The Constitutional Provisions Concerning Stamp Duties
I The Constitution of India has a number of other provisions
relevant to stamp duties. Of these, Article 246 and the Seventh Schedule are
relevant in regard to the legislative power to levy Stamp duties. Articles 265,
268 and 269 (e) are relevant mainly as regards the distribution of the revenues.
The former is more important, for the purposes of a consideration of the Stamp
Act. These Articles are reproduced as below;
246. Subject-matter of laws made by Parliament and by the Legislature
(1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive
power to make laws with respect to any of the matters enumerated in List I in
the Seventh Schedule (in this Constitution referred to as the "Union List").
(2) Notwithstanding anything in clause (3), Parliament, and, subject to clause
(1), the legislature of any State also, have power to make laws with respect
to any of the matters enumerated in List III in the Seventh Schedule (in this
Constitution referred to as the "Concurrent List").
(3) Subject to clauses (1) and (2), the Legislature of any State has exclusive
power to make laws for such State or any part thereof with respect to any of
the matters enumerated in List II in the Seventh Schedule (in this Constitution
referred to as the "State List").
(4) Parliament has power to make laws with respect to any matter for any part
of the territory of India not included (in a State) notwithstanding that such
matter is a matter enumerated in the State List.
x x x x x x
265. Taxes not to be imposed save by authority of law. -
No tax shall be levied or collected except by authority of law.
x x x x x x
268. Duties levied by the Union but collected and appropriated by
(1) Such stamp duties and such duties of excise on medicinal and toilet preparations
as are mentioned in the Union List shall be levied by the Government of India
but shall be collected:-
(a) in the case where such duties are leviable within any Union Territory,
by the Government of India, and
(b) in other cases, by the States within which such duties are respectively
(2) The proceeds in any financial year of any such duty leviable within any
State shall not form part of the Consolidated Fund of India, but shall be assigned
to that State.
269 Taxes levied and collected by the Union but assigned to the States-
(1) The following duties and taxes shall be levied and collected by the Government
of India but shall be assigned to the States in the manner provided in clause
a. Duties in respect of succession to property other than agricultural land;
b. Estate duty in respect of property other than agricultural land;
c. Terminal taxes on goods or passengers carried by railway, sea or air;
d. Taxes on railway fares and freights;
e. Taxes other than stamp duties on transactions in stock-exchanges and futures
f. Taxes on the sale or purchase of newspapers and on advertisements published
g. Taxes on the sale or purchase of goods other than newspapers, where such
sale or purchase takes place in the course of inter-State trade or commerce;
h. Taxes on the consignment of goods (whether the consignment is to the person
making it or to any other person), where such consignment takes place in the
course of inter-state trade or commerce.
(2) The net proceeds in any financial year of any such duty or tax, except
in so far as those proceeds represent proceeds attributable to Union territories,
shall not form part of the Consolidated Fund of India, but shall be assigned
to the States within which that duty or tax is leviable in that year and shall
be distributed among those States in accordance with such principles of distribution
as may be formulated by Parliament by law.
(3) Parliament may by law formulae principles for determining when a sale of
purchase of, or consignment of, goods takes place in the course of inter-State
trade or commerce.
II Briefly, the schedule provided for in the constitution
is as follows
(a) Under Article 246, such Stamp duties as are mentioned in the Union List
are levied by the Union, but, under Article 268, each State in which they
are levied, collects and retains the proceeds (except in the case of Union
(b) Other Stamp duties are levied and collected by the States, by virtue
of the legislative entry in the State List.
(c) And the Concurrent List contains the following entry
44. Stamp duties other than duties or fees collected by means of judicial stamps,
but not including rates of Stamp duty."
This entry deals with the general subject of stamps. Provisions other than
those relating to rates of duty are, thus within the legislative power both
the Union and the States.
(d) Broadly speaking, therefore, except as regards Union territories, parliaments
legislative power extends to-
(i) Rates of Stamp duty on the specified documents;
(ii) Machinery provisions, in respect of all documents.
III The position can be stated in the form of a Chart as follows
|Rates of Stamp duty in respect of bill of exchange,
cheques, promissory notes, bills of lading, letters of credit,
policies of insurance, transfer of shares, debentures, proxies
||Rates of Stamp duty in respect of document other
than those specified in the provisions of List-I with regard
to rates of Stamp Duty
||Stamp duties other than duties or fees collected
by means of judicial stamps but not including rates of Stamp
IV Thus, the power of the Union extends to the whole field
of Stamp duties, except that as regards rates of Stamp duty in the States, it
is confined to the specified documents. It is plenary as regards machinery provisions.