New Central Jute Mills Co. Ltd. And Ors vs The State Of West Bengal And Ors

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Petition No. 13 of 1962

Decision Date: 17 January, 1963

Coram: K.C. Das Gupta, Bhuvneshwar P. Sinha, P.B. Gajendragadkar, K.N. Wanchoo, J.C. Shah

In this case the matter was titled New Central Jute Mills Co. Ltd. and Others versus The State of West Bengal and Others and was decided on 17 January 1963 by the Supreme Court of India. The judgment was authored by Justice K. C. Das Gupta and was delivered by a bench consisting of Justices K. C. Das Gupta, Bhuvneshwar P. Sinha, P. B. Gajendragadkar, K. N. Wanchoo and J. C. Shah. The petitioners were New Central Jute Mills Co. Ltd. together with other respondents, while the respondents were the State of West Bengal and other parties. The case has been reported as 1963 AIR 1307 and 1964 SCR (1) 535. The statutory provision under consideration concerned the meaning of “duly stamped” in relation to a mortgage deed executed in Uttar Pradesh concerning property situated in West Bengal, and involved the Stamp Duty Act of 1899 (2 of 1899), specifically sections 2 (ii), 3 (as amended in Uttar Pradesh and West Bengal) and section 19 A, rule 3.

The first petitioner, identified as a company whose registered office was located in Calcutta, owned a manufacturing factory at Varanasi in the State of Uttar Pradesh. The Government of Uttar Pradesh had agreed to advance a loan to the company on the security of a mortgage over the company’s assets located at its jute mills in Budge Budge and Ghusuri, both situated in West Bengal. Consequently, a deed of mortgage was executed at Lucknow, Uttar Pradesh on 22 March 1957. To satisfy the stamp duty requirement, the petitioner affixed stamps having a total face value of Rs 1,08,751, which were purchased from the Collector of Stamps in Calcutta. The deed was subsequently registered at Calcutta on 5 April 1957. The Board of Revenue of Uttar Pradesh was later approached for a decision on the adequacy of the stamping. That Board held that because the mortgage deed was executed in a place within Uttar Pradesh, it was mandatory for the instrument to bear stamps issued by the Uttar Pradesh Government, and that the company was liable to pay an additional stamp duty of Rs 1,74,000 on the same document. Challenging this order, the petitioner filed a petition under Article 32 of the Constitution, contending that the deed should be considered “duly stamped” as it already bore stamps in accordance with the law of West Bengal.

The Court examined the nature of the dutiable events and held that the mortgage deed dated 22 March 1957 was indeed executed in Uttar Pradesh, even though it related to immovable property situated in West Bengal and was later presented in that State for registration. The first event liable to duty was the execution of the instrument, which occurred in Uttar Pradesh; the second event was the receipt of the instrument in West Bengal. When the matter was before the officers of Uttar Pradesh for a determination of whether the instrument was “duly stamped,” those officers were obliged to conclude that it was not, because it did not bear the stamps prescribed by the Uttar Pradesh authorities. Accordingly, the fact that the instrument carried stamps that satisfied the law of West Bengal could not be used to infer that the instrument was duly stamped for the purposes of Uttar Pradesh law. The Court therefore concluded that the instrument could not be said to be duly stamped unless it bore the appropriate amount and description of stamps required by the law of the State in which the execution took place.

