Arun Tandon, J.
1. These two connected writ petitions have been filed by the officers of the Life Insurance Corporation of India challenging the demand of stamp duty to the sum of Rs. 1,77,71,488 raised by the Deputy Inspector General/Deputy Commissioner, Stamps, Kanpur Division, Kanpur vide order 29.11.2003 and the consequential demand notices dated 5.2.2007 and 22.2.2007.
2. Facts relevant for deciding these two petitions are as follows:
Life Insurance Company is a statutory Corporation created under the Life Insurance Corporation Act, 1956. The Corporation has its zonal office at Kanpur Nagar.
3. For the purposes of execution of life insurance policies for every sum of Rs. 1,000 insured an insurance stamp of the value of 40 paisa is required to be affixed on each policy bond. The Divisional Office at Kanpur made purchases of self adhesive insurance stamps from the registered stamp vendors of Maharashtra between 19.4.1993 to 29.3.2001 and is stated to have used the same on policy bonds issued by various Branches of Life Insurance Corporation under the Divisional Office at Kanpur. A dispute arose with regards to the genuineness of such insurance stamps purchased. A first information report alleging a total loss of Rs. 1,77,71,488 to the State of Uttar Pradesh was lodged by the Deputy Inspector General (Stamps), Kanpur Nagar with the Police Station Peelkhana, District Kanpur Nagar.
4. The issue with regards to the aforesaid criminal investigation is not the subject-matter of these proceedings and therefore, no further facts are being stated in that regard.
5. On 29.11.2003 an order was passed by the Deputy Inspector General Stamps, Kanpur with reference to the letter of the Senior Divisional Manager, Life Insurance Corporation, Kanpur stating therein that between 19.4.1993 to 29.3.2001 self adhesive insurance stamps to the tune of Rs. 1,77,71,488 have been purchased by the Divisional Office at Kanpur from the following vendors:
(a) Amol Enterprises, Pune;
(b) M/s. V.S. Uppalkar, Mumbai;
(c) M/s. Gusain, Borewali;
(d) M/s. Nirmal P. Gore, Pune; and
(e) M/s. Somal Enterprises, Meerut.
6. Either the aforesaid stamp sellers were non-existent or else the stamps purchased from them have illegally been used by the Divisional Office at Kanpur which has resulted in loss of Rs. 1,77,71,488 to the State Government. The petitioners were, therefore, directed to deposit the said money failing which proceedings under the Indian Stamp Act, 1899 for recovery of the same shall be initiated. It is against this notice that the first writ petition being Writ Petition No. 197 of 2004 has been filed. During the pendency of the said petition demand notice dated 5.2.2007 and 22.2.2007, for a like amount have been issued which have been challenged by means of connected Writ Petition No. 11143 of 2007.
7. The petitioners have stated that Gyanendra Som/Somal Enterprises, Meerut, one of the sellers named in the order was duly authorized on behalf of M/s. Gadiya, a stamp vendor of Pune (Maharashtra) to sell the stamps on their behalf.
8. This Court may at the very outset record that it is admitted to the writ petitioners that self adhesive insurance stamp worth Rs. 1,77,71,488 have been purchased from the stamp vendors authorized by the State of Maharashtra and used for establishing the payment of stamp duty by affixation of the said stamps on Policy Bonds executed in State of Uttar Pradesh. It is also not disputed by the writ petitioner that the said insurance stamps purchased from the vendors of State of Maharashtra were not issued by the U.P. Government as per Rule 3 of the U.P. Stamp Rules as amended up to date. The demand of the aforesaid amount of Rs. 1,77,71,488 which represents the value of the stamp purchased from the stamp vendors authorized by the State of Maharashtra, Le., from a place out side the State of Uttar Pradesh and used on Policy Bonds executed in Uttar Pradesh is being questioned before this Court on behalf of the Life Insurance Corporation on the following facts and grounds:
(a) Self adhesive insurance stamps have been purchased from the licensed stamp vendors of the State of Maharashtra the genuinity of which is not disputed.
