JUDGMENT N.K. Mehrotra, J.
1. This is writ petition under Article 226 of Constitution of India for a writ of certiorari declaring Indian Stamp (U. P. Second Amendment) Act, 1997 (U. P. Act No. 23 of 1998 passed by the State Legislature as ultra vires and for a mandamus directing the respondents not to realize the stamp duty on the basis of the amendment made in the Indian Stamp Act and further to renew the licence of the petitioners forthwith, without compelling them to deposit stamp duty on renewal of their licence.
2. The State Legislature has amended Indian Stamp Act, 1899 in its application to Uttar Pradesh by Indian Stamp Act (Uttar Pradesh 2nd Amendment) Act, 1997 (Act No. 23 of 1998) by inserting a new Article 38A in Schedule 1-B to the Indian Stamp Act, 1899. Article 38A provides for imposition of Stamp Duty on the document evidencing the licence or renewal of licence relating to arms or ammunitions under the provisions of the Arms Act. 1959 (Act No. 54 of 1959) which are as follows :
(A) Licence relating to following arms :
(i) Revolvers or pistols Two thousand rupees
(ii) Rifles One thousand five hundred rupees.
(iii) D.B.B.L. Weapons One thousand rupees.
(iv) S.B.B.L. Weapons One thousand rupees.
(v) M.L. Weapons Two hundred rupees.
(B) Licence relating to arms or ammunitions on following Forms as set out in Schedule III to the Arms Rules. 1962 :
(i) Form XI Ten thousand rupees.
(ii) Form XII Ten thousand rupees.
(iii) FormXIII Five thousand rupees.
(iv) Form XIV Three thousand rupees.
(C) Renewal of licence relating to following arms :
(i) Revolvers or pistols One thousand rupees
(ii) Rifles Ten thousand rupees.
(iii) D.B.B.L. Weapons Five hundred rupees.
(iv) S.B.B.L. Weapons Five hundred rupees.
(v) M.L. Weapons One hundred rupees.
(D) Renewal of licence relating to arms or ammunitions on following Forms as set out in Schedule III to the Arms Rules, 1962 :
(i) Form XI Three thousand rupees.
(ii) Form XII Three thousand rupees.
(tit) Form XIII Two thousand rupees.
(iv) Form XIV One thousand rupees.
3. It is the aforesaid amendment, the vires of which is challenged in this writ petition.
4. The case of the petitioners is that 7th Schedule of the Constitution of India contains the lists indicating the jurisdiction of the Parliament and the State Legislature in the field of legislation. List-1 is the 'Union List' over which the Parliament has exclusive legislative competence. Entry-5 of the aforesaid Union List covers "Arms, Fire-arms, ammunitions and explosives." It is contended that the Parliament has enacted the Arms Act, 1959 which is applicable to entire country and no State Legislature has jurisdiction to enact any law pertaining to the aforesaid Entry. The Arms Act, 1959 confers privilege upon such person to have in their possession or carry fire-arms or ammunitions if, such person holds a licence issued in accordance with the provisions of the Act and rules made thereunder. Further, the Arms Act, 1959 provides for licence for manufacture, sale, repairs, etc. of arms and ammunitions and the conditions have been laid down under Section 5 of the Arms Act. Section 13 of the Arms Act lays down condition for grant of licence and Section 16 provides for fees, etc. for the licence. Sub-section (j) of Section 2 of the Arms Act defines 'licensing authority' and it means an officer or authority empowered to grant or renew licences under rules made under the Anns Act. Further, it is evident from the provisions of the Arms Act and rules framed thereunder that the Parliament has clearly provided fees for which the licence is to be granted to individual as well as to dealers and Section 13 of the Act states the conditions and fees to be imposed for grant of licence or for its renewals meaning thereby the State Legislature did not have any authority nor legislative competence to make any amendment in the Arms Act directly or indirectly or to impose any condition for grant of licence or its renewal. It is averred that by impugened amendment in the Stamp Act, the Legislature by inserting Article 38A to Schedule 1B to Stamp Act has laid down conditions for grant of licence of arms and their renewal, meaning thereby no licence shall be granted in the State of Uttar Pradesh or renewed until and unless the licence granted or to be renewed have to pay the stamp duty as imposed by the impugned amendment Act. It is further contended that such of the condition is indirectly encroaching upon the domain of the Union as the State Legislature has imposed a condition precedent for grant of licence, which otherwise, the State Legislature is incompetent to do so. The Government of India in exercise of its power under Section 16 of the Act and Rule 4 of the Arms Rules framed thereunder have prescribed fee for grant of licence for Arms to individual and to dealers also. According to the petitioners, the other State Governments have not imposed any stamp duty for registration of licence or their renewal, granted under the Arms Act, 1959. It is further contended that the State Legislature is competent to amend the Stamp Act but the State Legislature cannot encroach upon the domain of the legislative competence of the Parliament directly or indirectly by passing impugned amendment Act. The State Legislature has encroached upon the domain of the Parliament by prescribing the fees for grant of licence or renewal thereof. The petitioners are arms dealers in district Bijnor. Their licence expired on 31.12.2000 and the District Magistrate has refused to renew the licence without depositing the stamp duty as required under impugned amended Stamp Act. It is alleged that the impugned amendment made in the Indian Stamp Act is ultra vires of the Constitution.