In this matter the Court explained that an instrument can be considered duly stamped only when it carries stamps whose amount and description conform to the law of the State in which the instrument is required to be stamped. The applicable law includes not merely the principal Act but also the rules made under that Act. When an instrument first becomes liable to duty in one State because of its execution, and later becomes liable to duty in another State because of its receipt, the instrument must initially be stamped according to the law of the first State. If the stamp duty rate of the second State is the same as or lower than that of the first State, no additional stamping is required in the second State. However, where the duty rate in the second State is higher, the instrument must be stamped only for the excess amount, and this additional stamp must be affixed in accordance with the law and rules of the second State. The judgment concerned Petition No. 13 of 1962, filed under Article 32 of the Constitution of India for the enforcement of fundamental rights. The petition was presented by the Solicitor General of India and counsel on behalf of the petitioners, while counsel for the first respondent and for respondents numbered two through six were also listed, together with counsel for three interveners. The case was heard on 17 January 1963, and the judgment was delivered by Justice Das Gupta. The central issue before the Court was whether a public officer of Uttar Pradesh could correctly hold that a deed executed in Uttar Pradesh, which was liable to stamp duty under the Indian Stamp Act as amended in Uttar Pradesh, and which bore stamps overprinted with the name of West Bengal, was not duly stamped because it did not bear stamps overprinted with the name of Uttar Pradesh. The first petitioner, a company incorporated under the Indian Companies Act and having its registered office in Calcutta, owned a factory in Varanasi, Uttar Pradesh. The shareholders of that company were petitioners two and three. Uttar Pradesh had agreed to advance a loan of Rs 1,45,00,000 on the mortgage of the company’s assets located at its jute mills in Budge Budge and Ghusuri, both in West Bengal. The mortgage deed was executed in Lucknow on 22 March 1957. For this deed the company affixed stamps valued at Rs 1,08,751 purchased from the Calcutta Collector of Stamps, and the deed was duly registered in Calcutta on 5 April 1957. Subsequently, on 23 March 1957, a deed of substitution was executed between the company and the State of Uttar Pradesh, substituting part of the West Bengal mortgage property with property situated in Uttar Pradesh; that substitution deed was duly stamped and registered in Uttar Pradesh, and no objection was raised then to the stamp on the original mortgage deed. In 1960 the company requested Uttar Pradesh to release additional portions of the mortgage property and to accept, in their place, the assets and property of its factory at Varanasi as substituted security. The company forwarded a draft substitution deed to the Varanasi Collector for determination of the stamp duty payable and to obtain the benefit of reduced duty rates applicable to security substitution. The Collector referred the matter to the Uttar Pradesh Board of Revenue for adjudication of the stamp duty on the substitution document, and the Board ultimately decided that, as the original document had been executed in Uttar Pradesh, the applicable stamping rules of Uttar Pradesh governed its validity.

In this matter, the original mortgage deed covering property situated in West Bengal was released and, in its place, certain properties located in Uttar Pradesh were substituted; the deed of substitution was duly stamped and registered in Uttar Pradesh, and at that time no objection was raised to the stamp that had been affixed to the original mortgage deed. In 1960 the petitioner, a company, formally requested the Government of Uttar Pradesh to release an additional portion of the mortgage properties that were still specified in the original deed and to accept, as substituted security, the assets and properties of the company’s factory at Varanasi. To determine the stamp duty payable on this proposed substitution and to obtain the benefit of the reduced rates that applied to substituted security, the petitioner forwarded a draft deed to the Collector of Varanasi. The Collector, after receiving the draft, referred the matter to the Uttar Pradesh Board of Revenue for adjudication of the appropriate stamp duty on the substitution document. The Board concluded that, because the original mortgage instrument had been executed at a place within Uttar Pradesh, it was required to bear stamps issued by the Uttar Pradesh Government, and it rejected the petitioner's contention that the document dated 23 March 1957 was not an instrument and therefore could be stamped with West Bengal stamps. Consequently, the Board ruled that the company was liable to pay a deficit stamp duty of Rs 1,74,000 on the document dated 23 March 1957 before it could claim the concessional rate provided for substituted security. Subsequently, the Collector of Varanasi issued a letter dated 8 September 1961 informing the petitioner that the draft deed submitted by it constituted a substituted security chargeable under Article 40(c) of Schedule 1‑B of the Uttar Pradesh Stamp Amendment Act, 1958, with a duty of Rs 7,554, on the condition that the original mortgage deed of 22 March 1957 first be properly stamped by payment of the deficit duty of Rs 1,74,000. The same letter requested the petitioner to deposit the deficit amount of Rs 1,74,000 on the original mortgage deed and also to deposit Rs 7,554 for the deed of substitution to be executed. This communication from the Collector was followed by a second letter dated 17 November 1961 from the Tehsildar of Chandauli, Varanasi, demanding payment of the Rs 1,74,000 within one week of receipt of the notice. On 30 November 1961 the petitioner responded to the Tehsildar’s demand, seeking a one‑month extension for payment. The present petition was thereafter filed on 22 December 1961. The petitioner primarily contended that, under the provisions of the Stamp Act, a document cannot be declared unstamped unless it falls within the mischief contemplated by Section 15 of the Act, and therefore the Board of Revenue was erroneous in holding that the mortgage deed of 22 March 1957 could not be considered properly stamped unless it bore Uttar Pradesh stamps of Rs 1,74,000.