(b) That the Indian Stamp Act read with U.P. Stamps Rules does not restrict the purchase of stamps from places outside the State of Uttar Pradesh. Since the genuineness of the stamp purchased from the State of Maharashtra is not in dispute, the liability fastened upon the writ petitioner is totally unwarranted. For the purpose reliance has been placed upon the judgment of the Hon'ble Supreme Court in V.V.S. Rama Sharma and Ors. v. State of U.P. and Ors. 2009 (4) ADJ 234 (SC).
(c) Rule 3 of the U.P. Stamp Rules as was subject-matter of consideration before the Constitution Bench of the Hon'ble Supreme Court in the case of New Central Jute Mills v. State of West Bengal : AIR 1963 SC 1307, has since been amended in the year 1977 vide notification dated 25.3.1977 and thereafter the said judgment will have no application in the changed legal situation.
9. It is, therefore, contended that in the facts and circumstances of the case no liability can be fastened upon the Life Insurance Company qua the alleged loss caused to State of Uttar Pradesh, on the ground that insurance stamps purchased from outside the State of Uttar Pradesh have been used for discharging the liability of Stamp Duty on Policies executed in the State of Uttar Pradesh.
10. The contention so raised on behalf of the writ petitioner is opposed by Shri M.C. Chaturvedi, chief standing counsel. With reference to the Constitution Bench Judgment of the Apex Court in the case of New Central Jute Mills (supra), especially paragraphs 10 to 15 of the said judgment, it is contended that Constitution Bench has specifically held that not only the provisions of the Stamp Act which are to be examined, the provisions of the Rules which operates as part of the Stamp Act have also to be taken care of for ascertaining as to whether the instrument has been duly stamped in accordance with law or not. If a document is executed in the State of Uttar Pradesh and if it is to be subjected to stamp duty, the same can be so discharged by using stamps in accordance with law in force in Uttar Pradesh which will include the U.P. Stamp Rules. It is stated that under Rule 3 of U.P. Stamps Rules only the stamps issued by the State Government for discharging the liability of stamp duty can be used on documents executed in Uttar Pradesh, which has not been done in the facts of the case. Therefore, the demand is justified.
11. From the pleadings and the contention raised before this Court by the contesting parties, following undisputed facts emerge:
12. Stamp worth Rs. 1,77,71,488 have been purchased by the Divisional Office at Kanpur from the stamp vendors authorized by the State of Maharashtra. These adhesive stamps in fact have been used on the policy bonds executed within the State of Uttar Pradesh by various offices of Life Insurance Corporation under the control and supervision of the Divisional Office at Kanpur. The issue which needs to be examined by this Court is as to whether such use of the adhesive insurance stamps purchased from stamp vendors of Maharashtra would amount to payment/discharge of liability of stamp duty on the insurance bond within the framework of Stamp Act and the U.P. Stamp Rules or not.
13. On the controversy in hand both the parties have referred to the Constitution Bench judgment of the Hon'ble Supreme Court in the case of New Central Jute Mills (supra) wherein in paragraphs 10, 12 and 15, it has been held as follows:
10. Another important change in the legal position was effected by framing rules under the Act. While Section 74 empowers the State Government to make rules relating to the sale of stamps. Section 75 empowers the Government generally to make rules 'to carry out generally the purposes of the Act.' Section 76 provides that all rules made under the Act shall be published in the Official Gazette and on such publication shall have effect as if enacted by the Act. Of the rules framed by the Uttar Pradesh Government it is necessary to consider in the present case Rule 3 which is in these words:
3. Except as otherwise provided by the Stamp Act or by these rules-
(i) all duties with which an instrument is chargeable shall be paid, and such payment shall be indicated on such instrument, by means of stamp issued by the Government for the purposes of the Act, and
(ii) 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 an instrument of any other kind.
