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What Is The Validity Of The Unused Stamp Papers

It is common knowledge that the purchasers purchase stamp papers from the Government Treasury/duly authorised agents/stamp vendors or obtain e-stamp paper online for the purpose of execution of the sale deed of an immovable property by the seller in their favour but sometimes due to unavoidable circumstances/disputes arise between both the parties, the sale deed is not executed. A question therefore arises is for how long would the unused stamp papers remain valid and/or what are the legal recourses available to such holder of the stamp papers for utilization of unused Stamp Papers?

If we look at the various provisions, there is no specific provision under the Indian Stamp Act, 1872 regarding the validity of stamp papers in our country. As regards the refund against unused stamp papers the same is allowed within 6 months from the date of issuance of the said Stamp Papers subject to a deduction of 10% fee. Both these situations are subject to various conditions as contained in the Indian Stamp Act and the Rules made thereunder.

As regards the validity of stamp papers, the State Stamp & Registration Departments have a conviction that since there is no specific provision dealing with the validity of Stamp Papers, they become void and lose their validity after 6 months, which is the maximum time limit allowed by the said Act for Refund of the unused stamp papers. There were a lot of divergent views until the Apex Court made an authoritative pronouncement in the case of Thiruvengadam Pillai v. Navaneethammal 2008 (4) SCC 530 wherein the Apex Court categorically held thus:

The Indian Stamp Act, 1899 nowhere prescribes any expiry date for use of a stamp paper. Section 54 merely provides that a person possessing a stamp paper for which he has no immediate use (which is not spoiled or rendered unfit or useless), can seek refund of the value thereof by surrendering such stamp paper to the Collector provided it was purchased within the period of six months next preceding the date on which it was so surrendered.

The stipulation of the period of six months prescribed in section 54 is only for the purpose of seeking refund of the value of the unused stamp paper, and not for use of the stamp paper. Section 54 does not require the person who has purchased a stamp paper, to use it within six months. Therefore, there is no impediment for a stamp paper purchased more than six months prior to the proposed date of execution, being used for a document.

However, the State Stamp Acts of Maharashtra and Gujarat have brought in amendments to the effect that unused stamps after a period of 6 months become invalid and cannot be used any further. The Relevant Section 52B (b) of The Maharashtra Stamp Act 2016 reads thus:

Any stamps which have been purchased but have not been used or in respect of which no allowance has been claimed on or before the day immediately preceding the date of commencement of the Bombay Stamp (Amendment) Act, 1989 (hereinafter referred to as the commencement date ) and the period of six months from the date of purchase of such stamps has not elapsed before the commencement date, may be used before a period of six months from the date of purchase of such stamps is completed, or delivered for claiming the allowance under the relevant provision of this Act; and any stamps not so used or so delivered within the period aforesaid shall be rendered invalid.

Any stamps which have been purchased on or after the commencement date but have not been used, or no allowance has been claimed in respect thereof, within a period of six months from the date of purchase thereof, shall be rendered invalid.

It is noteworthy that there is a similar amendment in the Gujarat State Stamp Act. In view of the specific provision negating the validity of stamps after a period of 6 months from the date of purchase, the mandate of Thiruvengadam Pillai v. Navaneethammal (supra) is not applicable in the states of Gujarat & Maharashtra. It is a matter of grave concern that both the states recover tax although the taxing event has not occurred. This act of the State is tantamount to undue enrichment by retaining the value of the unused stamp papers.

Such an act of usurping money of its own people by a 'welfare state' is unethical, illegal & undesirable. Moreover, the provision in Maharashtra & Gujarat rendering the unused stamp papers invalid after 6 months of purchase is violative of Article 265 of the Constitution which mandates that no tax shall be levied or collected except by authority of law.

Thus, it is no longer Res Integra that the stamp papers, except in the States of Gujrat & Maharashtra, remain valid for unlimited period and can be legally used in future purchase of immovable properties at any time. The Stamp & Registration Department cannot object to the same in view of the aforementioned declaration of law by the Apex Court which binds all authorities & courts.

However, a new problem has arisen with the advent of E Stamps which have replaced the conventional coloured & printed stamps. Earlier only the name of the purchaser of stamp papers was handwritten and thus they could be used by the buyer in future transactions of immovable properties with any distinct buyer/seller. Moreover, the stamp papers were of smaller denominations and thus could be used in multiple smaller transactions. In the case of E Stamp, the name of both the purchaser & seller is mandatorily printed on the E Stamp and on top of it the same is issued on just one computer-generated paper. Thus, despite the generous Apex Court judgment, the E-stamp cannot be used because one party to the deed would be different than the one inscribed on the E-stamp.

This renders the binding judgment of the Apex Court redundant & nugatory. The Law Ministry/ State Stamp & Registration Departments should bring in guidelines/directions/circulars directing the issue of new E-stamps deleting the name of the erstwhile seller and substituting with the seller and also substituting the details of the new property instead of the earlier property which could not be purchased due to unavoidable circumstances.

Written By: Inder Chand Jain
Ph no: 8279945021, Email: [email protected]

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