The proper payment of stamp duty is crucial for validating the authenticity and legality of various instruments. Adjudication is the process through which an opinion is sought from the Collector (an authority designated by the government) regarding the duty, if any, applicable to an instrument under the Indian Stamp Act, 1899.
Adjudication is necessary when a share certificate has not been properly stamped with the required duty at the time of incorporation of a company. To rectify this mistake, the share certificate must undergo adjudication, which involves obtaining the opinion of the Collector on the proper payment of stamp duty along with any applicable penalties.
Determining Stamp Duty
When an individual presents an instrument, whether executed or not, to the Collector, they can seek the opinion of the Collector’s office regarding the applicable duty. In order to initiate this process, the person bringing the instrument is required to pay a fee of one hundred rupees. The Collector then assesses the instrument and determines the duty, if any, with which it should be charged.
Which Provision Deals with Adjudication of Stamp Duty
Section 31 of the Indian Stamp Act, 1899 deals with adjudication of stamp duty.
Applicability of Adjudication of Stamp Duty
The applicability of the provisions regarding the adjudication of stamp duty, as mentioned in Section 3 of the Indian Stamp Act, 1899, applies to companies or individuals who have issued share certificates. Specifically, the requirement for stamp duty payment on share certificates is applicable to all companies incorporated under the laws of India.
According to Section 3 of the Indian Stamp Act, 1899, every share certificate must bear the necessary stamp duty as per the Stamp Act of the respective State or Union Territory. This implies that the obligation to pay stamp duty on share certificates falls on the company or entity issuing the shares.
Furnishing Abstract and Evidence
To arrive at a fair determination, the Collector may request an abstract of the instrument, which provides a concise summary of its contents. Additionally, the Collector may demand an affidavit or other evidence to establish that all relevant facts and circumstances affecting the chargeability of the instrument with duty, or the amount of duty payable, are accurately stated within the instrument. The adjudication process cannot proceed until the necessary abstract and evidence have been provided.
Assessing Stamp Duty for Immovable Property Transactions
In the case of instruments pertaining to transactions involving immovable property, where stamp duty is charged based on the market value of the property, the Collector follows a specific procedure to assess the proper stamp duty. The rules prescribed by the Government of the Union territory of Jammu and Kashmir outline the steps and guidelines to determine the market value of the property for stamp duty assessment.
Payment of Stamp Duty and Penalties
Once the Collector adjudicates the stamp duty, the person responsible for paying the duty, as stipulated under Section 29 of the relevant legislation, must make the payment within sixty days of receiving the demand notice. Failure to comply within the specified timeframe attracts penalties. If the individual fails to pay the stamp duty within the given period, a penalty equivalent to 2% of the deficient portion of the stamp duty is imposed for every month or part thereof, starting from the date of executing the instrument.
Legal Implications and Safeguards
The evidence furnished during the adjudication process cannot be used against any person in civil proceedings, except when determining the duty chargeable on the instrument in question. This provision protects individuals from potential misuse of the information they provide during the process. Furthermore, if a person furnishing such evidence pays the full duty as determined by the Collector, they are relieved from any penalties that may have been incurred due to the omission of relevant facts or circumstances in the instrument.
Adjudication as to proper stamp plays a critical role in ensuring the correct payment of stamp duty on various legal instruments. The process of adjudication of stamp duty involves the evaluation of instruments by the Collector, who determines the duty payable based on the provided abstract and evidence. It is essential for individuals involved in transactions requiring stamp duty to adhere to the prescribed timelines for payment to avoid penalties. The safeguards built into the adjudication process protect individuals while ensuring compliance with stamp duty regulations.
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