(2) There shall be two kinds of stamps for indicating the payment of duty with which instruments are chargeable, namely:
(a) impressed stamps overprinted with the words 'Uttar Pradesh' or the letters of 'U. P.' and
(b) adhesive stamps overprinted with the letters 'U.P.':
Provided that the payment of stamp duty on instruments, executed in any part of British India other than Uttar Pradesh and governed by Section 19A of the said Act, as amended in its application to the Uttar Pradesh, may be indicated by such stamps as may be prescribed for use in that part to the extent of the duty payable there, the additional duty, if any chargeable in the Uttar Pradesh being paid by means of stamps prescribed in this rule. Sub-rule (2) of this Rule shall take effect from 1.4.1942:
Provided further that all impressed and adhesive stamps for indicating the payment of duty with which instruments are chargeable and which are not overprinted with the words 'Uttar Pradesh' or 'U.P.' respectively, shall be consumed or exchanged at the treasuries in Uttar Pradesh, provided that they are undamaged and unspoiled, with over printed stamps of the name and denomination and description before 1.4.1942 after which date the use or exchange of impressed and adhesive stamps not so overprinted, shall not be permissible, except to the extent indicated in the first proviso.
The effect of Section 76 already mentioned above is that this rule operates as a part of the Stamp Act. In deciding whether the instrument had been duly stamped or not the public officer had to consider not only the provisions of the Act but also the provisions of the rules. The position that confronted the officers may be summarized thus: The document had been executed in Uttar Pradesh. So, it became liable to pay duty under Section 3(aa) of the Act as amended in Uttar Pradesh. Rule 3 required that the liability had to be discharged by using stamps overprinted with the words 'Uttar Pradesh' or 'U.P.' The instrument did in fact bear stamps overprinted with the words 'West Bengal' or 'U.P.' The public officer was therefore bound to hold that it had not been stamped in accordance with the law in force in Uttar Pradesh.
12. It is next urged that when the officer finds that an instrument has been stamped in accordance with the law in force in West Bengal he is bound to hold that it has been stamped in accordance with the law for the time being in force in India and thus 'duly stamped' within the meaning of the Stamp Act.
15. It is clear that in many cases the only liability, viz., the liability on execution of the document will arise. After the amendment of the Act the liability can no longer be said to arise generally in India but must be held to arise in the particular State, where the instrument is executed. It stands to reason that liability having arisen in a particular State it cannot be held to be discharged in accordance with law in force in India unless it is discharged in accordance with law of the State where it arises. In other words, where the only liability of an instrument to stamp duty is the execution in Uttar Pradesh it must bear stamps of the amount and of the description as required by the law of Uttar Pradesh. If the liability of the instrument is on execution in Bihar it must bear stamps of the amount and description required by the law in Bihar; and so in the case of every other State which has amended the Stamp law in the same manner as in Uttar Pradesh. In all these cases the instrument can be said to be duty stamped only if it bears stamps of the amount and description in accordance with the law of the State concerned - the law including not only the Act but also the rules framed under the Act.
14. It has not been disputed that stamp duty is payable with reference to the place where the policy bond is executed in the facts of the present case in the State of Uttar Pradesh. Therefore, in view of the law laid down by the Apex Court in the case of New Central Jute Mills (supra), such liability of stamp duty can be said to be discharged only when the same is paid in accordance with the Act and the Rules applicable in the State of Uttar Pradesh.
15. It is no doubt true that the Rule 3 as considered by the Constitution Bench in the case of New Central Jute Mill (supra) has since been amended vide notification dated 25.3.1977 as has rightly been pointed out by the Counsel for the petitioner. However, it has to be examined as to whether the said amendment in any way alters the legal position as explained by the Apex Court in the case of New Central Jute Mills (supra) qua discharge of stamp duty or not. The amended Rule 3 is quoted hereinbelow:
3. Description of Stamps.- (1) Except as otherwise provided by the Indian Stamp Act, 1899 or by these rules-
(i) all duties with which any instrument is chargeable shall be paid and such payment shall be indicated on such instrument by means of stamps issued by the Government for the purposes of the Act, and
(ii) 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 an instrument of any other kind.