The petitioners contested the order of the Board of Revenue on the basis that they had already discharged the stamp duty liability in West Bengal to the amount of Rs 1,08,751. This payment had been made after the Collector of Stamps in Calcutta had adjudicated the matter in accordance with a circular dated 2 August 1954 issued by the State of West Bengal. The petitioners also challenged Rule 3 of the Stamp Rules framed by the Uttar Pradesh Government, which required that stamps bear the overprint “Uttar Pradesh” or the letters “U.P.”. They argued that this requirement was unconstitutional because it placed an unreasonable restriction on their fundamental rights guaranteed under Articles 19(1)(f) and 19(1)(g) of the Constitution. Alternatively, they contended that the West Bengal circular of 2 August 1954 was void, that the State of West Bengal had illegally demanded the sum of Rs 1,08,751 without any legal authority, and that such demand infringed the petitioners’ rights under the same constitutional provisions. The petitioners prayed for three remedies: (i) a writ of certiorari to set aside the Board of Revenue order dated 11 August 1961; (ii) a writ of mandamus directing respondents 3, 4 and 5—namely, Mr Bhargava, Member of the Board of Revenue, Uttar Pradesh; the Board of Revenue, Uttar Pradesh; and the Collector of Varanasi—to refrain from acting upon the said order; and (iii) alternatively, a writ of mandamus directing respondent 1, the State of West Bengal, to refund the amount of Rs 1,08,751 to the petitioners.

The State of West Bengal, together with the other respondents—the State of Uttar Pradesh and its officials—opposed the petition. The Uttar Pradesh side argued that the Board’s order of 11 August 1961 was fully consistent with law. According to paragraph 19 of the counter‑affidavit filed on behalf of respondents 2 to 6, the original mortgage deed dated 22 March 1957 had been seized by the Inspector of Stamps on 9 August 1961. The State of West Bengal denied that its 2 August 1954 circular was illegal and rejected the allegation that it had unlawfully extracted the sum of Rs 1,08,751 without statutory authority. Given the significance of the legal questions raised, notices were issued to the Advocates‑General of all the involved States, and several Advocates‑General appeared before the Court through their counsel. The learned Solicitor‑General, who appeared in support of the petitioners, chose not to press the contention against the State of West Bengal. His sole substantive argument was that, when the provisions of the Stamp Act and the Rules made thereunder are properly interpreted, it would be erroneous to hold that the document in question needed to be stamped with stamps purchased from the Uttar Pradesh Government. He did not address the issue concerning the quantum of stamp duty payable.

In the matter before the Court, it was noted that the stamps which had been used on the instrument in question were obtained from the Uttar Pradesh Government. The learned Solicitor‑General, who had appeared in support of the petitioner, did not address the Court on the specific issue concerning the amount of stamp duty that was payable. The Court held that there can be no doubt that whenever a public officer of a State, the term “public officer” being understood to mean an officer who is in charge of a public office, is required to determine whether an instrument is “duly stamped” or not, the officer must apply the Indian Stamp Act as it stands after being modified by the relevant State Legislature. Accordingly, when the public officers of Uttar Pradesh were called upon to decide, in the present dispute, whether the original mortgage deed dated 22 March 1957 was “duly stamped”, they were obliged to examine the Indian Stamp Act as amended by the Uttar Pradesh Legislature. Section 3 of the Stamp Act is the provision that creates a liability to pay stamp duty. After the amendment made by the Uttar Pradesh Legislature, Section 3 reads as follows: “3. Subject to the provisions of this Act and the exemptions contained in Schedule 1, the following instruments shall be chargeable with duty of the amount indicated in that Schedule as the proper duty therefor, respectively, that is to say – (a) every instrument mentioned in that schedule which, not having been previously executed by any person, is executed in the States on or after the first day of July; (b) every bill of exchange (payable otherwise than on demand) or promissory note drawn or made in the States on or after that day and accepted or paid, or presented for acceptance or payment or endorsed, transferred or otherwise negotiated, in the States; and (c) every instrument (other than a bill of exchange or promissory note) mentioned in that schedule which, not having been previously executed by any person, is executed out of the States on or after that day, relates to any property situated, or to any matter or thing done or to be done, in the States and is received in the States. Provided that, except as otherwise expressly provided in this Act, and notwithstanding anything contained in clauses (a), (b) and (c) of this section or in Schedule 1 or I‑A, the following instruments, subject to the exemptions contained in Schedule I‑A or I‑B, shall be chargeable with duty of the amount indicated in Schedule I‑A or I‑B as the proper duty therefor respectively, that is to say – (aa) every instrument mentioned in Schedule I‑A or I‑B which, not having been previously executed by any person, was executed in Uttar Pradesh – (i) in the case of instruments mentioned in Schedule I‑A on or after the date on which the U.P. Stamp (Amendment) Act, 1948, came into force, and (ii) in the case of instruments mentioned in Schedule I‑B on or after the date on which the U.P. Stamp (Amendment) Act, 1952, comes into force; and (bb) every instrument mentioned in Schedule I‑A or I‑B which, not having been previously executed by any person, was …”

