall be canceled.

(3) If any person referred to in section 33, before whom any such instrument is produced or comes in the performance of his functions, has reason to believe that the market value of the immovable property that is the subject matter of such instrument has not been accurately stated therein, he may, after performing his function in respect of such instrument, refer the instrument, along with a true copy of such instrument, to the Collector of the District for determination of such market value.

 Impounding of instruments after registration.

When through mistake or otherwise any instrument which is not duly stamped is registered under the Registration Act, 1908, the registering officer may call for the original instrument from the party and, after giving the party an opportunity of being heard and recording the reasons in writing and furnishing a copy thereof to the party, impound it. On failure to produce such original instrument by the party, a true copy of such instrument taken out from the registration record shall, for this section, be deemed to be the origin of such instrument.

Penalty for executing etc., an instrument not duly stamped – 

(1) Any person-

(a) drawing, making, issuing, endorsing or transferring, or signing otherwise than as a witness, or presenting for acceptance or payment, or accepting, paying or receiving payment of, or in any manner negotiating, any bill of exchange payable otherwise than on-demand or promissory note without the same being duly stamped, or

(b) executing or signing otherwise than as a witness any other instrument chargeable with duty without the same being duly stamped, or voting or attempting to vote under any proxy not duly stamped; shall for every such offense be punishable with a fine which may extend to five hundred rupees :

Provided that, when any penalty has been paid in respect of any instrument under section 35, section 40, or section 61, the amount of such penalty shall be allowed in reduction of the fine (if any) subsequently imposed under this section in respect of the same instrument upon the person who paid such penalty.

(2) If a share warrant is issued without being duly stamped the company issuing the same, and also every person who, at the time when it is issued, is the managing director or secretary or another principal officer of the company shall be punishable with fine which may extend to five hundred rupees.

Reference

Click to access Indian_Stamp_Act__English__under_Indian_Stamp_Act-1899.pdf

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