(2) There shall be three kinds of stamps for indicating the payment of duty with which instruments are chargeable, namely:
(a) impressed stamps, that is to say, stamped papers bearing the words 'Indian non-judicial' printed thereupon, which have been sold by a person duly authorized In that behalf as hereafter provided to any person for his use in accordance with these rules:
Provided that no stamp shall be deemed to be sold unless it clearly bears the name and address of the authorized vendor thereof and of the person to whom it is sold,
(b) impressed stamps bearing the word 'Hindi' printed or embossed thereon; and
(c) adhesive stamps bearing the words 'special adhesive' 'insurance', 'Foreign bill' 'share transfer' 'notarial brokers note' 'agreement' or 'revenue' printed thereon : Provided always that the stamps of the above descriptions over-printed with the words 'Uttar Pradesh' or the letters V. P.' shall continue to be used for payment of duty till such time as the State Government does not prohibit their use.
16. Vide notification dated 25.3.1977 the amendments that have been brought forth in Rule 3 (italicised portion) are only with reference to the kinds of stamps to be issued in Uttar Pradesh, i.e., (a) In place of two kinds of stamps, three kinds of stamps have been provided. (b) Overprinting on the adhesive stamps earlier, by the word 'U.P.' has been substituted by the words 'speQial adhesive' 'insurance' foreign bill' 'share transfer 'notarial brokers note' 'agreement' or 'revenue'.
17. From' a reading of the aforesaid amended Rule 3 vis-a-vis earlier Rule 3 it will be seen that except for the change in the use of the words to be overprinted on the adhesive stamps, there is no material change in the intent of the Rules. In our opinion mere change of the words which are to be impressed on the stamp will not in any way alter the legal position as explained by the Hon'ble Supreme Court in the aforesaid Constitution Bench judgment.
18. What is outstanding in the aforesaid Rule is the Rule 3(1)(i) which specifically provides that all duties which are chargeable on an instrument shall be paid and such payment shall be indicated on the instrument by means of 'stamps issued by the Government' for the purposes of the Act.
19. The word 'Government' used in Rule 3(i) has not been defined under the U.P. Stamp Rules. However since Rule 3 is part of the U.P. Stamp Rules framed by the State Government it would refer to the State Government of U.P. and therefore, the stamps issued by the State Government alone are to be used on the documents executed in Uttar Pradesh for indicating payment of stamp duty, as would also follow from examination of the various provisions of the Stamp Act and the U.P. Stamp Rules.
20. Section 3 of the Act is the charging section and Section 10 of the Stamp Act provides for the mode of payment of the stamp duty and reads as follows:
10. Duties how to be paid.- (1) Except as otherwise expressly provided in this Act, all duties with which any instruments are chargeable shall be paid, and such payment shall be indicated on such instruments by means of stamps,-
(a) according to the provisions herein contained; or
(b) when no such provision is applicable thereto, as the (State Government) may by rules direct.
(2) The rules made under Sub-section (1) may, among other matters, regulate,-
(a) in the case of each kind of instrument- the description of stamps which may be used;
(b) in the case of instrument stamped with impressed stamps- the numbers of stamps which may be used;
(c) in the case of bills of exchange or promissory notes written in any oriental language- the size of the paper on which they are written.
21. The Stamp Act does not provide for the mode of payment of stamp duty on Insurance Bonds. Therefore in view of Section 10(b) it has to be in accordance with the Rules framed by the State Government namely U.P. Stamp Rules.
22. Section 29(b) of the Act fixes the liability of payment of stamp duty on an insurance policy upon the person effecting the insurance.
23. Chapter V of the Act which contains Sections 49 - 55 provides for the allowances for misuse etc. and power in that regard is vested with the Collector of the District only subject to the rules.
24. Section 74 confers the power upon the State Government to make rules for regulating the sale of stamps including the person who can sell and reads as follows:
74. Power to make rules relating to sale of stamps.- The State Government may make rules for regulating,-
(a) the supply and sale of stamps and stamped persons ;
(b) the person by whom alone such sale is to be conducted; and
(c) the duties and remuneration of such persons:
Provided that such rules and shall not restrict the sale of ten paise or five paise adhesive stamps.
25. Section 75 confers the power to make rules generally to carry out the Act.
26. Section 76 provides for the publication of Rules which after publication have effect as if enacted by the Act.
27. In exercise of power under Sections 74 and 75 the State of Uttar Pradesh has framed U.P. Stamp Rules, 1942 which have been published under Section 76 and are, therefore, to be treated as enacted by the Act.
