Agreement to collect octroi is an “lease instrument” to collect tax under Section 2(n)(ii) and liable to stamp duty under Article 36(i) of Sch.I of the Maharashtra Stamp Act.

On 27.4.2006, the petitioner executed an agreement on stamp paper of Rs.500/- with Sangli Municipal Corporation (Corporation) for collection of octroi as per BPMC Act, 1949, for 2006 to 2007 for Rs.43.06 crores.

On 13.3.2007, the show cause notice was given to the petitioner for recovery of Rs.1,29,19,520/- as differential stamp duty and penalty of Rs.31,00,682/-.

The recovery notice issued by the respondents was set-aside in W.P.No.5209 of 2011 by the order dated 21.9.2011 and remanded the matter to reconsider payment of deficit stamp duty.

On 15.3.2012, an order was passed by the respondents.  In appeal, the appellate authority held that the agreement is “lease” as per Section 2(n)(iii) & Article 36(i) of the Maharashtra Stamp Act and rate of stamp duty payable under Article 25 dealing with conveyance.

The agreement cannot be treated as “lease” and as an “instrument by which tolls of any description are let” as defined in Section 2(n)(ii) of the Act.  Moreover, since it refers to “toll”, the collection of octroi is not covered by section 2(n)(ii).

HELD  that “Tolls of any description” occurring in Section 2(n)(ii) of the Stamp Act.  “Toll” is a Greek word and means “tax”.  Octroi is a tax on entry of goods within municipal limits.   Therefore, “tolls of any description” is very wide to include tax of any description and also octroi.  However, the matter was remanded to the authority for computation as per the discussion in para 24 of the judgment.

Judgment dated 18.10.2023 in W.P.No.6052 of 2013 of M/s. Sai Trading Company Vs. The District Controller and Collector of Stamps, Sangli.