Time of Stamping Instruments executed outside India – Indian Stamp Act

Introduction

Power of Attorney (GPA) Exceptions in India and Related Penalties As a piece of fiscal legislation, the Indian Stamp Act of 1899 (2 of 1899) is used. The Government of India has an active law that governs the imposition of stamp duty on documents that record transactions. The sole intent of this Act is to bring in money for the Indian government, and any document bearing its stamp will be considered admissible in court. Stamp duty is, essentially, an ad valorem tax that is paid upon the exchange of documents or the execution of instruments.

Section 18

As can be seen, such instrument which was not being a bill of exchange or promissory note executed only outside India and not duly stamped may be presented within three months after it has been first received in India before the Collector for stamping such document as per the law. Every instrument chargeable with duty that is only executed outside of India and is not a bill of exchange or promissory note may be stamped within three months of its initial receipt, according to Section 18 of the Indian Stamp Act, which deals with instruments other than bills and notes executed outside of India. If any such document cannot be properly stamped by a private person in accordance with the description of stamp required, it may be taken to the Collector within the allotted three months, who will stamp it in accordance with any manner and with any stamp that the person taking the document may specify and pay for.

Exception:

A recent order was issued by the Hon’ble Sri Justice U.Durga Prasad Rao in the High Court of Andhra Pradesh impounding of Power of Attorney (GPA) which was executed outside of India in the matter of Pedapudi Alfred Johnson Jeyakaran Jesudasan V. The State of Andhra Pradesh.

In this case, the court made it clear that Section 18 of the Stamp Act will not be applied if a document, such as a Power of Attorney, is executed outside of India on Indian non-judicial stamp paper prior to or at the time of its execution.

Facts of the case:

The writ petition was filed in the case of Pedapudi Alfred Johnson Jeyakaran Jesudasan v. The State of Andhra Pradesh because the District Registrar of Vijayawada had refused to accept the GPA dated 10.02.2020 signed by the writ petitioner’s sister, a resident of Canada, which would have allowed the Registrar to act as the sister’s GPA to sell her residential property on the grounds that the GPA was the Indian Stamp Act, 1899 (often referred to as “the Stamp Act”) was broken, i.e., more than three months after the document was received in India for validation purposes. The Indian Stamp Act of 1899 was broken, as was the justification for rejecting the GPA, which was presented after it had been valid for more than three months.

The petitioner’s learned counsel said that because of COVID-19, which led to a nationwide lockdown and other restrictions, the petitioner was unable to leave because of them. Because of this, there was no negligence, default, or even willful default on the part of the petitioner on 16.12.2021 when the petitioner was able to provide the GPA for validation.

Issue:

whether the writ petition has merits that should be allowed? It has been noted that the petitioner received the GPA from his sister in Canada on March 6, 2020, and that he presented the document for validation only on December 16, 2021. In the impugned order, the registrar held that the GPA cannot be validated because it was presented to his office after the deadline specified in Section 18 of the Indian Stamp Act had passed on December 21, 2021. The Indian Stamp Act’s Section 3 addresses instruments that are subject to duty in this regard.

Instruments subject to duty — Subject to the provisions of this Act and the exemptions set forth in Schedule I, each of the following instruments shall be subject to duty in the amount set forth in that Schedule as the proper duty, i.e., every instrument mentioned in that Schedule executed in [India] on or after July 1, 1899, which has not been previously executed by any person, every bill of exchange payable to another party.

Every document mentioned in that Schedule (aside from a bill exchange or promissory note), which is executed outside of India on or after that day and is received in India without having been previously executed by anyone, relates to any property located there or to any act or thing that has been done or is about to be done there. A power of attorney is subject to the obligations outlined in Article 48 of Schedule 1. A Power of Attorney is therefore excisable to stamp duty if it is signed outside of India and received there. As a charge section, Section 3 of the Indian Stamp Act should be read in conjunction with Section 18.

Judgment:

The Honorable Court noted that any GPA for any property located in India that was issued outside of India and received inside of India is liable to stamp duty. The Court further noted that the COVID-19 pandemic-related lockdown imposed by the Central and State Governments prevented the petitioner from meeting the requirements of section 18 of the law. Therefore, the lockdown undoubtedly limited individuals’ ability to travel throughout the nation at various times. It is also true that, with a few exceptions, transportation services like those provided by the air, rail, and roads were discontinued. The National Executive Committee, acting within the parameters of Section 10 of the Disaster Management Act, issued the directives and the lockdown orders, as stated in Section 72 of the same Act. Act will take precedence.— The provisions of this Act shall be applicable despite any inconsistencies with them that may be found in any other laws currently in force or in any instruments that are in force because of laws other than this Act. As a result, any other laws and legal documents that conflict with the said Act shall be superseded by the provisions of the said Act.

The Court further noted that the petitioner had not provided any substantial evidence to support his claim that the lockdown restrictions prevented him from leaving. The benefit of being exempt from the restriction also only extended to proceedings before courts or tribunals. As a result, the petitioner cannot seek refuge, as stated.

In order to determine the petitioner’s remedy, the case law Malaysian Airlines Systems BHD v. STIC Travels (P) Ltd. was consulted.The GPA dated 10.02.2020 executed in favour of the petitioner was thus directed to be received, and if it was not duly stamped, it was instructed to be collected the required stamp duty and penalty in accordance with the law, validate the aforementioned GPA, and released within two weeks of the date of receipt of a copy of this order.

References

https://economictimes.indiatimes.com/et-realty/instruments-of-stamp-duty/articleshow/2673491.cms

https://www.kaanoon.com/227065/signing-of-sale-agreement-in-usa-which-is-made-on-stamp-paper-sent-from-india

https://taxguru.in/finance/frequently-asked-questions-on-stamp-duty-related-to-indian-stamp-act-1899-and-bombay-stamp-act-1958.html#:~:text=As%20per%20section%2018%20of,been%20first%20received%20in%20India.

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