'State Cannot Retain Stamp Duty Paid Under Wrong Head Due To Delay': Bombay High Court Orders Refund With Interest

The Bombay High Court has held that the State cannot retain stamp duty paid under a wrong head merely on the ground that the refund application was filed beyond the prescribed limitation period. The Court observed that procedural timelines cannot defeat a substantive right, particularly where the State would otherwise unjustly enrich itself.

Justice Milind N. Jadhav was hearing a writ petition challenging orders of the Collector of Stamps and the Chief Controller of Revenue Authority rejecting the petitioner's refund application solely on the ground that it was filed beyond six months under Section 48(3) of the Maharashtra Stamp Act. The petitioner had mistakenly paid stamp duty under an incorrect head while purchasing e-stamps and was unable to execute the intended transaction. The Counsel for the Petitioner contended that the delay of 2 months and 8 days cannot be held against the Petitioner, and the State cannot be allowed to enrich itself unjustly on the ground that there has been a delay and forfeit the stamp duty amount which has been wrongly paid by the Petitioner.

The Court noted that there was no dispute regarding the factual position that stamp duty was paid under a wrong head and that the document could not be executed on that basis. It further observed that both authorities had rejected the claim only on the ground of delay of about two months and had not examined the merits of the claim.

Examining Sections 47 and 48 of the Act, the Court held that the case fell within the category of stamps rendered unfit due to error or mistake. It observed that while Section 48 prescribes a limitation period, it does not expressly bar consideration of claims made beyond that period, nor does it extinguish the substantive right to refund.

The Court further held that even if the limitation bars the remedy, it does not extinguish the underlying right, particularly where the payment was made due to an inadvertent error and no benefit was derived by the payer. It emphasised that the State cannot retain such an amount and thereby unjustly enrich itself.

Relying on precedent, the Court reiterated that the State, when dealing with citizens, ought not to rely on technicalities where the claim is otherwise just. It observed that a citizen cannot be penalised for an inadvertent mistake resulting in payment under a wrong head.

“… the Government cannot unjustly enrich itself by forfeiting the stamp duty amount deposited by Petitioner under a wrong head. I am of the clear opinion that a litigant cannot be penalized for an inadvertent mistake and error whereby he is deprived of his hard-earned money to the Government on the basis of such incorrect and wrong step taken by him,” the Court observed.

The Court also noted that the delay was explained by the petitioner on account of health issues, which had not been considered by the authorities. It held that such factors ought to have been taken into account while deciding the refund application.

Accordingly, the High Court quashed the impugned orders, allowed the refund application, and directed the authorities to refund the stamp duty amount of ₹3,00,100/- along with interest at 4% per annum within four weeks.

Case Title: Manjeet Singh vs. Chief Controller Revenue Authority & Ors. [Writ Petition No. 13113 of 2022]

Citation: 2026 LiveLaw (Bom) 234

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