5. A counter-affidavit has been filed on behalf of the State Government. It is averred by the State-respondent that the stamp duty imposed on the renewal of the arms licence has been exempted by another order dated 10.5.1999 issued under Section 9 of the Stamp Act. It is contended that the State Legislature is competent to amend the Stamp Act and the President of India has given assent to the amendment in the Stamp Act on 15.7.1998. The State Government has amended the Stamp Act only and no amendment has been made in the Arms Act. The State Legislature has power to amend the Stamp Act vide Entry No. 63 of State List (List II) of 7th Schedule of the Constitution of India.
6. We have heard Sri K. M. Garg, Advocate for the petitioners and Sri Vinod Swaroop, Additional Advocate General assisted by Srt Sanjay Goswami, standing counsel for the State of U. P. and have perused the record.
7. The only question involved in this writ petition is about the vires of the Indian Stamp (Uttar Pradesh Second Amendment) Act, 1997 by which a new Article 38A has been inserted in Schedule 1B to the Indian Stamp Act...............
8. Article 246 of Constitution of India deals with the distribution of legislative powers as between the Union and the State Legislature, with reference to the different Lists in the 7th Schedule. The Union Parliament has full and exclusive power to legislate with respect to matters in List I and has also power to legislate with respect to matter in List III. The State Legislature, on the other hand, has exclusive power to legislate with respect to matters in List II, minus matters falling in Lists I and III and has concurrent power with respect to matters included in List III. Article 246 is as follows :
"Article 246. (1) Notwithstanding anything in Clauses (2) and (3) Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the 'Union List).
(2) Notwithstanding anything in Clause (3), Parliament, and, subject to Clause (1), the Legislature of any State ..............
also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the "Concurrent List").
(3) Subject to Clauses (1) and (2), the Legislature of any State ........... has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in the Constitution, referred to as the "State List").
(4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included in the State notwithstanding that such matter is a matter emeumerated in the State List."
9. Entry 91 of List I (Union List), Entry 63 of List II (State List), Entry 44 of List III (Concurrent List) are relevant which are as follows :
Entry 91 of the Union List provides for rates of stamp duty on certain instrument. Entry 91 is being reproduced below :
"Entry 91.--Rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts."
Entry 63 of the State List II provides for rate of stamp duty which the State Government can impose. Entry 63 of the State List II is being reproduced below :
"Entry 63.--Rates of stamp duty in respect of documents other than those specified in the provisions of List I with regard to rates of stamp duty."
Further Entry 44 of List III (Concurrent List) provides stamp duty. It is being reproduced as below :
"Entry 44.--Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty."
10. The aforesaid three entries demonstrate that the stamp duties are levied on the documents of various kinds when they are executed. Stamp duties are levied either by means of judicial or non-judicial stamps. The judicial stamp duties are otherwise known as Court-fees. The power to levy non-judicial stamp duty is concurrent under Entry 44 of List III. The power to prescribe rates of non-judicial stamp duty is, however, divided between the Union and the State by Entry 91 of List I and Entry 63 of List II.
11. Before proceeding further, we want to make it clear that under the Arms Act, there is a provision of licence fee while the stamp duty is not a fee, it is a tax on certain transaction. This tax is levied in the shape of stamps on instruments recording transaction. The occasion for levy of stamp duty is the document, which is executed as distinguished from the transaction, which is embodied in the document.