The provision stipulated that an instrument executed outside Uttar Pradesh would be chargeable with duty only if it satisfied two conditions. First, if the instrument fell within Schedule I‑A, duty applied only to those executed on or after the commencement of the Uttar Pradesh Stamp (Amendment) Act, 1948. Second, if the instrument was listed in Schedule I‑B, duty applied only to those executed on or after the commencement of the Uttar Pradesh Stamp (Amendment) Act, 1952. In addition, the instrument had to relate to property situated in Uttar Pradesh, or to any act or transaction to be performed in Uttar Pradesh, and the instrument had to be received within Uttar Pradesh. The provision further exempted certain classes of instruments from any duty. The first exemption covered any instrument executed by, on behalf of, or in favour of the Government where, but for the exemption, the Government would otherwise have been liable to pay the duty. The second exemption applied to any instrument effecting the sale, transfer, or other disposition—whether absolute, by mortgage, or otherwise—of any ship or vessel, or any part, interest, share, or property in a ship or vessel that was registered under the Merchant Shipping Act, 1894, or under Article XIX of 1838, or under the Indian Registration of Ships Act, 1841, as amended by later statutes.

A further significant development in the legal framework resulted from the enactment of rules under the Act. Section 74 conferred upon the State Government the authority to formulate rules relating to the sale of stamps, while Section 75 authorized the Government generally to make rules “to carry out generally the purposes of the Act.” Section 76 mandated that every rule made under the Act be published in the official gazette, and such publication gave the rule the same effect as if it had been enacted by the Act itself. Among the rules issued by the Uttar Pradesh Government, Rule 3 was particularly relevant to the present matter. Rule 3 declared, in substance, that except where the Stamp Act or these rules provided otherwise, (i) all duties applicable to any instrument must be paid, and the payment must be indicated on the instrument by means of a stamp issued by the Government for the purposes of the Act; and (ii) a stamp whose face bears words appropriate to a particular kind of instrument must not be employed for an instrument of a different kind. The rule further specified that two categories of stamps were to be used to signify payment of duty. Category (a) comprised impressed stamps that were overprinted with the words “Uttar Pradesh” or the letters “U. P.”, while category (b) comprised adhesive stamps that were overprinted with the letters “U. P.”. The rule added that for instruments executed in any part of British India other than Uttar Pradesh and governed by Section 19‑A of the Act, as amended for Uttar Pradesh, the payment of stamp duty could be indicated by stamps prescribed for use in that particular part, to the extent of duty payable there, together with any additional duty, if any, chargeable in that jurisdiction.

The rule stipulated that payment of stamp duty in Uttar Pradesh must be made by using stamps prescribed in that rule, and sub‑rule (2) of the same rule became effective on 1 April 1942. It further provided that all impressed and adhesive stamps intended to indicate payment of duty on chargeable instruments, which were not overprinted with the words “Uttar Pradesh” or “U.P.”, had to be either consumed or exchanged at the treasuries in Uttar Pradesh, on condition that such stamps were undamaged and unspoiled and were exchanged for overprinted stamps showing the appropriate name, denomination and description before 1 April 1942; after that date the use or exchange of any impressed or adhesive stamps lacking such overprint was prohibited, except to the extent specified in the first proviso. The effect of section 76, as previously mentioned, was to make this rule an integral part of the Stamp Act. Consequently, when a public officer had to determine whether an instrument had been duly stamped, the officer was required to consider not only the provisions of the Act itself but also the relevant provisions contained in the rules. The factual situation that confronted the officers could be summarised as follows: the document in question had been executed in Uttar Pradesh, which consequently made it liable to duty under section 3(aa) of the Act as amended in Uttar Pradesh. Section 3 required that the liability be discharged by affixing stamps overprinted with the words “Uttar Pradesh” or “U.P.”. However, the instrument actually bore stamps overprinted with the words “West Bengal” and did not bear any stamps overprinted with “Uttar Pradesh” or “U.P.”. Because of this discrepancy, the public officer was bound to conclude that the instrument had not been stamped in accordance with the law then in force in Uttar Pradesh. On behalf of the petitioner it was argued that, notwithstanding the foregoing, the officer should still have held the document to be duly stamped, relying upon the definition of “duly stamped” contained in section 2(ii) of the Act. That definition states that “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 then in force in India. Although the question of the proper amount of the stamp was not considered for the present purpose, it was necessary to examine whether, when the officer found that the stamp had not been affixed or used “in accordance with the law then in force in Uttar Pradesh”, the officer was also entitled to say that the stamp had not been affixed or used “in accordance with the law then in force in India”. It was pointed out that, similar to the Uttar Pradesh legislature, the Bengal legislature had also amended the stamp law and framed its own rules. The amendment of section 3 in Bengal was effected by adding a proviso that read: “Provided that, except as otherwise expressly provided in this Act, and notwithstanding anything contained in cl.”

