NANAYAKKARA v. UNIVERSITY OF PERADENIYA

006-SLLR-SLLR-1991-V-1-NANAYAKKARA-v.-UNIVERSITY-OF-PERADENIYA.pdf


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Nanayakkara v. University of Peradeniya (S.N. Silva, J)
9;
NANAYAKKARA
V
UNIVERSITY OF PERADENIYA
COURT OF APPEALS.N. SILVA, J. SISMAIL J.
C.A. No. 149/90; D.C. KANDY 16792/MRJANUARY 21, 1991
Stamp duty ■ Stamp duty on affidavit – Stamp Duty Act No. 43 of 1982, S.5(1)
Held:
Any instrument or document imposed with stamp duty under section 2 of the Stamp Duty Ac! No43 of 1982 will nevertheless be exempt from the payment of stamp duty if it comes wimm the ambitof section 5. Section 5 exempts two categories of affidavits from the payment of stamp duty. Theyare:
Affidavits made on the request of a public officer.
Affidavits made in compliance with any requirement imposed by any written law.
An affidavit filed with an application for leave to appeal is one filed in compliance with a requi'emen;imposed by written law – s. 756(2) Civil Procedure Code. Hence it is exempt from stamp duty.
A necessary corollary of applying the rule of strict construction to determine liability under a taxingstatute is that any provision granting an exemption from such liability be given its full effect.
Cases referred to:
Cape Brandy Syndicate v. I.R.C. 1921 KB 64, 71
Volanka Ltd. v. Attorney-General (1984) 1 Sri 210, 211
Ameen and others v. Mafship (Ceylon Ltd. (1982) 2 Sri LR 406, 407
3.Bempy Appuhamy and others v. Peter Ranasinghe and others 79 (2) NLR 142
APPLICATION for exemption of stamp duty on affidavit filed with application for leave to 3pf
Kithsiri Gunaratne with Mss. SM Senaratne for petitioner.
Asoka de Silva, D.S.G. with K. Siripavan, S.S.C. as amicus.
Cur. adv. vut.
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15th March, 1991
S.N. Silva J.
The Plaintiff-Appellant, filed this application for leave to appeal, againstari order made by the learned District Judge rejecting the objectionsraised on his behalf, in respect of certain issues suggested by Counselfor the Defendant. When it was supported for notice on 5.11.1990,learned Counsel for the Plaintiff-Appellant conceded that the applicationwas time barred and did not wish to pursue the application. However,learned Counsel submitted that the Registrar had charged a stamp dutyon the affidavit filed with the application contrary to the provisions ofthe Stamp Duty Act No. 43 of 1982. It was submitted that the stampduty was paid under protest and Counsel moved for a ruling on theobjection tendered to the Registrar by letter dated 22.10.1991 of theregistered Attorney. The Registrar reported that the affidavit was adocument chargable with stamp duty and His Lordship the Presidentdirected that this question be decided by the same bench that heardthe application for leave to appeal.
Since the question involves a matter of public revenue we decided torequest the assistance of the Hon'ble Attorney General at the hearing.Accordingly learned Deputy Solicitor General appeared at the hearingon 21.01.1991 and also tendered written submissions.
The stamp duty charged on the document filed in this case is set outin the endorsement dated 22.10.1990 made by the Registrar. Accordingto that endorsement a total duty of Rs. 2,400/- was charged includinga sum of Rs. 600/- for the affidavit. Learned Counsel for the Plaintiff-Appellant submitted that although an affidavit is a document filed in aiegal proceeding as defined in the Stamp Duty Act it is specificallyexempted from the payment of stamp duty by section 5(1) of the ActLearned Deputy Solicitor General submitted ihatthe exemption containedin section 5{1) does not apply to affidavits filed in iegal proceedings.That, exemptions with regard to documents filed in legal proceedingsare specifically contained in section 5(14).
The Stamp Duty Act No: 43 of 1982 came into operation on 1.1.1583.The Stamp Ordinance No. 22 of 1909 was applicable for the periodanterior to the said date of operation. Section 2 of the Act imposes acharge of stamp duty on four classes or categories of instruments anddocuments. In terms of this section read with section 69, the Ministeris empowered to prescribe the applicable rate or rates of duty by
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Regulation. Under the Stamp Ordinance the scheme was somewhatdifferent. The Ordinance itself contained an elaborate schedule whichnot only grouped instruments and documents into certain classes butalso specified each type of instrument and document and the applicablerate of duty.
