The indian stamp act and state
stamp acts list conditions under which refund or repayment of any amount
against unused stamps is permissible.
Payment of prescribed stamp
duty is important for successful completion of any transaction related to
immovable property such as sale, gift, certain kind of mortgages, etc. or
documentation related to moveable assets such as transfer of shares, debentures
etc. Stamp duty is payable on such instruments, as mentioned under the stamp duty
schedule of relevant state stamp acts. Rates of stamp duty levied on
instruments differ from state to state.
The India Stamp Act. 1899
governs the law relating to payment of stamp duty. Several states such as
Maharashtra, Uttar Pradesh, Rajasthan, Kerala, Karnataka have enacted their own
stamp acts and rules. The Indian Stamp Act states that an instrument executed
by any person in India and chargeable with stamp duty needs to be stamped
before or at the time of execution. According the practice is to pay the stamp
duty and get stamp papers before executing the documents. However, there have
been cases when, after payment of the stamp duty but before the execution of
the documents, the transaction fails to materialize and the stamp duty papers
purchased by the parties to the transaction remain unused. The party which
purchased then is left with huge losses, as stamp duty amount could in many
cases run into lakhs or even crores. What is the way out for such parties?
The Indian Stamp Act and state stamp acts provide for conditions under which refund / repayment of any amount against unused stamps is permissible. The amount paid towards value of stamp after requisite deductions is allowable to be refunded if it was purchased within the period of six months (except for Karnataka, where this period is one year) immediately preceding the date on which the stamp paper was surrendered, provided such stamp paper was not spoiled or rendered unfit or useless for the purpose intended.
In respect of the validity of
the stamp papers, it may be noted that there is no time limit prescribed under
the stamp laws within which the stamp papers purchased are to be utilized, i.e.
to say that there is no expiry date for stamp papers and there is no
prescription on any time period within which such stamp papers purchased are to
be used. Once the stamp duty has been paid and the stamp papers have been
purchased by the party, the stamp paper can be used at any point of time. This
position has been clarified by the Supreme Court in the matter of Thiruvegada
Pillai v Navaneethammal and Anr in which the Supreme Court discussed the
similar provision being section 54 under The Indian Stamp Act.
It is clear from the provision
of The Indian Stamp Act as well as respective state stamp acts and the above
stated judgment that the condition of validity period of six months (one year
in case of Karnataka) is applicable only in cases of seeking refund of
amounts/allowance paid for unused stamp papers. However, no time limit is
applicable or has been prescribed for use / validity of the stamp papers.