The Court observed that the amount specified in Schedule I‑A to the Act, subject to the exemptions contained in that Schedule, constituted the duty chargeable under the Act on certain instruments. Those instruments were described in clauses (aa) and (bb) of the proviso. Clause (aa) covered every instrument listed in Schedule I‑A as chargeable with duty under that Schedule, which had not been previously executed by any person and was executed in Bengal on or after 1 April 1922. Clause (bb) covered every instrument also listed in Schedule I‑A as chargeable with duty, which had not been previously executed by any person, was executed outside Bengal on or after 1 April 1922, related to property situated in Bengal or to any matter to be done in Bengal, and was received in Bengal. The Bengal Government subsequently framed rules under section 76, published in the Gazette, and thereby incorporated them into the Act. Rule 3 of those rules, as presently amended, required that the payable duty be discharged by stamps overprinted with the words “West Bengal.” The instrument before the Court was identified in Schedule I‑A of the Stamp Act as applicable in West Bengal; although it was executed outside West Bengal, it concerned property situated in West Bengal and, for registration purposes, was received in West Bengal. Accordingly, the instrument fell within the ambit of section 3 (bb) of the Bengal‑applicable Stamp Act and the duty was paid using stamps bearing the “West Bengal” overprint, in compliance with the prevailing stamp rules. On behalf of the petitioner, counsel argued that the stamp law in force in West Bengal should be regarded as law of India to the same extent as the stamp law in Uttar Pradesh is law of India. It was further contended that, to determine whether an instrument was “duly stamped” within the meaning of the Stamp Act, an officer in Uttar Pradesh must consider the laws of other parts of India to ascertain whether the stamp had been affixed or used in accordance with the law then in force throughout India. Moreover, counsel submitted that when an officer in Uttar Pradesh finds that an instrument has been stamped in conformity with West Bengal law, the officer is compelled to hold that the instrument is stamped in accordance with the law of India and therefore “duly stamped.” The question therefore narrowed to the situation wherein an officer in Uttar Pradesh determines that an instrument has not been stamped in accordance with Uttar Pradesh law, and how the officer should proceed. The Court noted that this issue was readily apparent.

In similar situations, public officers of other States may confront comparable dilemmas. For example, an officer in Bihar tasked with determining whether a particular instrument has been duly stamped might discover that the instrument complies with the stamping requirements of the Madras law but not with the requirements of the Bihar law. The question then arises whether, under such circumstances, the officer should deem the instrument to be duly stamped. The Court first observed that the liability of an instrument to pay stamp duty arises at the moment of its execution. Under section 3(a) of the Stamp Act, as it stood before amendment, execution within India rendered the instrument liable to stamp duty. Section 3(c) provided that execution outside India, when the instrument concerned property situated in India or any matter to be done in India and the instrument was subsequently received in India, also attracted duty. When State legislatures amended the Stamp Act, they essentially treated their respective State as equivalent to the whole of India for the purpose of stamp duty. Consequently, after the amendment by the Uttar Pradesh legislature, the primary dutiable event became the execution of the instrument in Uttar Pradesh, and liability to stamp duty arose at that point. In addition, liability also arose where an instrument executed outside Uttar Pradesh related to property situated in Uttar Pradesh or to any matter to be performed in Uttar Pradesh and was received in Uttar Pradesh. The Court noted that the amendments enacted by other State legislatures were materially the same. In many cases, therefore, the sole liability was the liability on execution of the document. After the amendment, liability could no longer be said to arise generally in India; it must be regarded as arising in the specific State where the execution occurred. It follows logically that once liability has arisen in a particular State, it cannot be considered discharged according to the law of India unless it is discharged according to the law of that State. In other words, where the only liability of an instrument is the execution in Uttar Pradesh, the instrument must carry stamps of the amount and description required by Uttar Pradesh law. If the liability arises on execution in Bihar, the instrument must bear stamps prescribed by Bihar law, and the same principle applies to every other State that has amended the Stamp Act in the same manner as Uttar Pradesh. In all such instances, the instrument can be regarded as duly stamped only if it bears stamps of the appropriate amount and description in conformity with the law of the concerned State, a law that includes not only the Act itself but also the rules framed under the Act.

