* Author
[2024] 5 S.C.R. 241 : 2024 INSC 358
Life Insurance Corporation of India
v.
The State of Rajasthan and Ors.
(Civil Appeal No. 3391 of 2011)
30 April 2024
[Pamidighantam Sri Narasimha* and Aravind Kumar, JJ.]
Issue for Consideration
Whether the Rajasthan Stamp Law (Adaptation) Act, 1952 or the
Rajasthan Stamp Act, 1998 applies to the facts of the present case;
whether the state government has the legislative competence to
impose and collect stamp duty on policies of insurance as per
Entry 91 of List I r/w Entry 44 of List III; whether the 1952 Act
requires the purchase of insurance stamps from and payment of
stamp duty to the Rajasthan government for insurance policies
issued within the state; whether, in the facts of the present case,
the appellant is liable to pay stamp duty.
Headnotes
Rajasthan Stamp Law (Adaptation) Act, 1952 – Rajasthan
Stamp Rules, 1955 – Indian Stamp Act, 1899 – s.3; Schedule
I – Rajasthan Stamp Act, 1998 – Constitution of India – Entry
44 of List III, Entry 91 of List I – Power of the State to levy
and collect stamp duty on insurance policies executed within
the State – Appellant issued various insurance policies within
the State of Rajasthan however, purchased insurance stamps
from the State of Maharashtra – Demand for payment of stamp
duty by the State of Rajasthan – Validity:
Held: State of Rajasthan has the power to impose and collect stamp
duty on insurance policies under Entry 44 of List III, albeit such duty
must be imposed as per the rate prescribed by a Parliamentary
legislation under Entry 91 of List I – For the execution of insurance
policies within the state of Rajasthan, the appellant is bound to
purchase India Insurance Stamps and pay the stamp duty to the
State of Rajasthan – s.3 of Indian Stamp Act, 1899 as adapted to
the State of Rajasthan is the charging provision as per which the
appellant must pay stamp duty to the state government on insurance
policies executed within the state – The rate at which stamp duty
is payable on policies of insurance under the 1952 Act has been
242 [2024] 5 S.C.R.
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adopted from Schedule I of the central Act, in accordance with Entry
91 of List I – The charging provision has thus been validly enacted
by the state government under Entry 44 of List III – Therefore, the
state government in the present case can impose stamp duty on
the issuance of insurance policies within its territory and require
the payment of such stamp duty by the appellant – Hence, the
commencement of proceedings for recovery of stamp duty under
the state law and the rules made thereunder was legal, valid, and
justified – However, in the facts and circumstances of the present
case, the state government shall not demand and collect the stamp
duty as per the orders dtd.16.09.2004, 16.10.2004, 11.10.2004,
01.11.2004, and 28.10.2004 – Impugned judgment of the High
Court affirmed. [Paras 16, 37, 31, 38]
Rajasthan Stamp Law (Adaptation) Act, 1952 – Rajasthan
Stamp Act, 1998 – s.3 – Insurance policies issued between
1993-94 to 2001-02 – Stamp duty leviable under the 1952 Act
or the 1998 Act:
Held: Stamp duty must be levied as per the law in force as on
the date of execution of the instrument – The charging provision
i.e. s.3 of the 1998 Act, imposed stamp duty on every instrument
mentioned in the Schedule that is executed in the state on or
after the date of commencement of the Act – 1998 Act came into
force only on 27.05.2004 – Hence, at the time that the relevant
instruments were executed, the 1952 Act was still in force and the
stamp duty was leviable under the same. [Para 8]
Rajasthan Stamp Law (Adaptation) Act, 1952 – ss.2, 3(v),
(vi) – Application of Indian Stamp Act, 1899 – Adaptations
– Schedule I of the 1899 Act – Rajasthan Stamp Rules, 1955
– rr.2 (d), 3 – Liability to pay stamp duty under the 1952 Act:
Held: r.3, r/w r.2(d), provides that the stamps issued by the State
government will indicate the payment of stamp duty chargeable on an
instrument – Therefore, the stamp must be issued by and the stamp
duty must be paid to the State government for an instrument to be
‘duly stamped’ under the 1952 Act – State has the power to collect
stamp duty under s.3 of the Indian Stamp Act, 1899 as adapted
to the state of Rajasthan that provides that an instrument shall be
chargeable with the duty of the amount indicated in the Schedule if
it is executed within the state of Rajasthan – The mandate of s.3 is
also found in r.3 that provides for “mode of payment” – r.3, read with
r.2(d), provides that the duty with which any instrument is chargeable
[2024] 5 S.C.R. 243
Life Insurance Corporation of India v.
The State of Rajasthan and Ors.
shall be paid by means of a stamp issued by the state government –
The relevant event flowing from s.3 and r.3 authorising the levy and
imposition of stamp duty is the execution of the policy of insurance
within the state – The liability to purchase the stamps from the state
of Rajasthan is therefore clear and unambiguous – Consequently,
for instruments executed within the state, the purchase of stamps
from outside the state will equate to evasion of stamp duty and the
instrument will not be ‘duly stamped’. [Paras 22, 26]
Rajasthan Stamp Law (Adaptation) Act, 1952 – s.3A(1) –
Appellant issued various insurance policies within the state
of Rajasthan and was required to affix stamps by paying
stamp duty on such policies – It wrote to the Collector, Jaipur
regarding the non-availability of ‘Agents License Fee stamps’
– Plea of the appellant that in view of the letter of the Treasury
Officer, Jaipur dated 07.10.1991 stating that ‘India Insurance
Stamps’ are the property of the central government and their
supply and distribution is not related to their department, they
were compelled to purchase the stamps from Maharashtra,
without which they could not have issued the insurance
policies in the state of Rajasthan – High Court without taking
note of the aforesaid letter held that the correspondence of
the appellant with the department pertained to Agents License
Fee stamps and even if the stamps were unavailable, the
appellant was duty-bound to pay the stamp duty to the state
government in cash as provided under s.3A(1) – Propriety:
Held: High Court evidently did not take note of the letter dated
07.10.1991 – Further, it entirely failed to consider sub-section
(4) which excludes instruments under Entry 91, List I from the
application of s.3A – Therefore, the High Court also erred in holding
that the appellant could have paid the stamp duty in cash – In view
of the above circumstances, the appellant had no choice but to
purchase the insurance stamps from outside the state – While it
made every endeavour to purchase the stamp from within the state,
due to the letter by the department and the lack of mechanism for
payment of stamp duty under the 1952 Act in case of unavailability
of insurance stamps, it was unable to purchase the stamps and
pay the stamp duty to the Rajasthan government. [Para 36]
Constitution of India – Seventh Schedule – Stamp duty –
Entry 91 of List I, Entry 63 of List II, and Entry 44 of List III
– Distribution of legislative competence:
244 [2024] 5 S.C.R.