28. Rule 3 which has already been quoted above provides for the mode of payment of duty including that by use of adhesive stamps on certain Instruments.
29. Rule 25 (g) lay down the kind of instruments qua which discharge of stamp duty can be through affixation of adhesive stamps.
30. Rule 30 clarifies the kinds of adhesive stamps to be used on certain documents. Sub-rule (g) relevant for our purpose reads as follows:
Rule 30 (g). - Instruments chargeable with stamp duty under Article 47 of Schedule 1: with stamps bearing the words 'insurance'.
31.Chapter III of the U.P. Stamp Rules containing Rules 44 to 149 deal extensively with supply and distribution of stamps:
Rule 44 declares as follows:
44. Application of the rules and Explanations.- The Government of India have framed rules for the supply and distribution of stamps [copies received with G.O. No. M-2509 (2)/X-455, dated 23.101939]. Under Section 74 of the Indian Stamp Act, 1899 (II of 1899), and Section 21 of the United Provinces Court-Fees (Amendment) Act, 1938, the Governor of the United Provinces has elected to extend the provisions of Rules 12 to 37 of the Government of India Rules to judicial and non-Judicial stamps which are the property of the Provincial Government, to the whole of the territories under his administration. The Government of India Rules have, therefore, been incorporated bodily in this chapter. Supplementary and additional rules have been framed where necessary and they are given after the appropriate Government of India Rules. In order not to break the continuity of the serial numbering in this manual the Government of India Rules have been given serial numbers appertaining to this manual. These are mentioned in the left hand corner. For the facility of correspondence with the Controller of Stamps and Master, Security Printing, India, Nasik Road, and with other officers outside the United Provinces, the serial number of the Government of India Rules is also given within brackets in the right-hand margin.
32. It has to be notice here that the Central Rules from Rules 12 to 37 corresponding to Rules 63 to 102 of U.P. Stamp Rules have been adopted by the State of Uttar Pradesh in respect of the stamps which are the property of the 'Provincial Government' to the whole of the territories under its administration.
33. Rules 46 and 47 provide that all stamps are to be printed at Security Printing Press at Nasik.
34. Rule 50 speaks of a central stamp store attached to the Security Printing Press at Nasik.
35. Rule 52 provides for the stocks of stamps which are sources of provincial revenue in the United Provinces to be maintained at central stamp store and reads as follows:
52. Stock for United Provinces.- The central stamp store shall maintain a stock of stamps which are sources of provincial revenue in the United Provinces as shown below:
Adhesive...6 month's consumption.
Impressed...3 month's consumption.
36. Rule 55 requires the controller of stamps to supply the kinds of stamps both judicial and non-judicial for use in the Uttar Pradesh which include insurance stamp. For ready reference Rule 55 reads as follows:
55. Kinds of stamps for use in the United Provinces.- The controller of stamps is required to supply the following kinds of nonjudicial and judicial stamps for use in the Uttar Pradesh.
Kinds of Stamps
Non-Judicial or General Stamps
Fiscal stamps, special adhesive, insurance, foreign bill, share transfer, notarials, brokers note, agreement stamps, Hundis or bills of exchange, general stamps and revenue stamps.
Judicial or Court Fee Stamps
Adhesive and Impressed
Copy Stamps
37. Rules 56 to 62 provide the mode and manner of placement of indents with the controller of stamps by the Provincial Government.
38. Rules 63 to 75 provide for distribution and stocks of stamps for local depots in U.P. All treasuries in Uttar Pradesh have been declared to be lotfal depots.
