Case Title: Life Insurance Corporation of India v. The State of Rajasthan and Ors.
Case no.: Civil Appeal No. 3391 of 2011
Dated on: 30th April 2024
Quorum: Hon’ble Mr. Justice PS Narasimha and Hon’ble Justice Mr. Aravind Kumar
FACTS OF THE CASE
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 by paying stamp duty on the policies of insurances issued by it in accordance with the Indian stamp duty Act, 1899, as adapted to the state of Rajasthan by the 1952 Act. On 19.08.1991, the appellant wrote to the collector, Jaipur regarding the non- availability of ‘’Agents Licensee fee stamps”. On 07.10.1991, the Treasury officer, Jaipur replied that ‘’ India Insurance Stamps ‘’ are the property of the central government and their supply and distribution is non related to their department. On 15.04.2004 and 06.05.2004, the Inspector General (Registration and Stamps) Rajasthan, issued a letter to the appellant to deposit a sum of Rs. 1.19 crores for causing loss of revenue to the state government 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.
The additional collector (stamps), Jaipur issued a show- cause notice on 16.09.2004, under section 37(5) of the Rajasthan stamp Act, 1998 for payment of the amount and directed to appellant to deposit the amount. It was held that the correspondence between the appellant and the department pertained to agents fee not Indian insurance stamps. And similar ordered passed to the against the appellant. The appellant filed a writ petition challenging the order of the additional collector, which came to be dismissed by the high court single bench on the ground that the appellant has an alternative efficacious remedy of filing a revision under section 65 of Rajasthan stamp Act.
CONTENTIONS OF THE APPELLANT
The learned ASG, his submission was 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.
The learned ASG, his submission was that show-cause notice and the proceedings are under the 1998 Act, which does not provided for imposition of stamp duty by the sate on policies of insurance. And 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.
CONTENTIONS OF THE RESPONDENTS
Submission by the Respondents, has argued that the state has the power to impose and collect stamp duty on insurance policies under Entry 44 of List III. He 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. And also he submits that the 1952 Act applies since the period of levy is for policies issued between 1993-94 act applies between 1993-94 to 2001-02 which prior to the 1988 Act coming into force on 27.05.2004.
LEGAL PROVISIONS
Article 246 of the Constitution of India, 1950: Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the seventh schedule of the Constitution of India,1950.
Section 2 of the Rajasthan Stamp Law (Adaptation) Act, 1952: It applies to the State of Rajasthan subject to certain adaptations that are contained in section 3.
ISSUES
- Whether the 1952 Act or the 1998 Act applies to the facts of the present cases?
- 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?
- 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?
COURT’S ANALYSIS AND JUDGEMENT
The apex court agreed with the High Court’s view that stamp duty should be levied in accordance with the law in force on the date of execution of the instrument. However, the court held that under Entry 44in List III, parliament and the state legislatures have concurrent powers to legislative on stamps duties (other than fees or charges levied by the judicial seal) but do not extend to stamp duty. In view of the facts and circumstance of the current case, the bench decided that that state government should not demand and collect stamp duty as per the series of orders passes in 2004, therefore court made it clear that the state of Rajasthan has the power to levy and collect stamp duty on insurance policies under Entry 44 of Schedule III, though such duty has to be levied at the rate prescribed by parliamentary legislation under Article 246 of the constitution of India.
The Supreme court upheld the power and jurisdiction of the state of Rajasthan to levy and collect stamp duty on insurance policies issued in the state and rejected the life insurance corporation’s contention of lack of legislative competence. Hence dismiss the appeals and affirm the judgement of the high court and parties shall bear their own costs.
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Judgement Reviewed by – HARIRAGHAVA JP
