Hari Chand vs State of U.P. though Collector

Arun Tandon, J.—In proceedings u/s 33/47-A of the Indian Stamp Act an order was passed by the Additional District Magistrate (Finance and Revenue), Mathura dated 31.1Z2008 whereunder the Petitioner was held liable for payment of stamp duty, which was short paid, along with penalty.

Not being satisfied with the order, the Petitioner filed a revision u/s 56(1-A) of the Indian Stamp Act, being Revision No. 2/3/08-09. The revision, has been allowed by the Member, Board of Revenue/Chief Controlling Authority Revenue by means of an order dated 28th May, 2010 and the order of the Additional District Magistrate, demanding the short paid stamp duty and penalty has been set aside. In terms of the order so passed by the revisional authority, the Petitioner made an application for refund of the money which he had deposited under the order of the Additional District Magistrate (Finance and Revenue). Under the impugned order the Additional District Magistrate had directed refund of the money deposited by the Petitioner without interest. Hence this petition.

Counsel for the Petitioner submits that the interest is necessary corollary to the retention of the money by the State Government. It is neither penal nor compensatory in nature.

Standing Counsel in reply submits that u/s 45 of the Indian Stamp Act the authorities are empowered to refund the money or excess duty in certain cases and no interest is to be paid.

I have heard learned Counsel for the parties and have gone through the records of the writ petition.

I am of the considered opinion that payment of interests on the money retained by the State Government is a necessary corollary when the money is to be so returned under order of the appellate or revisional authority. Such interest is neither penal nor compensatory in nature. A Division Bench of this Court in the case of Wig Brothers (Builders & Engineers) (P) Ltd. and Anr. v. Union of India and Ors. (2003) 3 C.L.J. 328 (All.) has explained that payment of interest is a necessary corollary to the retention of the money.

So far as Section 45 of the Indian Stamp Act is concerned, it has no application in the facts of the present case. Section 45 of The Indian Stamp Act reads as follows:

Power to Revenue authority to refund penalty or excess duty in certain cases.- (1) Where any penalty is paid u/s 35 or Section 40, the Chief Controlling Revenue-Authority may, upon application in writing made within one year from the date of the payment, refund such penalty wholly or in party.

(2) Where, in the opinion of the Chief Controlling Revenue-Authority, stamp-duty in excess of that which is legally chargeable has been charged and paid u/s 35 or Section 40, such authority may, upon application in writing made within three months of the order charging the same, refund the excess.

The order for deposit of the money towards short fall stamp duty and penalty was passed in proceedings u/s 33/47-A of the Indian Stamp Act, which has been up set by the revisional authority in exercise of quasi judicial power. What logically follows is that the demand and collection of money under the order of the Additional District Magistrate (Finance and Revenue) is rendered per se illegal. Therefore, for the period the money was so retained, the State must pay the interest.

Reference may also be had to the judgment of this Court in the case of Anshu Chhabara Vs. Collector and Commissioner, Jhansi Division, wherein in similar circumstance payment of interest was directed.

In the facts and circumstances of the case, writ petition is disposed of by providing that the Respondent shall make payment of interest at the rate of 8% per annum from the date the money was deposited till the date of actual repayment, preferably within two months from the date a certified copy of this order is filed before the Additional District Magistrate (Finance and Revenue), Mathura.