39. Rules 84 to 103 lay down a detail mechanism for sale of Stamps in Uttar Pradesh. Rule 84 declares the treasurer or such other officer appointed by the District Magistrate to the ex-ojficio vendor. Rule 87 permits the sale of stamps by ex officio vendor to the public or to a licensed vendor for cash only. For ready reference Rule 87 reads as follows:
87. Sale of stamps by ex officio vendor.- From the stock so made over to his charge and kept by him under single lock the ex officio vendor shall sell stamps to the public and to licensed vendors for cash. He shall maintain the single lock register in the form mentioned in the Rule 85 in such language as the Provincial Government or local administration may direct, entering therein both in quantities and values the receipt from double lock, the daily sales and the balance in his hands of each denomination at the end of each day. He shall pay daily into the treasury the cash received by him for stamps sold, the amount realized on account of each of the various descriptions of stamps-namely, non-judicial, court fee, postage, match excise banderols, Indian and match excise banderols, Burma, Central Excise revenue stamps, tobacco excise duty labels, insurance agent licence fee stamps. Defence (or National) Saving Stamps etc. being paid in separately. The account of the daily sales should be inspected and the correctness of the calculation shown therein checked every day by the officer-in-charge of the depot.
40. Rule 87A provides the mode for presentation of challan, certifying the deposit of the value of the stamps in cash separately for each type of stamps.
41. Rules 101 to 113 regulate the sale of postage stamps/revenue stamps.
42. Rule 114 deals with British Unemployment Insurance Stamps which are declared to be the property of Central Government. These stamps are to be sold of master vessels from local depots at Madras, Malabar, Tanjore, South Arcot, East Godavari, Vizagapatam, Calcutta, Karachi, Tuticorin and Bombay.
43. Rule 115A regulates the sale of Central Excise Revenue Stamps, Defence or National Savings Stamps which are the property of Central Government through Post Offices in like manner as ordinary stamps and reads as follows:
115A. Stamps which are the property of the Central Government and which are required to be sold 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.
44. Chapter IV of the U.P. Rules which contain Rules 150 to 185 provides for sale of Stamps.
45. Rule 150 declares that an authorized person alone can sell the stamps and relevant portion whereof reads as follows;
150. Only authorized person to sell stamps - Exceptions.- No person, who is not duly authorized in the manner hereinafter provided, shall be entitled to sell stamps of any description other than ten naye paise revenue stamps. This prohibition shall not apply-
(i) to a legal practitioner or a banker, who buys a stock of stamps for uses in his own business, and affixes them, when occasion requires, to the documents he has to draw up in the course of that business, the cost of the stamps being recovered from his client or customer with the rest of his charges:
Provided that every court-fee label affixed by a legal practitioner to a document shall be enfaced by him in the name of the client on whose behalf the document is presented to the Court. A label once so enfaced shall not be enfaced a second time.
(ii) to Government offices or incorporated companies or other body corporate in respect of stamped paper used for printed forms of instruments for use by the persons concerned with the business of that office, company or body, the cost of the stamp being recovered from those persons.
Rule 151 provides that there shall be two kinds of vendors:
(a) Ex officio vendors (b) Licensed vendor.
46. Rule 151(a) describes the persons who are deemed to be ex-officio vendor.
47. Rule 151(b) provides that Collector may grant licence to vend stamps to the categories of persons mentioned thereunder. Terms and conditions of licence are also provided under the Rule.
48. Rule 152 restricts the sale of judicial as well as non-judicial stamps to the aggregate of Rs. 15,000 only by the licensed vendors and reads as follows:
152. Sale of stamps by licensed vendors and restrictions therefore-
(a) Licensed vendors shall be allowed to sell court fee stamps or non-judicial stamps not exceeding the aggregate value of fifteen thousand rupees for one document or instrument, as the case may be, and to an individual member of the public.
(b) Any person aggrieved by an order of the Collector under Clause (a) may, within thirty days thereof prefer an appeal to the Board of Revenue, Uttar Pradesh, Allahabad or any officer authorised by the Board in this behalf, whose decision thereon shall be final and conclusive.
49. From the Scheme of the Act and Rules specifically the provisions quoted above, what follows is:
That Section 3 of the Stamp Act is the charging section. It provides for the instruments which are chargeable with stamp duty of the amount indicated in the Schedule I. Schedule I as amended in the State of Uttar Pradesh provides for the payment of stamp duty on life insurance policies in three categories. We are basically concerned with category 3 which provides for the proper stamp duty of 40 paisa for every Rs. 1,000 or part thereof in excess of Rs. 1,000. Section 10 provides for the mode and manner of such payment of duty and if no provision has been made for the purposes under the Act then it has to be as the State Government may by rules direct. Section 29 fastens the liability of payment of duty on the person effecting the insurance.
