Impounding original instrument is a mandatory condition precedent for initiating deficit stamp duty proceedings.

The petitioners purchased three parcels of land in Village Hathijan, Ahmedabad, via registered sale deeds in 2013 and 2014.

Six years later, the respondent authorities issued notices under Section 39(1)(b) of the Gujarat Stamp Act, 1958, alleging deficit stamp duty based on photocopies of the deeds.

On 12.10.2020, the Collector ordered the recovery of ₹62,49,800/-, including penalty.

The petitioners’ subsequent appeal was rejected by the Chief Controlling Authority for failure to deposit the mandatory 25% pre-deposit.

The petitioners challenged these orders, contending that the proceedings were a nullity because the original documents were never impounded.

1. Whether the respondent authority can initiate proceedings for deficit stamp duty under Section 39(1)(b) of the Gujarat Stamp Act, 1958, by impounding a photocopy instead of the original document.

2. Whether the lack of a physical impounding of the original instrument renders the subsequent recovery orders and appellate rejections illegal.

Section 33 of the Gujarat Stamp Act, 1958, which mandates the impounding of instruments that appear to be insufficiently stamped.

Section 37(2) explicitly requires that the person impounding an instrument shall send it in "original" to the Collector.

Sakar Glazed Tiles Pvt. Ltd. v. State of Gujarat (SCA No. 8632 of 2008), which established that securing a photocopy does not constitute "impounding" and that physical custody of the original document is a condition precedent for exercising powers under Sections 33 and 39.

Shailesh Textiles Industries v. CCRA regarding the lack of a specific limitation period for Section 33/68 proceedings.

The court observed that the statutory scheme of Sections 33, 37, and 39 of the Act necessitates the physical presence and impounding of the original instrument to vest jurisdiction in the authorities.

In the present case, the State admitted that only photocopies were used for the assessment.

The court reasoned that since the mandatory procedure of taking the original document into custody—as required by Section 37(2)—was bypassed, the initiation of proceedings under Section 39(1)(b) was without authority of law and jurisdiction.

Because the foundational order of 12.10.2020 was a nullity, the subsequent appellate orders regarding pre-deposit and dismissal also could not be sustained.

It held that a valid exercise of power to recover deficit stamp duty under the Act is contingent upon the lawful impounding of the original instrument.

The court reserved liberty for the State to initiate fresh proceedings in accordance with the law, noting that such powers are not strictly circumscribed by a period of limitation.