Section 5 of the Act specifies the particular instruments and documentsthat are exempt from the payment of stamp duty. It is significant thatwhilst the imposition of the charge is on classes and categories, exemptionsare of specific instruments and documents. Furthermore, the exemptionsare not from the charge but from the payment of stamp duty unlike underthe Ordinance (proviso to section 2) where the exemptions were fromthe charge itself. The resulting position is that any instrument ordocumentimposed with stamp duty under section 2 will nevertheless be exemptfrom the payment of stamp duty if it comes within the ambit of section5.
The relevant provisions, imposing a charge of stamp duty on documentspresented or filed in civil and admiralty proceedings contained in section2 of the Stamp Duty Act are as follows:
"2. There shall be charged on –
. . .
Every document presented or filed, in civil proceedings institutedin the Supreme Court or the Court of Appeal or a District Court orin admiralty proceedings instituted in the High Court:
. . .
■ ■ •
a stamp duty at the prescribed rate. Different rates may be prescribedin respect of different classes or categories of instruments."
The word 'document' is defined in section 71 as follows:
"document" in relation to legal proceedings in any court includesan appointment of attorney, plaint, answer, replication or otherpleading, petition, application, affidavit, appointment, summons,judgement, decree, order of any description, award, writ, warrant,inventory, account, mandate, bond or recognizance;".
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The rates of duty are prescribed in the Regulations made by the Ministerand published in Government Gazette No. 224/3 dated 20.12.1982. Therelevant portion of this Regulation is as follows:
"Document filed in civ'n proceedings instituted in the Supreme Courtor in the Court of Appeal or in the High Court when exercisingadmiralty jurisdiction ■
For every Rs. 1,000 or part thereof the value of… the proceedings.
Subject to a maximum duty of Rs. 1,5000 on each documentchargeable with duty".
It is seen that the word 'document' includes an affidavit. Hence, anyaffidavit presented orfiled in civil or admiralty proceedings inthe SupremeCourt, Court of Appeal, High Court or District Court will ordinarily becharged with the prescribed rate of duty.
Section 5(1) which exempts certain affidavits and affirmations, from thepayment of stamp duty, is as follows:
"5. The following instruments and documents shall be exempt from thepayment of stamp du?y:-
affidavit or affirmation made on the request of any public officeror in compliance with any requirement imposed by any writtenlaw".
Section 5(14) exempts seven categories of "documents filed in legalproceed ings" (set out in paragraphs (a) to (g), from the payment of stampduty. The affidavit filed by the petitioner with his application for leaveto appeal does not come within any of these categories. The submissionof learned Deputy Solicitor General is that, a document filed in a legalproceeding and charged with stamp duty under section 2, will be exemptfrom the payment of duty only if it comes within any of the categoriesspecified in section 5(14). That, there is a distinction between affidavitsreferred to in section 5(1} and documents filed in legal proceedingsreferred to in sections 2(b) and 5(14).
This submission places an undue emphasis on the arrangement ofparagraphs in section 5. The section is intended to exempt certain
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instalments and documents from the payment of stamp duty. Theseinstruments and documents are grouped into 14 paragraphs. However,this arrangement into groups does not have the effect of casting theinstruments and documents exempt from stamp duty into watertightcompartments. Paragraph (14) is not intended to exclusively deal withdocuments filed in legal proceedings. It is plainly not so. Paragraph (4)exempts a "bail bond in criminal proceedings" from stamp duty. Indeed,a bail bond in a "criminal proceedings" is nothing but a specific descriptionof a document filed in a "legal proceeding". Therefore the arrangementof instruments and documents into groups is certainly lacking in precision.A simple scrutiny also reveals that several exemptions contained insection 5are redundant. Forinstance,section5(14) (a) exempts documentsfiled in the Magistrate’s Court, Primary Court and for the purposes ofcriminal proceedings in any other court, from the payment of stamp duty.The matter of granting an exemption for these documents does not arisebecause they are not in the first instance charged with stamp duty undersection 2. For the same reason the provision of section 5(4) referredto above regarding a bail bond in criminal proceedings is also redundant.Thus, the manner in which the documents are grouped in section 5 isnot a useful guide to the interpretation of its provisions. The mere factthat section 5(14) opens with the words "… documents filed in legalproceedings" does not lead to an inference that a document exemptfrom the payment of stamp duty under any other paragraph will ceaseto have that exemption if it is filed in legal proceedings.
The Stamp Duty Act imposes a pecuniary burden on the people. Thereforeit is subject to the rule of strict construction. (Maxwell on Interpretationof Statutes, 12th Edition page 256). In the case of Cape Brandy Syndicatevs. 1.R.C-m Rowlatt J stated as follows:
"In a taxing Act one has to look merely at what is clearly said. Thereis no room for any intendment. There is no equity about a tax. Thereis no presumption as to a tax. Nothing is to be read in, nothing isto be implied. One can only look fairly at the language used”.