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Held: A combined reading of the constitutional scheme shows
that the power to prescribe the rate of duty is mutually exclusive
and has been clearly demarcated between the Parliament and the
legislatures of the state – Insurance policies, which are the relevant
instrument for the purpose of the present case, fall under Entry
91 of List I for the purpose of prescription of rate of duty – This
means that only the Parliament holds the exclusive power and the
legislative competence under the Constitution to prescribe the rate
of stamp duty on insurance policies. [Para 12]
Rajasthan Stamp Law (Adaptation) Act, 1952 – Indian Stamp
Act, 1899 – Constitution of India – Article 254; Entry 44, List III:
Held: In the present case, the imposition of stamp duty by the
state government was under the 1952 Act, which is a state law
that has been enacted under Entry 44 of List III, and has received
Presidential assent as contemplated under Article 254 – Article
254(2) clearly stipulates that when a state law with respect to a
matter in the Concurrent List is repugnant to the provisions of an
earlier law made by the Parliament or an existing law with respect
to that matter, then the law passed by the state shall prevail in that
state “if it has been reserved for the consideration of the President
and has received his assent” – The 1952 Act that occupies the
field in the present case has undisputedly received Presidential
assent and hence it prevails over the Indian Stamp Act, 1899 so
far as the state of Rajasthan is concerned. [Para 29]
Tax/Taxation – Tax law – Plea that the rate of taxation is an
essential component for a valid imposition of tax and since
the State legislature cannot prescribe the rate of stamp duty
on insurance policies, there can be no valid imposition of
stamp duty on these instruments by way of a state enactment:
Held: Rejected – Even if the State legislature cannot prescribe the
rate of stamp duty, it can levy such duty at the rate as provided by
the Parliament – In the present case, while it is true that the State
cannot prescribe the rate of duty on insurance policies, that by itself
does not mean that there is ambiguity or lack of clarity regarding
the rate of such duty – Rather, the rate of duty is unambiguous,
clear, and defined by the Parliament and is adopted by the state
to levy and collect stamp duty. [Para 18]
Constitution of India – Entry 44 of List III; Entry 91 of List
I – Contention as regards whether Entry 44 of List III is a
taxation entry:
[2024] 5 S.C.R. 245
Life Insurance Corporation of India v.
The State of Rajasthan and Ors.
Held: Entry 44 of List III is a taxation entry that falls under the
Concurrent List – State legislature has the legislative competence
to impose and collect stamp duty on policies of insurance under
Entry 44 of List III, as per the rate prescribed by the Parliament
under Entry 91 of List I. [Para 19]
Case Law Cited
VVS Rama Sharma v. State of Uttar Pradesh [2009] 5
SCR 1159 : (2009) 7 SCC 234; Govind Saran Ganga
Saran v. Commissioner of Sales Tax [1985] 3 SCR 985 :
(1985) Supp SCC 205; Mathuram Agrawal v. State of
Madhya Pradesh [1999] Supp. 4 SCR 195 : (1999) 8
SCC 667 – distinguished.
State of West Bengal v. Kesoram Industries [2004] 1 SCR
564 : 7 (2004) 10 SCC 201; State of Karnataka v. State
of Meghalaya [2022] 18 SCR 516 : (2023) 4 SCC 416;
Bar Council of Uttar Pradesh v. State of Uttar Pradesh
[1973] 2 SCR 1073 : (1973) 1 SCC 261; Vijay v. Union of
India [2023] 15 SCR 293 : (2023) SCC OnLine SC 1585
: 2023 INSC 1030; Government of Andhra Pradesh v. P.
Laxmi Devi [2008] 3 SCR 330 : (2008) 4 SCC 720; UP
Electric Supply Co Ltd v. R.K. Shukla [1970] 1 SCR 507
(1969) 2 SCC 400; M. Karunanidhi v. Union of India [1979]
3 SCR 254 : (1979) 3 SCC 431; Balaji v. ITO [1962] 2
SCR 983 : AIR (1962) SC 123; Municipal Council, Kota,
Rajasthan v. Delhi Cloth and General Mills Co. Ltd, Delhi
[2001] 2 SCR 287 : (2001) 3 SCC 654 – referred to.
List of Acts
Rajasthan Stamp Law (Adaptation) Act, 1952; Indian Stamp Act,
1899; Rajasthan Stamp Act, 1998; Rajasthan Stamp Rules, 1955;
Constitution of India.
List of Keywords
Stamp duty; Liability to pay stamp duty; Evasion of stamp duty;
Imposition and collection of stamp duty on policies of insurance;
Purchase of insurance stamps; Payment of stamp duty; Insurance
policies issued/executed within the State; Recovery of stamp duty;
Stamp duty chargeable on instrument; Rate of stamp duty on
insurance policies; Purchase of stamps from outside the State;
‘duly stamped’; Taxation entry.
246 [2024] 5 S.C.R.
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Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3391 of 2011
From the Judgment and Order dated 21.02.2011 of the High Court of
Rajasthan at Jaipur in DBCSA No. 670 of 2004
With
Civil Appeal Nos. 3849, 3393, 3394 and 3395 of 2011
Appearances for Parties
N. Venkatraman, A.S.G., C.Paramasivam, Nishant Sharma,
V. Chandrasekara Bharthi, Ms. Amitha Chandramouli, Rahul
Vijayakumar, Shivshankar G., Rakesh K. Sharma, Advs. for the
Appellant.
Dr. Manish Singhvi, Sr. Adv., Ms. Shubhangi Agarwal, Apurv Singhvi,
Rohan Darade, Milind Kumar, Advs. for the Respondents.
Judgment / Order of the Supreme Court
Judgment
Pamidighantam Sri Narasimha, J.
1. The issue for consideration is whether the state of Rajasthan has
the power and jurisdiction to levy and collect stamp duty on policies
of insurance issued within the state. For the reasons to follow, we
have rejected the contention of the Life Insurance Corporation, the
appellant herein, regarding the lack of legislative competence of the
state and have also affirmed the power to levy and collect stamp
duty under the Rajasthan Stamp Law (Adaptation) Act, 19521
and
the rules made thereunder. While dismissing the appeal, we have
however set aside certain findings of the High Court and granted
relief to the appellant in the facts and circumstances of the case. We
will first refer to the necessary facts before analysing the provisions
and drawing our conclusions.
2. Facts: The appellant issued various insurance policies within the state
of Rajasthan between 1993-94 and 2001-02. As per the prevailing
law relating to stamp duty, the appellant was required to affix stamps
1 Hereinafter ‘1952 Act’.
[2024] 5 S.C.R. 247
Life Insurance Corporation of India v.
The State of Rajasthan and Ors.
by paying stamp duty on the policies of insurance issued by it in
accordance with the Indian Stamp Act, 1899, as adapted to the state
of Rajasthan by the 1952 Act.
2.1 On 19.08.1991, the appellant wrote to the Collector, Jaipur
regarding the non-availability of ‘Agents License Fee stamps’. On
07.10.1991, the Treasury Officer, Jaipur replied to the appellant
that ‘India Insurance Stamps’ are the property of the central
government and their supply and distribution is not related to
their department.
2.2 On 15.04.2004 and 06.05.2004, the Inspector General
(Registration and Stamps) Rajasthan, Ajmer issued a letter to
the appellant to deposit a sum of Rs. 1.19 crores for causing
loss of revenue to the state of Rajasthan as it had purchased
insurance stamps between 1993-94 and 2001-02 from the state
of Maharashtra for insurance policies that were issued within the
state of Rajasthan. Pursuantly, the Additional Collector (Stamps),
Jaipur issued a show-cause notice under Section 37(5) of the
Rajasthan Stamp Act, 19982
for payment of the amount.