12. Now we come to the provisions of the Stamp Act. We quote Sections 3 and 17, which are charging sections under the Stamp Act.
"Sections 3. Instruments chargeable with duty.--Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in that Schedule as the proper duty therefor, respectively, that is to say-
(a) every instrument mentioned in that Schedule which, not having been previously executed by any person, is executed In India on or after the first day of July, 1899 ;
(b) every bill of exchange payable otherwise than on demand or promissory note drawn or made out of India on or after that day and accepted or paid, or presented for acceptance or payment, or endorsed, transferred or otherwise negotiated, in India ; and
(c) every instrument (other than a bill of exchange or promissory note) mentioned In that Schedule which, not having been previously executed by any person, is executed out of India on or after that day, relates to any property situate or to any matter or thing done or to be done, in India and is received in India."
"Section 17 : Instruments executed in India.--A 11 instruments chargeable with duty and executed by any person in India shall be stamped before or at the time of execution."
'Instrument' is defined in Section 2(14) of the Stamp Act which is as follows :
"Section 2(14) "Instrument".-- "Instrument" Includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished, or recorded,"
13. The Arms Act has nothing to do with the imposition of the stamp duty. The Arms Act and the rules made thereunder provide for realization of licence-fee.
Section 16 of the Arms Act is as follows :
"Section 16 : Fees etc., for licence.--The fees on payment of which, the conditions subject to which and the forms in which a licence shall be granted or renewed shall be such as may be prescribed :
Provided that different fees, different conditions and different forms may be prescribed for different types of licence :
Provided further that a licence may contain in addition to prescribed conditions such other conditions may be considered necessary by the licensing authority in any particular case."
Rule 4 of the Arms Rules, 1962 defines the licensing authority and form of licence. Rule 4 is being reproduced below :
"Rule 4 : Licensing Authority and forms of licences.--Licenses, under Chapter II of the Act may be granted or renewed for such forms and to be valid for such purposes, by such authorities in such form and to be valid for such period and in such areas as are specified in Schedule II, subject to such conditions as are specified in that Schedule and in the licence :
Provided that the licences granted or renewed by a licensing authority may be signed by such officer subordinate to that authority as may be specially empowered in this behalf by the State Government."
14. The main argument of the learned counsel for the petitioners is that after imposition of the stamp duty on the licence of the arms and ammunitions, the deposit of stamp duty has become a condition for issue of the licence and it encroaches upon the field of legislation given in the Union List.
15. In support of his contention, the learned counsel for the petitioners has referred a case Harakchand Ratanchand Banthia and Ors. etc. v. Union of India and Ors., AIR 1970 SC 1453, in which it was held that "the entries in the three lists are only legislative heads or fields of legislation ; they demarcate the area over which the appropriate Legislatures can operate. It is well established that the widest amplitude should be given to the language of the entries, the reason being that the allocation of subjects is not by way of scientific or logical definition but is a mere enumeration of broad and comprehensive categories. But some of the entries in the different lists or in same list may overlap or may appear to be in direct conflict with each other. It is then the duty of court to reconcile the entries and bring about a harmonious construction ............. It is well recognised cannon of construction that a general power should not be so interpreted as to nullify a particular power conferred by the same instrument."
16. The learned counsel for the petitioners has further referred a case Nagpur District Central Co-operative Bank Ltd., Nagpur and another v. Divisional Joint Registrar, Cooperative Societies, Nagpur and Anr., AIR 1971 Bom 365 in which it was held by the Bombay High Court that "if, a subject is covered by the entries in List I and fall within the exclusive powers of the Central Legislature then whether the Central Legislature has occupied that field or not the State Legislature cannot legislate on that subject."
17. The learned counsel for the petitioners has further referred a case Chaturbhai M. Patel v. Union of India and Ors., AIR 1960 SC 424. in which it was held that "in every case where the legislative competence of a Legislature in regard to a particular enactment is challenged with reference to the entries in the various lists it is necessary to examine the pith and substance of the Act."
18. The learned counsel for the petitioners has further relied on cases Indu Bhusan Bose v. Rama Sundari Debi and Anr., AIR 1970 SC 228 and Commissioner of Commercial Taxes, Board of Revenue, Madras and Anr. v. Ramkishan Shrikishan Jhaver etc., AIR 1968 SC 59, in which the Supreme Court has defined the scope of Article 246 and the entries in different lists of the Constitution.
