Instrument – Chargeability to stamp duty – Document executed before Notary – Creating rights in land – Stamp Act, 1899, section 17, 2(14)

A document before the Notary was executed on 14-12- 2009 by one Mr. Mahadeo and others by which they withdrew their rights on the abadi land admeasuring 80 ft. x 70 ft. and transferred them in favour of the petitioner for a consideration of Rs. 50,000/- only. The aforesaid document was written on a stamp paper of Rs. 150/- only. The Additional Commissioner (Stamp) vide order dated 18-04-011 held the above document to be an instrument of conveyance and assessing its market value determined the deficiency in stamp duty and imposed a penalty. The appellate authority affirmed the aforesaid order vide its order dated 25-11-2011.

The above two order dated 25-11-2011 and 18-04-2011 were under challenge by way of writ petition before the Allahabad High Court. The Hon’ble Court observed that section 17 of the Indian Stamp Act, 1899 provides that all instruments chargeable with duty and executed by any person in the India shall be stamped before or at the time of execution. Therefore, stamp duty on an instrument is payable at the time of execution of the instrument. The moment an instrument is executed stamp duty is payable on it. The validity of its execution or its non-registration has nothing to do with its execution and consequently the payment of stamp duty.

An instrument as defined u/s. 2(14) of the Act includes every document and record by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded. The above document executed before the Notary, with whatever name it may be called, creates rights in the land in favour of the petitioners, after extinguishing those of Mr. Mahadeo and others therein. It is, therefore, undoubtedly, an instrument as defined u/s. 2(14) of the Act.

In view of the aforesaid facts the aforesaid document dated 14.12.2009 is an ‘instrument’ within the meaning of Section 2(14) of the Act and its execution is not denied, it is chargeable to stamp duty.