2.3 By order dated 16.09.2004, the Additional Collector (Stamps),
Jaipur confirmed the show-cause notice and directed
the appellant to deposit the amount. It was held that the
correspondence between the appellant and the department
pertained to Agents Fee Stamps and not India Insurance stamps
that are affixed on insurance policies and were available at the
relevant time. Similar orders were passed on 16.10.2004 for
Rs. 1.07 crores, 11.10.2004 for Rs. 1.18 crores, 01.11.2004
for Rs. 1.87 crores, and 28.10.2004 for Rs. 43.68 lakhs. The
appellant also challenged these orders by way of separate
writ petitions, which have been disposed of in the judgment
impugned before us.3
2.4 The appellant filed a writ petition challenging the order of
the Additional Collector dated 16.09.2004, which came to be
2 Hereinafter ‘1998 Act’.
3 In D.B. Civil Writ Petition No. 3418/2006, D.B. Civil Writ Petition No. 3419/2006, and D.B. Civil Writ
Petition No. 3420/2006, and D.B. Civil Writ Petition No. 8187/2004, judgment dated 21.02.2011
(‘impugned judgment’).
248 [2024] 5 S.C.R.
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dismissed by the High Court single judge4
on the ground that
the appellant has an alternative efficacious remedy of filing a
revision under Section 65 of the Rajasthan Stamp Act.
2.5 The appellant preferred a writ appeal before the division bench,
which was initially disposed of by an order dated 11.12.2004
wherein the High Court directed the Chief Secretary of the
Rajasthan government to constitute a High Powered Committee
under his chairmanship to decide the matter by a reasoned
order. It was also held that if either party is dissatisfied with
the decision of the committee, they could file for revival of the
writ appeal. The Committee constituted pursuant to this order
rejected the appellant’s representation, due to which the writ
appeal was restored and decided in the impugned judgment5
.
3. Reasoning of the High Court: It is necessary to briefly discuss
the reasoning of the High Court in dismissing the writ appeal and
confirming the imposition of stamp duty. The High Court relied
on Sections 2, 3(v), and 3A of the 1952 Act read with Rules 2(d)
and 3 of the Rajasthan Stamp Rules, 1955. Section 2 provides that
subject to the other provisions of this Act, the Indian Stamp Act, 1899
shall apply to the whole state of Rajasthan on and from 01.04.1958.
Section 3(v) provides that reference in the Indian Act to ‘government’
shall, unless the context otherwise requires, be construed as reference
to the state government. Section 3A(1) provides for payment of stamp
duty in cash when stamps are not available for sale.
3.1 Rule 2(d) of the Rajasthan Stamp Rules, 1955 defines
government as state government and Rule 3 provides for the
mode of payment of stamp duty to the state government.
3.2 Relying on these provisions, specifically Section 3A(1), the High
Court held that the appellant should have paid the stamp duty
in cash and the receipt would be affixed on the instrument as
envisaged under this provision. It was also held that there was
no legal sanction under the scheme of the Act that permits the
appellant to purchase such stamps from outside the state in case
4 In S.B. Civil Writ Petition No. 7013 of 2004, judgment dated 08.10.2004
5 In D.B. Civil Special Appeal (Writ) No. 670/2004, judgment dated 21.02.2011 (‘impugned judgment).
[2024] 5 S.C.R. 249
Life Insurance Corporation of India v.
The State of Rajasthan and Ors.
of non-availability.6
It further held that in any case, only Agents
License Fee stamps were unavailable while the imposition of
stamp duty was on India Insurance Stamps.7
3.3 Relying on Rule 2(d) that defines ‘government’ as meaning
government of Rajasthan and Rule 3 that mandates payment
of stamp duty to the state government, the High Court held
that the stamps must only be purchased from the Rajasthan
government.8
The only exception provided is under Section 3A
when the person can deposit cash with the government treasury
in case of non-availability of stamps and affix the receipt of
challan with the instrument.9
The 1952 Act and the 1955 Rules
do not permit the appellant to purchase stamps from outside
the state that do not bear the superimposition of the words
‘Rajasthan’ or letters ‘RAJ’ as provided in the Explanation to
Rule 3.10 On such reading of the law and facts, the High Court
upheld the order of the Collector dated 16.09.2004.
4. The High Court also dealt with the arguments by the parties on
the competence of the state government to impose stamp duty
on insurance policies based on the distribution of legislative fields
in the Seventh Schedule on stamp duty. The High Court held that
Entry 91 of List I (Union List) empowers the Parliament to enact a
law relating to rate of stamp duty in respect of various instruments,
including policies of insurance. Entry 44 of List III (Concurrent List)
empowers both the Parliament and state legislatures to enact laws
with respect to “stamp duties other than duties or fees collected by
means of judicial stamps, but not including rates of stamp duty”.
4.1 The High Court held that the 1952 Act has been enacted under
Entry 44, List III and has received Presidential assent. It does
not occupy the field covered by Entry 91 of List I as it does
not fix or prescribe the rate of duty for insurance stamps but
only provides for the collection of stamp duty. The High Court
6 Impugned judgment, p. 15
7 ibid.
8 ibid, p.17
9 ibid.
10 ibid.
250 [2024] 5 S.C.R.
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hence rejected the submission by the appellant that the state
government does not have the power to demand payment for
insurance stamps as they fall under the Union List.
4.2 It also rejected the appellant’s reliance on this Court’s judgment in
VVS Rama Sharma v. State of Uttar Pradesh11 by differentiating
it as in that case, there was no state law that had received
Presidential assent and instead the consideration was under
Rule 115A of the UP Stamp Rules, 1942.12 Since the 1952 Act
had received Presidential assent, it was held to be a special law
that has overriding effect, which was not the case in VVS Rama
Sharma (supra) where the Indian Stamp Act read with rules
framed by the state of UP was applicable.13 It also differentiated
the case on facts as VVS Rama Sharma (supra) pertained to
the commission of criminal offences under the Indian Penal
Code and the Indian Stamp Act, 1899.14
5. Submissions by the appellant: The learned ASG, Mr. N. Venkataraman,
appeared on behalf of the appellant and has made two primary
arguments. The gist of his submission is: First, that on the basis
of Entry 91 of List I, Entry 63 of List II, and Entry 44 of List III, the
state of Rajasthan does not have the legislative competence to
impose and collect stamp duty on insurance policies as the same
falls under the Union List. Second, that the show-cause notice and
the proceedings are under the 1998 Act, which does not provide
for imposition of stamp duty by the state on policies of insurance.
Alternatively, even if the 1952 Act applies, the appellant had no
option but to purchase the stamps from Maharashtra due to their
admitted unavailability and in view of Section 3A(4) of the 1952 Act.
The detailed arguments are as follows:
5.1 Learned ASG has relied on Entry 47 of List I on insurance and
Entry 91 of List I that empowers the Parliament to prescribe
the rate of stamp duty in respect of bills of exchange, cheques,
promissory notes, bills of lading, letters of credit, policies of
insurance, transfer of shares, debentures, proxies and receipts.
11 [2009] 5 SCR 1159 : (2009) 7 SCC 234
12 Impugned judgment, p. 19
13 ibid, p. 20
14 ibid.
[2024] 5 S.C.R. 251
Life Insurance Corporation of India v.
The State of Rajasthan and Ors.