50. The State of Uttar Pradesh has framed rules in exercise of powers under Sections 74 and 75 for the purposes of carrying out the Act. From Rule 3 it is apparently clear that qua the insurance bond the mode and manner of discharging the stamp duty is by affixation of self adhesive stamp issued by the State Government.
51. Thus stamp duty payable on insurance bonds under Section 3 of the Act executed in the State of Uttar Pradesh has to be discharged in accordance with Rule 3 read with Rules 25 and 30(g) of the U.P. Stamps Rules, i.e., by affixation of adhesive stamp bearing the word special adhesive insurance and that such adhesive stamps must necessarily be issued by the State Government for the purpose.
52. From Rule 44 read with Rules 63 to 102 it is apparently clear that the judicial as well as non-judicial stamps used for discharge of stamp duty payable in the State of Uttar Pradesh have been declared to be the property of the Provincial Government. Similarly Rule 52 provides that the stocks of stamps which are to be maintained at the Central Depot Store attached to the Security Press, Nasik are source of revenue for the State of Uttar Pradesh specifically the adhesive stamps and the impressed stamps.
53. As. already recorded above, adhesive stamps bearing the words 'special adhesive insurance' are necessarily to be used on bonds executed in the State of Uttar Pradesh, and therefore, the stamps duty derived therefrom is a source of Provincial Revenue in the State of Uttar Pradesh. Same follows from reading of Rule 25 also.
54. Rules 56 to 87A regulate the procedure for obtaining supply of stamps from the Central Depot at Nasik and their distribution to local depots. District treasuries in Uttar Pradesh have been declared to be local depots and treasurer the ex officio vendor. The ex officio vendor, le., treasure can sell stamps of all kinds to the public as well as licensed vendors for cash only and mechanism for such sale has also been regulated.
55. Thus, sale of stamps to the public as well as licensed vendors can only be effected through the local depot, i.e., treasury against payment in cash and it is these stamps which can be treated to have been issued by the Government under Rule 3. These stamps alone can be used for establishing the discharge of duty payable on the insurance polices executed in U.P. by affixation of requisite amount of special adhesive insurance stamps as per the rate prescribed under Schedule I.
56. We may also notice that a licensed vendor is entitled to sell stamps worth Rs. 15,000 only qua one instrument, this value has been fixed under an amendment by notification dated 30.3.1991 published in the U.P. Gazette on the same day and such licensed vendors are appointed under Rule 151(b) by the Collector of the District.
57. In view of the aforesaid statutory provisions this Court has no hesitation to record that insurance stamps which are issued by the local depot (treasuries) of the district alone can be termed to have been issued by the State Government and affixation of such stamps alone on the policy bonds can be for the purposes of discharge of stamp duty as contemplated by Section 3 read with Rule 3 of the U.P. Stamp Rules. These stamps Issued by the Government must also necessarily be Impressed by the words 'special adhesive insurance'. Unless such stamps issued by the State Government are affixed on the insurance bonds for establishing the discharge of payment of duty, the liability of stamp duty cannot be said to be discharged in view of the language of Section 3(1) of the Stamps Act and as per the law explained by the Hon'ble Supreme Court in the J.K. Jute Mills (supra).
58. At this stage we may clarify that Rule 151A of the U.P. Stamps Rules is in respect of stamps which are declared to be the property of Central Government and which are required to be sold to the public through post offices alone namely Central Excise, Revenue Stamps, Defence, National Savings Stamps. Rule 151A therefore, has no application so far as special adhesive insurance stamps are concerned which are the property of the Provincial Government and a source of revenue for the State Government.
59. The purchase of stamps from the licensed vendor of State of Maharashtra who had obtained their supply from the treasuries In the State of Maharashtra and affixed on insurance policy executed in U.P. cannot amount to discharge of the stamp duty payable under the Stamp Act read with the U.P. Stamp Rules as explained by the Constitution Bench of the Apex Court in the case of New Central Jute Mills (supra). Therefore, in the facts of the case the authorities are legally justified in Insisting upon the petitioner to pay the amount of Rs. 1,77,71,488 which represents the amount of stamp duty payable in respect of insurance policies executed by various offices within the territorial jurisdiction of Divisional Office at Ranpur in the State of Uttar Pradesh.