This dicta has been followed in other cases and is also cited by Maxwell.
In the case of Volanka Ltd. vs. Attorney General(2) this Court applieda restrictive interpretation to the words "every document presented or
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filed in civil proceedings . . appearing in section 2(b) of the StampDuty Act. It was held by H.A.G. de Silva J that these words do not applyto “ documents made by the Court itself in performance of its functionsand duties in a particular civil proceeding" (at page 214). In the caseof Ameen and others vs. Malship (Ceylon) Ltd.(3) the Supreme Courtapplied the rule of strict construction in construing the provisions ofsubhead A of Part II of the Schedule of the Stamp Ordinance. It washeld that applications for leave to appeal and notices of appeal are notcharged with stamp duty under the Ordinance. Soza J. observed asfollows:
"The levy of stamp duty is governed by the letter of the law andnot by its spirit. In construing a taxing statute one cannot bend itsplain language to suit that which the Legislature may havecontemplated or intended. To do so would be to cross the Rubiconwhich divides the province of the Judge from that of the Legislature"(at pages 486 and 487).
A necessary corollary of applying the rule of strict construction todetermine liability under a taxing statute, is that any provision grantingan exemption from such liability be given its full effect. Exemptions areprovided for by the Legislature for the purpose of giving a measure ofrelief to a person who would otherwise be liable to tax under the generalrule. Therefore no restriction should be placed on such provisions byway of interpretation so as to defeat the purpose of granting suchexemption. In the case of Bempy Appuhamy and others vs. PeterRanasinghe and others,(4) the Supreme Court applied such a standardof interpretation to section 75(1) of the Partition Act No. 16 of 1981.The section provided as follows:
"All pleadings and processes and all documents filed or producedin a partition action under this Act shall be exempt from stamp duty".
it was held by the Supreme Court that the exemption extends to papersfiled in an application by way of revision filed against an interlocutorydecree in a Partition Action Samarakoon C.J. said "if one looks at theintention of the Legislature it is clear that it intended all matters connectedwith partition proceedings to be exempt from stamp duty" (at page 144).
Section 5(1) of the Stamp Duty Act exempts two categories of affidavitsfrom the payment of stamp duty. They are:
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(i) affidavits made on the request of a public officer,
(ii) affidavits made in compliance with any requirement imposed by anywritten law.
It is seen that the criteria upon which the exemption is granted is thepurpose of making the particular affidavit. In category (i) the purposeof making the affidavit is to meet the request of a public officer. In category(ii) the purpose is to meet the requirement imposed by written law. Sincethe exemption is granted on the basis of these specified purposes, theexemption should apply not only to the stage at which the affidavit ismade but also to the stage when it is used for the stated purposes. Thusan affidavit made at the request of a public officer will be exempt fromduty at the stage it is presented to that public officer. Similarly an affidavitmade in compliance with any requirement imposed by any written lawwill be exempt from duty at the stage it is presented or filed in compliancewith such written law.
The submission of learned Deputy Solicitor General is that the exemptionin section 5(1) will not apply to affidavits filed in legal proceedings. Thissubmission would be tenable only if the words “other than in legalproceedings" are introduced at the end of section 5(1). Such an exerciseis clearly not warranted for the reasons stated above. On the other hand,it has to be borne in mind that the requirement to make affidavits isimposed by written law mainly in relation to legal proceedings. It is seldomif any that there will be a similar requirement in relation to matters thatdo not constitute a legal proceeding. Certainly the legislature did notintend the exemption to apply only to these rare instances. Thus theinterpretation contended for will negative the very purpose for which theexemption has been introduced. Further, it appears that the draftsmanhas included this exemption in section 5(1) in order to include all theexemptions in relation to affidavits in one paragraph. The arrangementwill not in any way lend itself to the construction that affidavits exemptedby section 5(1) will nevertheless be deprived of that exemption whenfiled in legal proceedings. For these reasons the submission c* learnedDeputy Solicitor General is not acceptable.
Section 756(2) provides that every application for leave to appeal shallbe by petition and “be supported by an affidavit. There are similarprovisions in the Civil Procedure Code and in the Supreme Court Pules,where a party to a legal proceeding is required to file an affidavit. The
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petitioner has made the affidavit in question, in compliance with therequirement imposed on him by section 756 (2) of the Civil ProcedureCode. Therefore I hold that the provisions of section 5(1) of the StampDuty Act apply in relation to this affidavit and it is exempt from stampduty at the time it was made and at the time it was filed in the proceedingsof this case. The sum of Rs. 600/- referred to above has therefore beenillegally recovered and the Petitioner is entitled to have this sum refundedto him.
ISMAIL, J. – l agree.
Stamp duty held not leviable