He has argued that since insurance falls under the Union list
and more specifically, since only the Union can prescribe the
rate of stamp duty on insurance policies, the state government
cannot demand that the stamp duty on insurance policies
must necessarily be paid to it and that the stamps cannot be
purchased from other states. He relied on VVS Rama Sharma
(supra) on the point that a state cannot require that insurance
stamps, which are property of the central government, must be
purchased only from that particular state when the insurance
policy is issued within its territory. Challenging the imposition
of stamp duty by the state government, the learned ASG has
further submitted that a levy of stamp duty is in the nature of
tax and that there is no valid imposition of tax unless there is
a rate of taxation. Relying on Govind Saran Ganga Saran v.
Commissioner of Sales Tax15 and Mathuram Agrawal v. State
of Madhya Pradesh16, he has submitted that the rate of stamp
duty must be clearly and unambiguously ascertainable, without
which there is no valid tax law. Since the state does not have
the domain competence to prescribe the rate of stamp duty
in the present case, it cannot validly impose and demand the
payment of such duty. Lastly, the learned ASG has argued that
Entry 44 of List III is not in the nature of a taxation entry by
relying on State of West Bengal v. Kesoram Industries17 and
State of Karnataka v. State of Meghalaya18. He submits that it is
well-settled in taxation law that entries pertaining to taxation are
clearly demarcated between the Union List and the State List.
There is no head of taxation in the Concurrent List. Hence, the
state government cannot impose stamp duty on the appellant
by claiming legislative competence under Entry 44 of List III.
5.2 Apart from arguing that levy of stamp duty by the state is
contrary to the constitutional scheme, the learned ASG has
also argued that stamp duty cannot be imposed in the present
case under the specific state enactments. He has argued that
the 1998 Act applies in the present case as the notice for
15 [1985] 3 SCR 985 : 1985 Supp SCC 205, para 6
16 [1999] Supp. 4 SCR.195 : (1999) 8 SCC 667, para 12
17 [2004] 1 SCR 564 : (2004) 10 SCC 201
18 [2022] 18 SCR 516 : (2023) 4 SCC 416, para 92
252 [2024] 5 S.C.R.
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recovery has been issued under Section 37(5) of the 1998 Act.
Section 3 of the 1998 Act is the charging provision that provides
that instruments shall be chargeable with duty of the amount
indicated in the Schedule. By comparing entry 47 of Schedule
I of the Indian Stamp Act, 1899 (which provides the rates of
stamp duty for various kinds of policies of insurance) and the
Schedule under the 1998 Act, he has argued that there is no
parallel entry in the Schedule of the 1998 Act that provides the
rate of stamp duty on insurance policies. Since Section 3 only
provides for imposition of stamp duty as per rates prescribed
in the Schedule and there is no such rate of duty indicated,
the state government cannot demand stamp duty from the
appellant on insurance policies. Alternatively, the learned ASG
has argued that even if the 1952 Act applies, as considered
by the High Court in the impugned judgment, the stamp duty
could not have been paid to the Rajasthan government in
the present case due to the admitted unavailability of India
Insurance stamps with the treasury. Relying on the letter from
the department dated 07.10.1991, he argued that the High Court
erred in holding that only Agents License Fee stamps were
unavailable when the letter clearly mentioned India Insurance
stamps. Further, the letter also stated that these stamps are
central government property and their supply and sale is not
related to the state government. Relying on this letter by the
department, the learned ASG has submitted that the government
could not have then demanded payment of stamp duty in 2004.
Lastly, he has argued that the High Court’s reliance on Section
3A to hold that the duty could have been paid in cash in case
of unavailability of stamps is misplaced as sub-clause (4) of
Section 3A clearly stipulates that the provision does not apply
to payment of stamp duty chargeable on instruments specified
in Entry 91 of List I. Since insurance policies are an instrument
that fall under this entry, Section 3A does not apply to it and
the appellant could not have paid the stamp duty in cash. The
High Court erred in its conclusion as it had entirely failed to
consider this sub-clause. A similar provision is also contained
in Section 4(4) of the 1998 Act. Hence, he concluded that there
was no way for the appellant to have paid stamp duty to the
Rajasthan government and they had to purchase the stamps
[2024] 5 S.C.R. 253
Life Insurance Corporation of India v.
The State of Rajasthan and Ors.
from outside the state as non-payment of duty would lead to
evasion and an unstamped insurance policy would not be
admissible in evidence.
6. Submissions by the respondent: Dr. Manish Singhvi, learned senior
counsel for the state, has argued that the state has the power to
impose and collect stamp duty on insurance policies under Entry
44 of List III. He has argued that while the power to prescribe the
rate of such duty falls within the exclusive domain of the Parliament,
the power to collect and impose the duty and to frame a charging
provision lies with the Parliament and the state legislatures under
Entry 44 of the Concurrent List, which is a sui generis provision. The
legislative competence of the states extends to collecting stamp duty
on instruments specified in Entry 91 of List I but does not extend
to prescribing the rate of duty for such instruments. The power to
prescribe the rate of stamp duty is clearly demarcated between the
Union and the states through Entry 91 of List I and Entry 63 of List
II. The state government can impose the duty at such rate that is
prescribed by the Parliament. He has also argued that Entry 44 of
List III is a taxation provision, as has been clearly held in Bar Council
of Uttar Pradesh v. State of Uttar Pradesh19.
6.1 Dr. Manish Singhvi further submits that the 1952 Act applies
since the period of levy is for policies issued between 1993-94
to 2001-02, which is prior to the 1998 Act coming into force
(on 27.05.2004). The 1952 Act received Presidential assent
and hence prevailed over the Indian Stamp Act, 1899 in the
state as per Article 254(2). Section 3(vi) of this Act adopts
the Schedule from the central Act for the purpose of rate of
stamp duty. Hence, the stamp duty must be paid to the state
government for insurance transactions occurring within the
territory of the state after the 1952 Act came into force as
per the rate prescribed in entry 47 of Schedule I of the Indian
Stamp Act. Alternatively, he has argued that even if the 1998
Act applies, Sections 90 and 91 of that Act have the effect
of adopting the Indian Stamp Act with respect to instruments
contained in Entry 91 of List I. Lastly, he has differentiated the
present case from VVS Rama Sharma (supra) as that case
19 [1973] 2 SCR 1073 : (1973) 1 SCC 261
254 [2024] 5 S.C.R.
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pertained to the registration of a criminal case against the
officers of LIC for non-payment of stamp duty and the lack of
criminal intent, leading to the quashing of FIR.
7. Issues: Having heard the learned ASG for the appellant and Dr.
Manish Singhvi for the respondent, the following issues arise for
our consideration:
I. Whether the 1952 Act or the 1998 Act applies to the facts of
the present case?
II. Whether the state government has the legislative competence
to impose and collect stamp duty on policies of insurance as
per Entry 91 of List I read with Entry 44 of List III?
III. Whether the 1952 Act requires the purchase of insurance stamps
from and payment of stamp duty to the Rajasthan government
for insurance policies issued within the state?
IV. Whether, in the facts of the present case, the appellant is liable
to pay stamp duty?
