1. These appeals by the State are filed against a common judgment of Palaniswamy, J., who struck down the Indian Stamp (Madras Amendment) Act. 1967, as unconstitutional. He did so on the view that substitution of "consideration" by "market value" in the Indian Stamp Act has converted stamp duty into a tax on property, and that it also violated Arts. 14 and 19(1)(f) of the Constitution. In our opinion, this view cannot be sustained.
2. We agree with him that stamp duty is a duty on an instrument as defined in the Stamp Act, and that this concept as to the character of the duty is in accordance with the British and Indian Legislative practice, and the scope of Entry 44 in List III of the Seventh Schedule to the Constitution, to wit "stamp duty other than the duties or fees collected by means of judicial stamps, but not including rates of stamp duty." But we cannot agree with him that the substitution made by the Amending Act has altered the character of the duty. While stamp duty is a charge on the instrument which by itself is the taxable event, the measure of charge may be fixed or ad valorem. Chargeable event which is an instrument, as defied in the Act and described in the first column of the First Schedule to the Act, is not to be confused or mixed up, or identified with the measure of duty, which is indicated in the second column of that Schedule. Sec. 3 of the principal act, which is the charging section makes this clear, that is, what attracts liability to duty is the instrument of the particular description, the charge is on the instruments, not on the consideration or amount indicated in the document which is but a measure of, or the basis for computation of the extent of liability to stamp duty. The section says that every instrument mentioned in the schedule, subject to exemptions or exceptions shall be chargeable with duty of the amount indicated in that schedule as the proper duty therefor. Liability to duty is on the instrument, and its quantum depends on its description as well as the measure indicated in the First Schedule to the Act. To illustrate, an acknowledgment attracts stamp duty as an instrument, and for an instrument of that character or description, the proper stamp duty is fixed as 15 p. Conveyance in entry 23 of the Schedule attracts duty as an instrument of conveyance, but the proper stamp duty is measured on the amount of value of the consideration for such conveyance as set forth therein, which works out on a slab basis. Section 27 of the principal Act requires facts affecting duty to be set forth in the instrument. If the value of the property is understood, Section 64 makes it an offence punishable with fine. But on that account an instrument will not become void, nor is it rendered inadmissible in evidence. The Amending Act, in order to check evasion, requires, by the substitution complained against, market value to be mentioned in the instrument of conveyance, gift, or partition as the basis for measure of the extent of liability, or quantum of stamp duty with which such instrument is chargeable, and provides for determination of the true market value where it is suspected to be understated and right of appeal to Court by an aggrieved party. We are clearly of opinion that the amendment to that effect has not shifted the chargeable event from an instrument to market value, and the duty after the Amending Act is still on the instrument, and not on the market value any more than consideration mentioned therein. We hold that the Amending Act is within the competence of the State Legislature.
3. Again, with respect, we are also unable to agree that market value is such an uncertain and indefinite matter so as to make the Court hold that amendment is arbitrary or unreasonable involving violation of Art. 14 and 19(1)(f) of the Constitution. The expression 'market value' as a basis for direct tax or for quantification of tax is to be found in several of the taxing statutes, as for insance, the Wealth Tax act, the Gift Tax Act, the Estate Duty Act, and so on. Though market value may be a varying factor and arithmetical accuracy may not be possible, still cannot be said that the expression is so uncertain or vague or indefinite as to make it arbitrary or unreasonable for purposes of the said two Articles. Market value has been made the subject of taxation or the means by which tax could be quantified as such in many Acts, and its validity had been upheld by this Court as well as the Supreme Court. We are of the view, therefore, that the madras amendment is not violative of Article 14 or Art. 19(1)(f) of the Constitution.
4. The learned Judge has stated that adoption of a uniform basis of levy of stamp duty for sale, exchange, and gift is without any rational classification. In matters of taxation, the legislature is given a wide choice. It does not have to tax everything in order that a given tax may be supported as to its validity. The quantum of taxation is a matter of policy and will depend on the exigency of the budgetary needs. If the legislature adopted a uniform standard for assessment of the quantum of duty for the three categories of instruments, we do not think that it will be hit by Art. 14 or even Art. 19(1)(f) of the Constitution on that account.
5. Before we leave this matter, we would like to make this observation. Palaniswami, J., in the course of his judgment evidently apprehended that the Amending Act might be used as a means of oppression by the officers entrusted with the duty of collecting the charge. But this charge can be levelled in respect of other taxing statutes as well where the basis of tax or quantification of tax is the market value. Even so, we are inclined to think that the object of the Amending Act being to avoid large scale evasion of stamp duty, it is not meant to be applied in a matter-of-fact fashion and in a haphazard way. Market value itself, as we already mentioned, is a changing factor and will depend or various circumstances and matters relevant to the consideration. No exactitude is, in the nature of things possible. In working the Act, great caution should be taken in order that it may not work as an engine of oppression. Having regard to the object of the Act, we are inclined to think that normally the consideration stated as the market value in a given instrument brought for registration should be taken to be correct unless circumstances exist which suggest fraudulent evasion. Even in such a case, we trust that disputes will not be raised for petty sums. Unless the difference is considerable or sizeable and it appears patent that the amount mentioned in the document is a gross undervalue, no disputation as to value is expected to be started.
6. We allow the appeals, but, in the circumstances, make no order as to costs.
7. Appeal allowed.