In a partnership reconstitution case, the Gujarat High Court (Ahmedabad Bench) has ruled that the Stamp Authority cannot bypass the procedure under amended Section 33 of the Gujarat Stamp Act, 1958, by relying on a pre-amendment Section 68(2) notice to impound photocopies of deeds. The Court clarified that where a Stamp Authority obtains photocopies of partnership reconstitution deeds under Section 68(2) of the Gujarat Stamp Act, 1958 prior to the 2025 amendment, and thereafter impounds such photocopies under Section 33(5) without first issuing a notice under Section 33(4) calling for the original instruments, the impoundment is illegal and void.
The High Court also clarified that Section 33(5) is not an independent power and cannot be exercised without following the mandatory procedure prescribed under Section 33(4). Consequently, a notice under Section 39(1)(b) demanding deficit stamp duty, founded upon such invalid impoundment, is unsustainable and is liable to be quashed.
A Single Judge Bench of Justice Nirzar S. Desai noted that Section 33(4) of the Gujarat Stamp Act, 1958 provides that, where any deficiency in stamp duty is noticed from a copy of an instrument, the Collector may call for the original instrument for the purpose of satisfying himself as to the adequacy of the duty paid thereon, and the instrument so produced before the Collector shall be deemed to have been produced or to have come before him in the performance of his functions. Section 33(5) takes care of a situation where, despite a notice under Section 33(4) having been issued, the person fails to produce the original instrument within the period specified by the Collector, and only thereafter can the Collector impound the photocopy of the instrument.
The Court held that Section 33(5) cannot be read in isolation and the powers thereunder cannot be exercised independently unless the procedure prescribed under Section 33(4) is first followed by the Collector. The Court further held that Section 33 falls within Chapter IV of the Act, which bears the title ‘Instruments Not Duly Stamped’, and is the specific provision governing the examination and impounding of instruments, whereas Section 68 falls within Chapter VIII, which deals with supplemental provisions. Therefore, unless the powers under Section 33 are exercised in accordance with the procedure prescribed therein, it is not open to the authority to invoke the supplemental provisions under Section 68 of the Act.
The Court held that issuance of notice under Section 33(4) is a condition precedent for exercising powers under Section 33(5) and thereby impounding the photocopy of the instrument, because only upon receiving such notice would the concerned person come to know about the intention of the authority to impound the document. The Court held that, in the instant case, as the respondents did not issue any notice under Section 33(4) to the petitioner and proceeded to impound the photocopies of the instruments/documents by relying upon the notice issued under Section 68(2), such action on the part of the authority cannot be considered to be legal or valid.
Consequently, the impoundment of the photocopies of the instruments in exercise of powers under Section 33(5), without first issuing a notice under Section 33(4), renders the impoundment invalid and illegal, and the notice issued under Section 39(1)(b), being founded upon such invalid impoundment, cannot be sustained in law.
Briefly, Himgiri Corporation, a partnership firm constituted in 1975, brought a property at Vastrapur, Ahmedabad as part of the capital contribution by one of its original partners, Karamchand Premchand Private Limited (KPPL). Between 1975 and 2010, the firm underwent 19 changes in its constitution through various deeds of reconstitution, including admission and retirement of partners and modification of profit-sharing ratios. The property, however, remained with the firm throughout and was eventually sold by way of a registered conveyance deed in favour of M/s. Godrej Properties Limited.
The purchaser voluntarily submitted the conveyance deed for adjudication under Section 31 of the Gujarat Stamp Act, 1958, and the stamp duty was paid as determined. Thereafter, the purchaser received a notice dated Nov 11, 2024, from the Additional Superintendent of Stamps under Section 68(2) of the Act, calling for copies of all partnership deeds. The petitioner-seller submitted photocopies of all the partnership/reconstitution deeds and subsequently, the petitioner received two show-cause notices from the Collector and Additional Superintendent of Stamps, Gandhinagar, under Section 39(1)(b) of the Gujarat Stamp Act, 1958, alleging that the partnership reconstitution deeds had not been duly stamped and raising a demand of Rs. 22.49 crores as deficit stamp duty.