I. Applicable Law
8. It is first important to determine whether stamp duty in the present
case can be imposed under the 1952 Act or the 1998 Act. The High
Court has relied on the provisions of the 1952 Act while arriving at
its conclusion. We agree with the High Court on this aspect as the
stamp duty must be levied as per the law in force as on the date
of execution of the instrument.20 In the present case, the insurance
policies were issued between 1993-94 to 2001-02. Section 3 of the
1998 Act21, which is the charging provision, imposes stamp duty on
every instrument mentioned in the Schedule that is executed in the
state on or after the date of commencement of the Act. The 1998 Act
came into force only on 27.05.2004 by way of a notification. Hence,
20 Vijay v. Union of India [2023] 15 SCR 293 2023 : SCC OnLine SC 1585, 2023 INSC 1030, para 11
21 The relevant portion of Section 3 of the 1998 Act reads:
“3. Instrument chargeable with duty.— Subject to the provisions of this Act and the exemptions
contained in the Schedule, the following instruments shall be chargeable with duty of the amount
indicated in the 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 State on or after the date of commencement of this Act;
(b) every instrument mentioned in that Schedule, which, not having been previously executed by any
person, is executed out of the State on or after the said date, relates to any matter or thing done or to be
done in the State and is received in the State, or relates to any property situate in the State.”
[2024] 5 S.C.R. 255
Life Insurance Corporation of India v.
The State of Rajasthan and Ors.
at the time that the relevant instruments were executed, the 1952
Act was still in force and the stamp duty is leviable under the same.
II. Legislative Competence
9. The learned ASG has forcefully contended that the state does not
have the power to collect and levy stamp duty on insurance policies
under the state enactment as only the Union can prescribe the rate
of stamp duty for such instruments. He has taken us through the
constitutional scheme on the fields of legislation under the Seventh
Schedule on matters of stamp duty. The relevant entries are Entry
91 of List I, Entry 63 of List II, and Entry 44 of List III, which have
been extracted here for reference:
Entry 91 of List I:
“91. Rates of stamp duty in respect of bills of exchange,
cheques, promissory notes, bills of lading, letters of credit,
policies of insurance, transfer of shares, debentures,
proxies and receipts.”
Entry 63 of List II:
“63. Rates of stamp duty in respect of documents other
than those specified in the provisions of List I with regard
to rates of stamp duty.”
Entry 44 of List III:
“44. Stamp duties other than duties or fees collected by
means of judicial stamps, but not including rates of stamp
duty.”
10. Article 246 of the Constitution states that the Parliament has the
exclusive power to make laws with respect to any matter in List I,
the Parliament and the legislatures of any state have the power to
make laws with respect to any matter in List III, and the legislature
of any state has the exclusive power to make laws for such state or
any part thereof with respect to any matter in List II.22
22 Article 246 reads:
“246. Subject-matter of laws made by Parliament and by the Legislatures of States.—(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
256 [2024] 5 S.C.R.
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11. Reading the relevant entries of the Seventh Schedule in the context
of Article 246, the distribution of legislative competence with respect
to legislation on stamp duty is as follows. The Parliament has the
exclusive power to legislate on the rate of stamp duty with respect to
certain instruments, namely: bills of exchange, cheques, promissory
notes, bills of lading, letters of credit, policies of insurance, transfer
of shares, debentures, proxies and receipts, under Entry 91 of List
I. As per Entry 63 of List II, the legislatures of the states have the
exclusive power to legislate on the rate of stamp duty with respect
to documents other than those specified in Entry 91 of List I for their
state or any part of their state. In other words, there is a distribution
of instruments between the Parliament and the state legislatures as
regards the legislative competence to fix rates of stamp duty. However,
as per Entry 44 of List III, the Parliament and the legislatures of the
states have concurrent powers to legislate on stamp duties (other
than duties or fees collected by means of judicial stamps), but not
including rates of stamp duty.
12. A combined reading of the constitutional scheme shows that the
power to prescribe the rate of duty is mutually exclusive and has
been clearly demarcated between the Parliament and the legislatures
of the state.23 Insurance policies, which are the relevant instrument
for the purpose of the present case, fall under Entry 91 of List I
for the purpose of prescription of rate of duty. This means that
only the Parliament holds the exclusive power and the legislative
competence under the Constitution to prescribe the rate of stamp
duty on insurance policies. There is no dispute regarding this point.
13. The issue however that falls for our consideration is whether the state
government can enact a law that imposes stamp duty on insurance
policies by using the rate prescribed by the Parliament by sourcing
legislative competence through Entry 44 of List III.
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 2
[in a State] notwithstanding that such matter is a matter enumerated in the State List.”
23 VVS Rama Sharma (supra), paras 14-15
[2024] 5 S.C.R. 257
Life Insurance Corporation of India v.
The State of Rajasthan and Ors.
14. This Court in VVS Rama Sharma (supra) has answered this question
in the affirmative and has held that under Entry 44 of List III, “the power
to levy stamp duty on all documents, is concurrent. But the power
to prescribe the rate of such levy is excluded from Entry 44 of List
III and is divided between Parliament and the State Legislatures.”24
Therefore, the charging provision for imposition of stamp duty, even
on documents contained in Entry 91 of List I, can be enacted by both
the Parliament and the state legislatures, subject to the provisions
of Article 254.25 These principles have been summarised in VVS
Rama Sharma (supra) as follows:
“23. As mentioned earlier, under Entry 44 of List III, the
power to levy stamp duty on all documents is concurrent.
But the power to prescribe the rate of such levy is excluded
from Entry 44 of List III and is divided between Parliament
and the State Legislatures. If the instrument falls under
the categories mentioned in Entry 91 of List I, the power
to prescribe the rate will belong to Parliament, and for all
other instruments or documents, the power to prescribe
the rate belongs to the State Legislature under Entry 63
of List II. Therefore, the meaning of Entry 44 of List III is
that excluding the power to prescribe the rate, the charging
provisions of a law relating to stamp duty can be made both
by the Union and the State Legislature, in the concurrent
sphere, subject to Article 254 in case of repugnancy. So,
in the case at hand, it is Entry 91 of List I of the Seventh
Schedule which would be applicable and the States do
not have the power to circumvent a Central law.”
15. In a recent judgment in Vijay v. Union of India,
26 this Court has again
held that the power to levy stamp duty on all documents is concurrent
under Entry 44 of List III. Only the power to prescribe the rate of
such duty is with the Parliament, and subject to Entry 91 of List I,
with the state legislatures.27
24 ibid, para 14
25 ibid, para 15
26 [2023] 15 SCR 293 : 2023 SCC Online SC 1585, 2023 INSC 1030
27 ibid, para 12
258 [2024] 5 S.C.R.
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16. From the above precedents, it is clear that the state of Rajasthan has
the power to impose and collect stamp duty on insurance policies
under Entry 44 of List III, albeit such duty must be imposed as per the
rate prescribed by a Parliamentary legislation under Entry 91 of List I.
17. In view of the above explanation, the issue relating to legislative
competence raised by the learned ASG conclusively ends. However,
the learned ASG has raised additional arguments regarding the
requirements of a valid tax law and on whether Entry 44 of List III is a
taxation entry. Although we find these submissions to be unnecessary,
we will deal with them as they have been raised.
18. Relying on this Court’s decisions in Govind Saran Ganga Saran (supra)
and Mathuram Agarwal (supra), the learned ASG has argued that
the rate of taxation is an essential component for a valid imposition
of tax. Since the state legislature cannot prescribe the rate of stamp
duty on insurance policies, he has argued that there can be no valid
imposition of stamp duty on these instruments by way of a state
enactment. This argument must be rejected in view of the above
conclusion that even if the state legislature cannot prescribe the rate
of stamp duty, it can levy such duty at the rate as provided by the
Parliament. Both the decisions relied on by the learned ASG pertain
to cases where the charging provision was ambiguous in defining
an essential component of a valid tax law, i.e., the subject of the tax,
the person who is liable to pay the tax, and the rate at which the tax
is to be paid28. In the present case, while it is certainly true that the
state cannot prescribe the rate of duty on insurance policies, that by
itself does not mean that there is ambiguity or lack of clarity regarding
the rate of such duty. Rather, the rate of duty is unambiguous, clear,
and defined by the Parliament and is adopted by the state to levy
and collect stamp duty. Hence, this submission must be rejected.
