The Gujarat High Court has disposed of a petition that challenged the State’s decision to halt the use of physical non-judicial stamp paper in the State (Manish Jitendra Shah v. State of Gujarat).

A group of six petitions had been moved, urging the Court to declare that the new rule, Rule 8-A, in the Gujarat Stamps Supply and Sales Rules, 1987 was ultra vires the Indian Stamp Act, 1889 and the Gujarat Stamp Act, 1958.

A Division Bench of Chief Justice Vikram Nath and Justice Ashutosh J Shastri dismissed the challenge and upheld the validity of the new rule.

With the aid of the Lists in the Constitution, the Court found that the Indian Stamp Act was “neither the parent Act nor a superior legislation” to the Gujarat Act because they operated in separate spheres.

Stamp duty rates for negotiable instruments is an entry enumerated in the Union’s areas of legislation i.e. the Union List. The Indian Stamp Act was introduced using this entry.

The State List, on the other hand, lists stamp duty rates for other kinds of documents. The Concurrent List, which specifies matters upon which both the Centre and the State can legislate, has “stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty” as an entry.

The Court went on to reject the petitioner's arguments that the State did not have the power to introduce the challenged rule, noting that, "Section 74 of the 1889 Act and section 69 of the 1958 Act confers specific powers on the State Government to make rules for regulating the supply and sale of stamps and stamp paper."

In 2019, the Gujarat government had inserted the following rule:

Observing that e-stamping was operational in twenty-one states in the country and that in Karnataka and in New Delhi physical judicial stamp paper were discontinued, the Court found Rule 8-A valid.

It is also held that the discontinuance of the sale of physical non-judicial stamp paper did not interfere with the sales under the Indian Stamp Act or with the rights of vendors.

Addressing arguments raised on the apprehended adverse imact on licensed stamp paper vendors, the Bench observed that,

"license vendors still have their license to sell judicial stamp papers in physical form. They would be entitled to their discounts/commissions from the State as per the existing rates settled by the State. The SHCIL i.e. the CRA only has to deal with the non-judicial stamp papers and not with the judicial stamp papers."

It added, "The right to claim 'discount' on sale of nonjudicial physical stamp papers is not a fundamental right and it is not even a common law right."

In view of these, among other, observations, the Court dismissed the petitions, stating,

"in our considered opinion, it is well within the power of the Respondent State to pass the notifications (inserting the Rule) ... This is more particularly in light of the fact that the Indian Stamp Act, 1899 and Gujarat Stamp Act, 1958 are independent of each other and Rule 8A of the Gujarat Stamps Supply and Sales Rules, 1987 does not amend either the Indian Stamp Act, 1899 or the Gujarat Stamp Act, 1958 ..."

Advocates BM Mangukiya, Bela A. Prajapati, Dhaval D. Vyas, Arpit A Kapadia, Vishwas K Shah argued for the petitioners.

Government Pleaders Manisha Lavkumar Shah, Aishvarya Gupta and Chintan Dave appeared for the respondent.

Read the Judgment here: