1. The point involved in this Reference is a short but an interesting one. Under Section 9 of the Indian Stamp Act, 1899, there is a statutory power in the Government, not merely to reduce the stamp duty upon any particular category of instruments, but to remit the stamp duty altogether. Since the provisions of any Act have to be read harmoniously, as far as possible, Section 9 has clearly to be construed as a limitation or restriction upon the scope of Section 3, which is the charging section, and which specifies the instruments chargeable with duty under the Act. This power under Section 9 is to be exercised, according to the Legislature, " by rule or order published in the Official Gazette." Under Section 76 (2) of the Stamp Act, "All Rules published as required by this section shall, upon such publication, have effect as if enacted by this Act." The facts in the present case are not in dispute. The Respondent (Messrs. Simpson and General Finance Co., Limited, Madras) executed an instrument dated 16th September, 1964 (Exhibit A) transferring certain properties in favour of Simpson and Company, which is a subsidiary Company of the Respondent concern. This instrument is not liable to stamp duty, as it is totally exempted by the exemption No. 58 of Government Notification No. 13 dated 17th December, 1938. Under those circumstances, we must certainly construe this exemption as part of the Rules, and an integral part of the Act itself, by virtue of Section 76, so that the clear consequence is that this instrument has been totally removed from the ambit of the provisions of the Stamp Act.
2. We may now proceed to the point immediately in issue. The Madras City Municipal Corporation Act (IV of 1919), contains two important provisions, with regard to the power of the Local Body to levy transfer duty upon instruments relating to transfers of immovable property, within its jurisdiction. Section 98 is the source of power, and it is in the following terms:
The Council may levy:
(a) to (g) * * *
(h) a duty on certain transfers of property in the shape of an additional stamp duty.
This is the source of the taxing power. Actually, the taxing, provision is in Section 135 of the same Act, and Section 135 (a) runs as follows:
The duty on transfers of property shall be levied:
(a) in the form of a surcharge on the duty imposed by the Indian Stamp Act, 1899, as in force for the time being in the State of Madras, on every instrument of the description specified below, which relates to immovable property situated within the limits of the City....
3. Section 135 (b) need not be set forth verbatim here, but we may note that this sub-section relates to the rate at which this surcharge is to be levied, and it indicates that the rate may be as "fixed by the State Government, not exceeding five per centum, on the amount specified below against such instrument. Under this follows the enumeration of the description of instruments, namely, sales, exchanges, gifts and mortgages with possession, of immovable properties. The amount on which the duty should be levied is stated as, respectively, the amount or value of the consideration for the sale, as relating to sales, the value of the property of the greater value, as relating to exchanges, the value of the property, as set forth in the instrument of gifts, and the amount secured by the mortgage, as relating to mortgages.
4. The present Reference arises from a doubt felt by the concerned Authority, whether, notwithstanding the exemption granted under Section 9 of the Stamp Act, which as we observed, takes that instrument out of the ambit of the Act altogether, the Madras City Municipal Corporation may, nevertheless, be entitled to levy a surcharge on the amount forming the value of the consideration, under Section 98 read with Sections 135 (a) and 135 (b) of the Act. The simple answer to this question depends upon our interpretation of Sections 98 and 135 (a) and (b), as those relevant provisions do specify the source of the power to levy the tax, and also the character and basis of the tax in question.
5. We have very carefully considered this question. In our view, Section 98 (A) itself makes it clear that the duty cannot be levied, in the case of an instrument, which is not liable to duty at all under the Stamp Act. For, the relevant words are:
a duty on certain transfer of property in the shape of an additional stamp duty.
These words, we think, render it clear beyond doubt that the tax is an additional tax or burden upon a pre-existing tax under the Stamp Act, and could be appropriately levied, only where the instrument is liable to duty under the Stamp Act, and not otherwise. The point in issue is rendered even more definite by the words of Section 135 (a), namely, that the duty is to be levied " in the form of a surcharge on the duty imposed by the Indian Stamp Act, 1899, as in force for the time being in the State of Madras." These words, considered together, clearly imply that where there is an instrument, which is not at all liable to stamp duty under the Indian Stamp Act, 1899, as in force for the time being, no surcharge could be levied, because, in law, this duty under Section 96 has to be " in the form of a surcharge on the duty imposed by the Indian Stamp Act." Undoubtedly, under Section 135 (b), the rates make it clear that this surcharge is not to be a proportion of the stamp duty itself, but will be a rate on the amount of the consideration or the value of the concerned property, not exceeding five per cent. The learned Additional Government Pleader brings it to our notice that, as the facts stand to-day surcharges do exceed the duty leviable under the Stamp Act. But, it is clearly essential that the instrument should be liable to duty under the Stamp Act, before the power under Section 98 could be invoked, to lay an additional burden, or before, any surcharge itself could be formulated and enforced.
6. The argument per contra, of the learned Additional Government Pleader would not merely be illogical, but would lead to the manifest absurdity that even with regard to instruments, which are not at all liable for duty under the Stamp Act, it may be upon grounds of public interest or public policy, a body like the Municipal Corporation, could still claim a power, independently, to tax that property, ignoring such public interest or ground of public policy. We have no reason to think that that was ever the intendment of the Legislature. Certain arguments were also addressed upon the meaning of the word 'surcharge', and we have been at some pains to scrutinise the standard Law Lexicons and Dictionaries. But, we find that what is probably the most happy and appropriate elucidation of this expression is by Ramachandra Iyer, J., (as he then was), in Rajagopalachariar v. State of Madras I.L.R. in the following words. The learned Judge said:
The word ' surcharge ' implies an excess or additional burden, or amount of money charges.
7. In the one enactment, of a parallel kind, to which our attention has been drawn, namely, the Madras Local Revenue (Surcharge) Act (XXIX of 1954), we find the word employed in the very same sense, and actually, under this provision, surcharge is to be a proportion of the charge or land revenue, at a specified rate. Under Explanation (1) to Section 3, land revenue remitted " shall not be deemed to be land revenue payable for the purpose of this section ". That is another instance of the principle that, where the tax or charge itself cannot be levied on the ground of a statutory exemption, the question of imposing a further surcharge cannot legitimately arise. Our attention has also been drawn to an early judgment of this Court in C.S. Nos. 449 of 1917 and 196 of 1920, but we find nothing in that judgment contrary to the view that we have expressed, and, indeed, by implication, it strengthens the inference that we have drawn.
8. We are, therefore, clearly of the opinion that the taxing power in this case cannot be exercised by the Madras City Municipal Corporation, for the simple reason that this power is to impose an additional burden or tax or surcharge, whatever it might be termed, further to the duty levied under the Stamp Act, and this is a case in which the instrument itself is beyond the ambit of that Act, by the force of a statutory provision. So long as that exemption is enforced, the instrument cannot either be taxed to duty under the Indian Stamp Act, or made the subject of surcharge thereon by the Madras City Municipal Corporation Act. The Reference is answered accordingly. No order as to costs.