19. The other submission by the learned ASG that there is no taxation entry
in the Concurrent List is based on this Court’s decisions in Kesoram
Industries (supra) and State of Karnataka v. State of Meghalaya
(supra). The learned ASG has pointed us to relevant portions of these
judgments. However, it must be noted that these judgments pertain
to taxation entries, rather than to entries on stamp duty. While stamp
28 Mathuram Agarwal (supra), para 6
[2024] 5 S.C.R. 259
Life Insurance Corporation of India v.
The State of Rajasthan and Ors.
duty is certainly in the nature of a tax,29 it has not been specifically
considered by this Court in these judgments. A three-judge bench of
this Court in Bar Council of Uttar Pradesh v. State of UP (supra) held
that payment of stamp duty pertains to the domain of taxation and
the imposition of such duty falls in pith and substance under Entry
44 of List III.30 This judgment came prior to the decisions relied on by
the learned ASG but has not been considered by the Court in those
cases as they did not pertain to stamp duty. Hence, it is clear that
Entry 44 of List III is a taxation entry that falls under the Concurrent
List and this submission must also be rejected. We hold that the
state legislature has the legislative competence to impose and collect
stamp duty on policies of insurance under Entry 44 of List III, as per
the rate prescribed by the Parliament under Entry 91 of List I.
III. Liability to Pay Stamp Duty Under the 1952 Act:
20. Provisions and Imposition of Stamp Duty Under the 1952 Act: Section
2 of the 1952 Act reads as follows:
“2. Application of Indian Act.–Subject to the other
provisions of this Act, the Indian Stamp Act, 1899 (II of
1899) of the Central Legislature as amended from time to
time, hereinafter referred to as the Indian Act shall apply
to the whole of the State of Rajasthan on and from the
1st day of April, 1958.”
(emphasis supplied)
21. Section 2 of the 1952 Act adopts the Indian Stamp Act, 1899 and
makes it applicable to the state of Rajasthan subject to certain
adaptations that are contained in Section 3. Sections 3(v) and 3(vi)
are relevant for our purpose, and are as follows:
“3. Adaptations.–For the purposes of section 2,–
(v) references in the Indian Act to any Government shall,
unless the context otherwise requires, be construed as
references to the State Government, that is to say, to
the Government of the State of Rajasthan as formed by
29 Government of Andhra Pradesh v. P. Laxmi Devi, [2008] 3 SCR 330 : (2008) 4 SCC 720, para 19
30 Bar Council of Uttar Pradesh (supra), para 14
260 [2024] 5 S.C.R.
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section 10 of the States Re-organisation Act, 1956 (Central
Act 37 of 1956):
Provided that in clause (i) of section 3 of the Indian Act,
the word “Government” wherever occurring shall mean
the State Government as well as the Central Government.
(vi) references in the Indian Act to Schedule I shall be
construed as references to the Second Schedule of the
Rajasthan Stamp Law (Adaptation) Act, 1952 (Rajasthan
Act VII of 1952)”
22. Further, Rules 2(d) and 3 of the Rajasthan Stamp Rules, 1955 read
as follows:
“2(d) “Government” means the Government of the State
of Rajasthan”
“3. Mode of payment of duty-Except as otherwise provided
by the Act, or by these rules, -
(1) all duties with which any instrument is chargeable
shall be paid, and such payment shall be indicated on
such instruments, by means of stamps issued by the
Government for the purpose of the Act and these Rules; and
(2) a stamp which by any word or words on the face of it
is appropriated to any particular kind of instrument shall
not be used for any instrument of any other kind.
Explanation: - For the purpose of clause (1), a stamp
of the central Government or of the Government of
any covenanting State shall be deemed to have been
superimposed with word “Rajasthan” or with the letters
“RAJ”.”
Rule 3, read with Rule 2(d), provides that the stamps issued by the
state government will indicate the payment of stamp duty that is
chargeable on an instrument. Therefore, the stamp must be issued
by and the stamp duty must be paid to the state government for an
instrument to be ‘duly stamped’31 under the 1952 Act.
31 Section 2(11) of the Indian Stamp Act, 1899 as adapted to the state of Rajasthan reads:
“2. Definitions. — In this Act, unless there is something repugnant in the subject or context, —
(11) “Duly stamped”. — “duly stamped”, as applied to an instrument, means that the instrument bears an
[2024] 5 S.C.R. 261
Life Insurance Corporation of India v.
The State of Rajasthan and Ors.
23. Pursuant to the adaptations by the 1952 Act, the relevant portion of
Section 3 and Schedule I of the Indian Stamp Act, 1899 as adapted
to the state of Rajasthan by the 1952 Act is as follows:
“3. Instruments chargeable with duty.—Subject to the
provisions of this Act and the exemptions contained in
Schedule I, the following instruments shall be chargeable
with duty of the amount indicated in that Schedule as the
proper duty therefore respectively, that is to say—
(a) every instrument mentioned in that Schedule which, not
having been previously executed by any person, is executed
in India on or after the day on which the Act comes into force
in the State of Rajasthan;
(b) every bill of exchange payable otherwise than on demand,
or promissory note drawn or made out of India on or after
that day and accepted or paid or presented for acceptance
or payment, or endorsed, transferred or otherwise negotiated,
in India; 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 India on or after that day, relates to any property situate,
or to any matter or thing done or to be done, in India and is
received in India:”
Schedule I of the central Act, as adapted to the state of Rajasthan,
reads as follows:
“SCHEDULE I
Stamp Duty on Instruments
(See section 3)
[In this Schedule, given under the Indian Stamp Act, 1899, only
those articles are reproduced for which no specific provision
is made in the Rajasthan Amending Act, No. 7 of 1952.]
***
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 for the time being in force in India”
262 [2024] 5 S.C.R.
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47. Policy of insurance–
D- LIFE INSURANCE OR GROUP
INSURANCE OR OTHER INSURANCE NOT SPECIFICALLY PROVIDED FOR, except
such a RE-INSURANCE, as
is described in Division E of
this article—
If drawn
singly
If drawn
in
duplicate
for each
part.
(i) for every sum insured not
exceeding Rs. 250;
Ten paise. Five
paise.
(ii) for every sum insured
exceeding Rs. 250 but
not exceeding Rs. 500;
Ten paise. Five
paise.
(iii) for every sum insured
exceeding Rs. 500 but
not exceeding Rs. 1,000
and also for every Rs.
1,000/- or part thereof in
excess of Rs. 1,000.
Twenty
paise.
Ten
paise.
N.B.- If a policy of
group insurance is
renewed or otherwise
modified whereby the
sum insured exceeds
the sum previously
insured on which
stamp-duty has been
paid, the proper stamp
must be borne on the
excess sum so insured.
Exemption
Policies of life-insurance granted by
the Director-General of Post Offices in
accordance with rules for Postal LifeInsurance issued under the authority
of the Central Government
[2024] 5 S.C.R. 263
Life Insurance Corporation of India v.
The State of Rajasthan and Ors.
