Friday, 4 February 2022

Time of stamping

 Provisions regarding time stamping of an instrument under Indian Stamp Act

By Shreya Verma

As per section 2(11) of the Indian Stamp Act, “duly stamped”, as applied to an instrument means, that the instrument bears an adhesive or impressed stamp of not less than the proper amount, and that such stamp has been affixed or used in accordance with the law for the time being in force in India. Stamp Duty is expected to be paid in full and on time. Non-payment of stamp duty or any irregularity in the payment makes the defaulter liable to be punished and renders the instrument inadmissible as evidence in a court of Law. It is necessary to Stamp a contract so as to provide protection to the people who signed the agreement, as the document is now admissible before the court in case of a dispute.

Stamp duty is levied by the government for the purpose of securing revenue. It is a matter of Union List as well as of the state list. Entry 91 to I list of 7th schedule provide certain instruments for which the Union government will levy stamp duty by setting the rate of the duty. With regard to the remaining instruments, the State government is empowered to levy duty under the provisions as provided in Entry 63 of list II of the Seventh Schedule to the Constitution. 

Stamping of an instrument is inevitable and it is provided in the Act itself that if an instrument is not stamped then it is not admissible as evidence under section 35 of the Indian Stamp Act, 1899. 

Indian Stamp Act is never read in isolation, rather, it is supplementary to the Registration Act as how the Government will otherwise get to know that there is a private transaction between the parties. Registration Act provides a compulsory registration so as to establish a title to property conveyed by such instrument and the Act provides Stamping of such instrument not to be raised as a technical irregularity but for the purpose of raising revenue by the government as was held by the Gujarat High Court in- JMA Raju vs. K. Bhatt (1976). 

The purpose for prescribing time limit for such stamping is to secure the payment of stamp, otherwise the parties will ignore the payment thereof. Section 17 to 19 of the Act provides for such a time limit and it can be divided in 3 parts: 

  1. Instrument executed by the person in India- such instruments shall be stamped before or at the time of execution of the instrument, 

'Execution' as provided in section 2(12) of the Act means ‘to sign’. 

  1. Instruments executed out of India- such instruments may be stamped within 3 months after it has been first received in India. 

Instrument under this section does not include a Bill of exchange (paid otherwise than on demand) and promissory notes. 

  1. Bill of exchange and promissory notes which are made or drawn out of India but which have to be presented for acceptance are which are to be endorsed or otherwise negotiated in India- such instruments can be stamped before its presentation or negotiation in India.

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