Stamp-duty penalties must be proportionate; mere delay absent fraud or deceit does not justify punitive assessment.

The petitioner allotted 188,450 shares on 30 March 2007 and 197,000 shares on 5 March 2008, each at an issue price of ₹100 per share

In June 2016, it applied under Section 31 of the Indian Stamp Act, 1899, for determination of the stamp duty payable

On 10 January 2017, the stamping authority directed payment of stamp duty totalling ₹38,545 and imposed penalties of ₹1,00,000 for each allotment.

The appellate authority upheld the penalties, and the petitioner challenged that decision, submitting that there had been no mala fide evasion and that it would accept a penalty of up to twice the stamp duty.

Whether the penalty imposed for delayed payment of stamp duty was a reasonable and judicious exercise of discretion under Section 40(1)(b) of the Indian Stamp Act, 1899

Whether, in the circumstances, the penalty should be reduced to twice the amount of the requisite stamp duty

Section 40(1)(b) of the Indian Stamp Act, 1899 permits the Collector to impose a penalty of up to ten times the proper duty, but that discretion must be exercised judiciously and reasonably, without arbitrariness or oppression

A penalty is intended to deter, not to punish retributively, and its amount should be proportionate to the nature and gravity of the default; fraud, deceit, or intentional deprivation of State revenue may be relevant aggravating circumstances

The Court relied on Trustees of H.C. Dhanda Trust v. State of Madhya Pradesh & Ors., Civil Appeal Nos. 3195–3196 of 2020, for the deterrent purpose of a penalty

Although the petitioner’s applications were belated, it had itself approached the authority under Section 31 to determine the duty payable.

No notice had been issued by the stamping authority before those applications, and the record did not disclose an intention to deceive or evade payment

In the absence of mala fides or other aggravating circumstances, the Court found that the penalty should reflect a proportionate exercise of statutory discretion, consistent with the petitioner’s limited request for a penalty of up to twice the duty

The petition was disposed of on those terms, and the pending applications were also disposed of