24. From reading the above provisions, rules, and the Schedule together,
it can be seen that Section 2 of the 1952 Act provides that the Indian
Stamp Act, 1899 will apply in the state of Rajasthan subject to certain
adaptations. The relevant adaptations for our purpose are that
‘government’ shall refer to state government (as per Section 3(v) of
the 1952 Act) and that reference to Schedule I of the central Act shall
be construed as reference to the Second Schedule of the 1952 Act
(as per Section 3(vi) of the 1952 Act). The Second Schedule of the
1952 Act prescribes the rates of stamp duty on certain instruments.
However, since policies of insurance are specified in Entry 91 of List
I, only the Parliament has the legislative competence to prescribe
the rate of stamp duty to be imposed on them. Consequently, the
Second Schedule to the 1952 Act does not contain any entry on
rates of duty for policies of insurance, and rightly so. Rather, when
we read Entry 47(D) of Schedule I of the Indian Stamp Act, 1899
as adapted to the state of Rajasthan, we see that the rate that has
been prescribed under the central law has been adopted within the
state as well.
25. The power to levy and collect stamp duty is relatable to the legislative
competence of the state, followed by clear authority of law through
statutory prescription. Having recognised the legislative competence
of the state of Rajasthan, the state has the power to collect stamp
duty under Section 3 of the Indian Stamp Act, 1899 as adapted
to the state of Rajasthan that provides that an instrument shall be
chargeable with the duty of the amount indicated in the Schedule if
it is executed within the state of Rajasthan.
26. The mandate of Section 3 is also found in Rule 3 of the Rajasthan
Stamp Rules, 1955 that provides for “mode of payment”. Rule 3,
read with Rule 2(d), provides that the duty with which any instrument
is chargeable shall be paid by means of a stamp issued by the
state government. The relevant event flowing from Section 3 and
Rule 3 authorising the levy and imposition of stamp duty is the
execution of the policy of insurance within the state. The liability
to purchase the stamps from the state of Rajasthan is therefore
clear and unambiguous. Consequently, for instruments executed
within the state, the purchase of stamps from outside the state
will equate to evasion of stamp duty and the instrument will not
be ‘duly stamped’.
264 [2024] 5 S.C.R.
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27. Differentiating VVS Rama Sharma (supra): The learned ASG has
placed reliance on the following portions of VVS Rama Sharma
(supra) to contend that the state government cannot demand that
insurance stamps must only be purchased from it for policies issued
within the state:
“29. In the case at hand, it has been stated in the
FIR that the Divisional Office of LIC, Varanasi has not
purchased the insurance stamps from the Treasury
Office of U.P. but the same were purchased from the
stamp vendors, outside of State, which caused loss to
the State exchequer to the tune of Rs 1,67,21,520.00 to
the State Government. So, the sole allegation against
the appellants is that they have purchased the insurance
stamps from outside the State of U.P. However, as we
have already noted that the said act of the appellants
cannot be said to be inconsistent with any provisions
of the Stamp Act or any other rules. So, the allegation
made in the FIR even if proved by the prosecution does
not constitute any offence.
32. It is wholly immaterial whether the appellants are
purchasing the insurance stamps from the State of U.P.
or from any other State. In fact, as mentioned earlier, Rule
115-A of the U.P. Stamp Rules itself declares that “Stamps
which are the property of the Central Government”. That
being the legal position, it is legally untenable to contend
that the insurance stamps must be purchased from the
State of U.P. only.”
(emphasis supplied)
28. These portions of the judgment must be seen in the context of the facts
and the law applicable in that case. While arriving at its conclusion,
this Court in VVS Rama Sharma (supra) interpretated Rule 115A of
the UP Stamp Rules, 194232 (these Rules were framed by the state
32 Rule 115A of the UP Stamp Rules, 1942 has been extracted in VVS Rama Sharma (supra), para 20 that
reads as follows:
“20. Further, Rule 115-A of the Stamp Rules provides for the mode of sale of such stamps. It reads as
follows:
“115-A. Stamps which are the property of the Central Government and which are required to be sold
[2024] 5 S.C.R. 265
Life Insurance Corporation of India v.
The State of Rajasthan and Ors.
government pursuant to rule-making powers given to states under
Sections 74 and 75 of the Indian Stamp Act, 189933) read with the
provisions of the Indian Stamp Act, 1899.34 It was held that since
the Stamp Rules have been framed under the central Act, their
scope is only to the extent provided in Sections 74 and 75 and they
cannot circumvent the provisions of the central Act.35 In these facts,
this Court held that the State of UP could not require that stamps
on insurance policies must only be purchased within the state and
cannot be validly purchased from other states.
29. The law under consideration in the facts of the present case is
different. In the present case, the imposition of stamp duty by the
state government is under the 1952 Act, which is a state law that
has been enacted under Entry 44 of List III, and has received
Presidential assent as contemplated under Article 254.36 Article
254(2) clearly stipulates that when a state law with respect to a
to the public through post offices e.g. Central excise revenue stamps, defence (or national) savings
stamps, shall be obtained by post offices from local and branch depots and sold to the public in the same
manner as ordinary postage stamps.
Tobacco excise duty labels and insurance agent licence fee stamps shall be sold to the public at local
and branch depots at which they are stocked.”
33 Sections 74 and 75 of the Indian Stamp Act, 1899 read as follows:
“74. Powers to make rules relating to sale of stamps. –– The State Government may make rules for
regulating–(a) the supply and sale of stamps an stamped papers,
(b) the persons by whom alone such sale is to be conducted, and
(c) the duties and remuneration of such persons:
Provided that such rules shall not restrict the sale of ten naye paise or five naya paise adhesive stamps.
75. Power to make rules generally to carry out Act. ––The State Government may make rules to carry
out generally the purposes of this Act, and may by such rules prescribe the fines, which shall in no case
exceed five hundred rupees, to be incurred on breach thereof.”
34 VVS Rama Sharma (supra), paras 18-23
35 ibid.
36 Article 254 of the Constitution reads as follows:
“254. Inconsistency between laws made by Parliament and laws made by the Legislatures of
States.—(1) If any provision of a law made by the Legislature of a State is repugnant to any provision of
a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law
with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of
clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature
of such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature
of the State shall, to the extent of the repugnancy, be void.
(2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the
Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament
or an existing law with respect to that matter, then, the law so made by the Legislature of such State
shall, if it has been reserved for the consideration of the President and has received his assent, prevail
in that State:
Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with
respect to the same matter including a law adding to, amending, varying or repealing the law so made
by the Legislature of the State.”
266 [2024] 5 S.C.R.
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matter in the Concurrent List is repugnant to the provisions of an
earlier law made by the Parliament or an existing law with respect
to that matter, then the law passed by the state shall prevail in that
state “if it has been reserved for the consideration of the President
and has received his assent”. The 1952 Act that occupies the field
in the present case has undisputedly received Presidential assent
and hence it prevails over the Indian Stamp Act, 1899 so far as the
state of Rajasthan is concerned.37
30. This Court in VVS Rama Sharma (supra) did not consider any such
law enacted by the state legislature that received Presidential assent
and was applicable within the state over the central Act. Further, a
stamp duty is a tax,38 and hence under Article 26539, its levy and
collection must be by the ‘authority of law’40. In VVS Rama Sharma
(supra), there was no charging provision that was considered by the
Court that required the payment of stamp duty on insurance policies
to the government of UP. Rather, the case was concerned with the
interpretation of Rules framed by the state under the central Act.