In situations where a document is executed in one State but concerns property that is situated in another State, or relates to acts that are performed or are to be performed in a different State, and the document is subsequently received in that second State, two separate stamp‑duty obligations arise. The first liability emerges under the stamp law of the State where the execution took place because the act of execution itself triggers a duty under that State’s legislation. A second liability is created under the law of the State where the document is received, since receipt in that State constitutes a distinct dutiable event. The question before the Court was how these liabilities should be discharged. Specifically, the Court asked whether the duty must be paid in accordance with the law of the State of execution or in accordance with the law of the State where the receipt occurs, which is the second dutiable event.

The Court observed that a revenue officer in the State of execution might reasonably contend that the law of his own State should dominate. Consequently, even if the document had already been stamped in compliance with the law of the other State, the officer could disregard that stamping as non‑compliant with Indian law and could demand that new stamps be affixed according to the law of his own State. To prevent the hardships that could result from such conflicting demands, the legislatures of various States enacted Section 19A of the Stamp Act. The Uttar Pradesh Act provides that when an instrument becomes chargeable in any part of the country outside Uttar Pradesh under the applicable stamp law, and later becomes chargeable in Uttar Pradesh at a higher rate of duty pursuant to clause (bb) of the first proviso to section 3, the amount of duty payable in Uttar Pradesh shall be the amount specified in Schedule 1‑A or Schedule 1‑B, reduced by any duty that has already been paid in the other State. In addition, the instrument must be stamped with the additional stamps required for the Uttar Pradesh duty in the same manner, at the same time, and by the same persons as if the instrument were being received in Uttar Pradesh for the first time when the higher duty becomes applicable.

The Court therefore concluded that where the duty rate in Uttar Pradesh is higher for an instrument that was executed outside Uttar Pradesh but relates to property or matters situated in Uttar Pradesh, the party is required to pay only the excess duty in Uttar Pradesh. The duty already paid in the other State is taken into account, and only the difference between the two rates must be satisfied in Uttar Pradesh.

The Court observed that only the excess amount of duty is required to be paid in Uttar Pradesh stamps, as directed by Rule 3 of the Uttar Pradesh Rules. Section 19‑A, the Court explained, applies solely to an instrument that, after becoming chargeable in a State other than Uttar Pradesh, later becomes chargeable in Uttar Pradesh at a higher rate of duty. The Court further expressed the view that where the duty rate in Uttar Pradesh is the same as, or lower than, the rate already paid in another State, no additional duty should be payable on that instrument. To require payment of the full Uttar Pradesh rate in such circumstances would be anomalous and unreasonable, because the legislature could not have intended that the excess alone be payable when a higher rate applies, yet the entire rate be due when the already paid duty is equal to or exceeds the Uttar Pradesh rate. Consequently, the Court reasoned that if an instrument first becomes liable to duty in one State at the time of its execution and later becomes liable to duty in another State upon receipt, the instrument must be stamped according to the law of the first State. When the second State’s rate is the same or lower, no further stamping is required; when the second State’s rate is higher, only the excess over the duty already paid needs to be stamped, and this must be done in compliance with the law and rules of the second State. The mortgage deed that is the subject of the petition was executed in Uttar Pradesh, although it related to property situated in West Bengal and was thereafter received in West Bengal for registration. The first dutiable event occurred at the time of execution in Uttar Pradesh, and the second dutiable event occurred upon receipt in West Bengal.

When the deed was presented to the officers of Uttar Pradesh for a determination of whether it had been duly stamped, those officers were compelled, based on the foregoing discussion, to hold that the instrument was not duly stamped because it bore no Uttar Pradesh stamps. The fact that the deed had been stamped in accordance with West Bengal law could not be taken to mean that it complied with the law applicable throughout India. Accordingly, the officers of Uttar Pradesh correctly concluded that the original mortgage deed was not duly stamped. On that basis, the Court held that the petitioners were not entitled to any relief. In the circumstances, the Court ordered that each party bear its own costs and dismissed the petition.