60. We may also take note of the judgment of the Hon'ble Supreme Court in the case of V.V.S. Rama Sharma and Ors. v. State of U.P. and Ors. (supra). The issue before the Hon'ble Supreme Court was qua criminal proceedings initiated for purchase of stamp from other States. It has been held in the facts of that case that no offence under Section 69 of the Stamp Act had been committed. It has been explained that the appellants were neither the stamps vendors nor were doing any unauthorized sale of the insurance stamps. There can be no two opinion with regard to the law laid down by the Hon'ble Supreme Court in the case of V.V.S. Rama Sharma and Ors. v. State of U.P. and Ors. (supra) specially paragraph 23 wherein the Hon'ble Supreme Court has held that there is no restriction on purchase of stamps from outside the State of Uttar Pradesh and, therefore, no criminal offence for purchase of stamps from outside the State of Uttar Pradesh can be alleged. For ready reference relevant portion of paragraph 23 is quoted hereinbelow:
23. ...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 appellant cannot be said to be inconsistent with any provisions of the Stamp Act or any other Rules. So, the allegation made in the F.I.R. even if proved by the prosecution does not constitute any offence.
61. However, the issue before us is as to whether the liability of payment of stamp duty on insurance bonds executed within the State of Uttar Pradesh can be said to be discharged without affixation of special adhesive insurance stamps issued by the State of Uttar Pradesh as per Rule 3 or not. It is all worth mentioning that the Constitution Bench Judgment in the case of New Central Jute Mills (supra) had also not been placed before the Apex Court in the case of V.V.S. Rama Sharma (supra) and, therefore, not noticed in the said case.
62. Consequently the judgment relied upon by the petitioner is clearly distinguishable in the facts of the present case.
63. The Hon'ble Supreme Court has repeatedly held that a little difference in the facts or additional facts may make a lot of difference in the precedential value of a Judgment Ref. Bhavnagar University v. Palitana Sugar Mills (P.) Ltd. and Ors. : 2003 (2) SCC 111, which has recently been followed in the case of Rajveer Singh v. Chaudhary Devi 2008 AIR SCW 5817.
64. In view of the aforesaid we have no hesitation to record that the law laid down by the Constitution Bench in the case of New Central Jute Mills (supra) has not been diluted by the amendments in Rule 3 of the U.P. Rules vide notification dated 25.3.1977 whereunder the only change made in qua the use of the words to be imprinted on adhesive stamps.
65. Therefore, in our opinion even after of the amendment made vide notification dated 25.3.1977, so far as insurance policies executed within the7 State of Uttar Pradesh are concernedr they have to be subjected to payment of stamp duty in accordance with Rules applicable in the State of Uttar Pradesh and have to be affixed with adhesive insurance stamps issued by the State of Uttar Pradesh only.
66. We may record that it is not the case of the writ petitioners that the stamp vendors of Maharashtra from whom they have purchased the insurance stamps had been issued the same by the State Government of Uttar Pradesh nor there can be such a case inasmuch as the vendors of Maharashtra are not licensed to purchase stamps from the Local Depots/Government Treasuries of State of Uttar Pradesh. It is held that the stamps purchased by the petitioner corporation from the stamp vendors registered with the State of Maharashtra are not the stamps issued by the State of Uttar Pradesh. The Constitution Bench has already explained that if the payment of duty is required to be made on execution within the State of Uttar Pradesh on a document, then discharge of such duty can be only if same is made as per the rules framed by the State of Uttar Pradesh. Since in the facts of the present case no stamp duty as per the U.P. Stamp Rules by way of adhesive stamps issued by the State of Uttar Pradesh has been paid on policy bonds executed in U. P., demand made under the impugned order is as per the law.
67. No other point was pressed before us on behalf of the petitioner. We hold that the Writ Petition No. 297 of 2004 and Writ Petition No. 11143 of 2007 lack merits and are dismissed. Interim order, if any, is discharged. No orders as to costs.