Hence, the final conclusion in that case is differentiable on facts and
law from the present case.
31. Conclusions on this issue: We have undertaken a detailed analysis
of the provisions of the 1952 Act and the Rajasthan Stamp Rules,
1955 that impose stamp duty on insurance policies issued by the
appellant within the state. Section 3 of Indian Stamp Act, 1899 as
adapted to the state of Rajasthan is the charging provision as per
which the appellant must pay stamp duty to the state government on
insurance policies executed within the state. The rate at which stamp
duty is payable on policies of insurance under the 1952 Act has been
adopted from Schedule I of the central Act, in accordance with Entry
91 of List I. The charging provision has thus been validly enacted by
the state government under Entry 44 of List III. Therefore, the state
government in the present case can impose stamp duty on the issuance
37 UP Electric Supply Co Ltd v. R.K. Shukla [1970] 1 SCR 507 : (1969) 2 SCC 400, para 9; M. Karunanidhi
v. Union of India [1979] 3 SCR 254 : (1979) 3 SCC 431, paras 7-8
38 Government of Andhra Pradesh v. P. Laxmi Devi (supra), para 19
39 Article 265 reads as follows:
“265. Taxes not to be imposed save by authority of law.—No tax shall be levied or collected except
by authority of law.”
40 Balaji v. ITO [1962] 2 SCR 983 : AIR 1962 SC 123; Municipal Council, Kota, Rajasthan v. Delhi Cloth and
General Mills Co. Ltd, Delhi [2001] 2 SCR 287 : (2001) 3 SCC 654
[2024] 5 S.C.R. 267
Life Insurance Corporation of India v.
The State of Rajasthan and Ors.
of insurance policies within its territory and require the payment of
such stamp duty by the appellant. Under these circumstances, the
commencement of proceedings for recovery of stamp duty under the
state law and the rules made thereunder is legal, valid, and justified.
IV. Liability of the Appellant in the Facts of the Present Case:
32. The learned ASG has relied on the letter by the Treasury Officer,
Jaipur dated 07.10.1991, the contents of which have been extracted
hereinunder:
“In reference to above it is to submit that Government
of India Insurance Stamp is the property of Central
Government, whose supply and distribution is not related
with this Department.”
33. From the contents of the letter, it is clear that the department
has admitted the non-availability of India Insurance stamps and
has also stated that it is not concerned with their supply and
distribution as they are the property of the central government.
The appellant submits that due to such representation by the
respondent-government, they were compelled to purchase the
stamps from Maharashtra, without which they could not have issued
the insurance policies in the state of Rajasthan. The High Court,
in the impugned judgment, has held that the correspondence of
the appellant with the department pertained to Agents License Fee
stamps.41 However, it has evidently not taken note of the letter
dated 07.10.1991 while arriving at such finding. The High Court
has therefore erred in this regard.
34. Further, the High Court has held that even if the stamps were
unavailable, the appellant was duty-bound to pay the stamp duty
to the state government in cash as provided under Section 3A(1)
of the 1952 Act.42 The relevant portions of Section 3A have been
extracted:
“3A. Payment of stamp duty in cash.— (1) Where the
State Government or the Collector under instructions of
the State Government, by order published in the Official
41 Impugned judgment, p. 15
42 Impugned judgment, p. 15
268 [2024] 5 S.C.R.
Digital Supreme Court Reports
Gazette, declares that adhesive or impressed stamps of
any denomination are not in stock for sale in sufficient
quantity; then, notwithstanding anything contained in this
Act or the rules made thereunder and during the period
the said order remains in force,—
(i) any instrument chargeable with the stamp duty under
this Act may be executed on an unstamped paper;
(ii) the stamp duty chargeable on such instrument under
this Act may be paid to or collected by any Government
treasury in cash and a receipt or challan therefor shall be
duly given by the officer receiving the cash;
(iii) the officer-in-charge of the Government treasury
shall, as soon as may be, after the stamp duty chargeable
on any such instrument under this Act has been received
in cash, make on the instrument for which the stamp
duty has been paid in cash, the following endorsement,
after due verification that the stamp duty had been
paid in cash for such instrument, and after cancelling
such receipt or challan so that it cannot be used again,
namely:-
‘Stamp duty of Rs. ……………………paid in cash, vide
receipt/challan No. …………………….dated…………………
(iv) the instrument endorsed under clause (iii) shall be
deemed to be duly stamped under this Act and may be used
or acted upon as such to all intents and for all purposes;
Explanation.- For the purposes of sub-section (1)
“Government treasury” includes a Government subtreasury and any other place as the State Government may
by notification in the Official Gazette, appoint in this behalf.
***
(4) Nothing contained in this section shall apply to the
payment of stamp duty chargeable on the instruments
specified in entry 91 of List I of the Seventh Schedule to
the Constitution of India.”
35. However, the High Court entirely failed to consider sub-section (4),
[2024] 5 S.C.R. 269
Life Insurance Corporation of India v.
The State of Rajasthan and Ors.
despite quoting it, which excludes instruments under Entry 91, List
I from the application of Section 3A. Therefore, the High Court has
committed an error in holding that the appellant could have paid the
stamp duty in cash.
36. In view of the above circumstances, the appellant had no choice but
to purchase the insurance stamps from outside the state. While it
made every endeavour to purchase the stamp from within the state,
due to the letter by the department and the lack of mechanism for
payment of stamp duty under the 1952 Act in case of unavailability
of insurance stamps, it was unable to purchase the stamps and pay
the stamp duty to the Rajasthan government.
37. Therefore, having considered the matter in detail, we finally hold that:
I. The preliminary issue relating to the applicability of the relevant
state law, i.e., the 1952 Act or the 1998 Act, is answered by
holding that the Rajasthan Stamp Law (Adaption) Act, 1952
applies to the present case.
II. We hold that the state legislature has the legislative competence
to impose and collect stamp duty on policies of insurance under
Entry 44 of List III, as per the rate prescribed by the Parliament
under Entry 91 of List I.
III. We hold that for the execution of insurance policies within the
state of Rajasthan, the appellant is bound to purchase India
Insurance Stamps and pay the stamp duty to the state of
Rajasthan.
IV. While we have upheld the power and jurisdiction of the state to
levy and collect stamp duty on insurance policies, in the facts
and circumstances of the case as indicated hereinabove, we
direct that the state government shall not demand and collect
the stamp duty as per the orders dated 16.09.2004, 16.10.2004,
11.10.2004, 01.11.2004, and 28.10.2004.
38. In conclusion, we dismiss the appeals and affirm the judgment of
the High Court dated 21.02.2011 in D.B. Civil Special Appeal (Writ)
No. 670 of 2004, D.B. Civil Writ Petition No. 3418 of 2006, D.B. Civil
Writ Petition No. 3419 of 2006, D.B. Civil Writ Petition No. 3420 of
2006 and D.B. Civil Writ Petition No. 8187 of 2004. We also set
aside certain findings of the High Court to the extent indicated in
270 [2024] 5 S.C.R.
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issue no. IV and direct the State Government not to demand and
collect stamp duty as per the orders dated 16.09.2004, 16.10.2004,
11.10.2004, 01.11.2004, and 28.10.2004.
39. Parties shall bear their own costs.
Headnotes prepared by: Divya Pandey Result of the case:
Appeals dismissed.
