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Exceptions for Power of Attorney (GPA) in India and Penalty Associated Thereof: The Indian Stamp Act of 1899 (2 of 1899) acts as fiscal legislation. It is an in-force Act of the Government of India for the charging of stamp duty on instruments recording transactions. The sole purpose of this Act is to generate revenues for the Indian government, the document which is stamped acts as a piece of valid evidence in a court of law. Basically, stamp duty is an ad valorem tax that is paid on the exchange of documents or execution of instruments.
According to the Indian Stamp Act, Section 18 deals with Instruments other than bills and notes executed out of India which states that;
- “Every instrument chargeable with duty executed only out of India and not being a bill of exchange or promissory note may be stamped within three months after it has been first received in
- Where any such instrument cannot, with reference to the description of stamp prescribed, therefore, be duly stamped by a private person, it may be taken within the said period of three months to the Collector, who shall stamp the same, in such manner as the 47 [State Government] may by rule prescribe, with a stamp of such value as the person so taking such instrument may require and pay for.”
As can be seen, such instrument which was not being a bill of exchange or promissory note executed only outside India and not duly stamped may be presented within three months after it has been first received in India before the Collector for stamping such document as per the law.
Exception of this section:
In the case of Pedapudi Alfred Johnson Jeyakaran Jesudasan V.The State of Andhra Pradesh, a recent order was passed by the Hon’ble Sri Justice U.Durga Prasad Rao in the High Court of Andhra Pradesh impounding of Power of Attorney (GPA) which was executed outside India.
The court in this case clarified that if a document such as the Power of Attorney is executed outside India on Indian non-judicial stamp paper before or at the time of its execution then Section 18 of the Stamp Act will not be applicable.
Facts of the case:
In the case of Pedapudi Alfred Johnson Jeyakaran Jesudasan V.The State of Andhra Pradesh, the writ petition was filed as the District Registrar of Vijayawada had refused to accept the GPA dated 10.02.2020 executed by the writ petitioner’s sister, a resident of Canada, which would have authorized the Registrar to act as the writ petitioner’s sister GPA to sell her residential property on the ground that the GPA was executed on 10.02.2020, notarized on 11.02.2020 and the same was received in India on 06.03.2020 and presented before Registrar on 21.12.2021 i.e., more than three months after the document was received in India for validation purpose, in violation of the Indian Stamp Act, 1899 (for short, ‘the Stamp Act’). The basis for rejecting the GPA, as stated earlier, was a more than three months of delay in presenting it to validate it, which constituted a violation of the Indian Stamp Act, 1899.
The Learned counsel for the petitioner submitted that due to COVID-19 and consequently lockdown was imposed throughout the country, the petitioner could not move out due to restrictions. Hence, in such circumstances, the petitioner was able to produce the GPA for validation on 16.12.2021 and hence there was no negligence or default much less willful default on from the petitioner’s side.
Whether there are merits in the writ petition to allow?
- It is observed that the petitioner received GPA from his sister at Canada on 06.03.2020 to his permanent address and he presented the document for validation only on 16.12.2021 and in the impugned order the registrar having observed that it was presented before his office only on 21.12.2021 i.e., after the expiry of the time prescribed in Section 18 of the Indian Stamp Act, held that the GPA cannot be validated. In this regard, Section 3 of the Indian Stamp Act deals with instruments which are chargeable with duty;
“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 first day of July 1899;
(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 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.”
- As per Article 48 of Schedule 1, a power of attorney is chargeable with duty as mentioned in that Article. Therefore, if a Power of Attorney is executed outside India and received in India, it is excisable to stamp duty. Thus, Section 3 is a charging section read with section 18 of the Indian Stamp Act.
The Hon’ble Court observed that a GPA issued outside India and received in India related to any property located in India is subject to stamp duty. The Court further observed that the petitioner could not fulfill the criteria of section 18 because of the lockdown imposed by the Central and State Governments due to the COVID-19 pandemic. Therefore, the lockdown no doubt restricted the movement of the citizens throughout the country in different spells. It is also true that transport services like air, rail, roadways, etc. were suspended with few exceptions. The guidelines and lockdown orders were issued by the National Executive Committee exercising powers under Section 10 of the Disaster Management Act Section 72 of the said Act reads thus:
“72. Act to have overriding effect.—The provisions of this Act, shall have an effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.”
Therefore, the provisions of the said Act shall have the overriding effect on all the other laws and instruments which are inconsistent with the said Act.
The Court further observed that the petitioner had not submitted any significant evidence to establish that he could not leave due to the lockdown orders. Furthermore, the benefit of excluding the restriction applied solely to processes brought before courts or tribunals. Therefore, the petitioner cannot take shelter stating the reasons.
Therefore, the remedy of the petitioner was decided by referring to the case law Malaysian Airlines Systems BHD v. STIC Travels (P) Ltd. Thus, the Writ Petition was allowed and directed to receive the GPA dated 10.02.2020 executed in favor of the petitioner and if it was not duly stamped, then asked to collect the required stamp duty and penalty as per law and validate the aforesaid GPA and release the document within two weeks from the date of receipt of a copy of this order.
Author: Poonam Nahar, a Final year LL.B student from Marathwada Mitra Mandal’s Shankarrao Chavan Law College, Pune, currently an intern at Khurana & Khurana, Advocates and IP Attorney. In case of any queries please contact/write back to us via email firstname.lastname@example.org.