19. The learned counsel for the petitioners has also referred to observations of the Constitution Bench in the case of Federation of Hotel and Restaurant v. Union of India and Ors., AIR 1990 SC 1637, in which it was observed that where the tax envisaged by the impugned law is within the legislative competence of the Union Parliament and if a Legislature transgresses its powers, such transgression will be a colourable legislation and wherever legislative powers are distributed between the Union and the States, if, any situation of overlapping arises then, it is the duty of the Courts to ascertain to what degree and to what extent, the authority to deal with matters falling within these classes and in order to prevent such a result the two provisions must be read together.
20. The learned counsel for the petitioners has also referred a case State of Rajasthan v. G. Chawla and Anr., AIR 1959 SC 544, which is relevant for the purpose of the scope of Articles 245 and 246 and the rule of pith and substance and enforcement of the legislative entries.
21. Further, a reference has been made to a case Raja Jagannath Baksh Singh v. State of U. P. and Anr., AIR 1962 SC 1563, to show the scope of Articles 245 and 246 and the enforcement of the legislative entries and to show that the taxing statute can be challenged on the ground that it violates fundamental right. The aforesaid judicial pronouncement cited by the learned counsel for the petitioners do not appear to be relevant to the question whether the State Government is competent to amend Indian Stamp Act by imposing stamp duty on the licence of the arms and ammunition and whether by doing so, the State Government has encroached upon the legislative power of the Parliament.
22. The learned counsel for the respondents has referred a case State of V. P. and Anr. v. Bar Council of U.P., 1970 ALJ 1026, in which Section 3 of the U.P. Taxation Laws Amendment Act, 1969 by which the stamp duty was imposed on the certificate of enrolment of the advocate under the Advocates Act making amendment in Schedule 1B of the Stamp Act was challenged. The learned single Judge of this Court held that the Legislature has got no power to enact the Impugned Act by imposing stamp duty on the certificate of the enrolment of an advocate. According to the learned single Judge, the power to impose stamp duty of any amount on the entry of an advocate in the State roll is vested in Parliament and consequently, the writ of the Bar Council was allowed and the U.P. Stamp (Amendment) Act, 1969 was held ultra vires, the State Legislature. It is against this order of the learned single Judge, an appeal was preferred by the State of U.P. and in appeal, the judgment of the learned single Judge was set aside and it was held by the Division Bench that the power of the Legislature to legislate with respect to certain matters is derived from Article 246 of the Constitution. The topics on which the Legislatures (Parliament or State Legislature) may legislate are enumerated in the three lists of the Seventh Schedule to the Constitution. Each of these three lists contains an entry relating to subject of stamp duty. Entry 91 of List I mentions rate of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts. Entry 63 of List II mentions, "rate of stamp duty In respect of documents other than these specified in the provisions of List I with regard to rates of stamp duty." Entry 44 of List III mentions, "stamp duties other than duties or fees collected by means of judicial stamps, but not Including rates of stamp duty." The Division Bench of this Court took a view that the Amendment Act 1969 is prima facie intra vires the State Legislature for the subject-matter of this particular enactment falls within Entry 63 of List II. This argument was repelled that the State Legislature cannot Impose stamp duty on the certificate of enrolment of an advocate because it Is covered under Entry 78 of List I. The Division Bench of this Court referred a case M.P.V. Sundaramier and Co. v. State of Andhra Pradesh, AIR 1958 SC 468 in which the Supreme Court has observed that :
"Under the scheme of the Entries in the Lists, taxation is regarded as a distinct matter and is separately set out."
So it is not possible to read in Entry 78 of List I the Implied power to impose the stamp duty and to fix the rate of stamp duty with respect to the enrolment of a person entitled to practice in the High Court, The argument of repugnancy was also not accepted by the Division Bench in that case.
23. So far as the repugnancy is concerned, this Court in the aforesaid judgment referred a case of Ch. Tika Ramji u. State of U. P., AIR 1956 SC 676 and State of Orissa v. M. A. Tullock and Co., AIR 1964 SC 1284. and quoted the observation of the Supreme Court in the case of State of Orissa (supra) which is as follows :
"The test of two legislations containing contradictory provisions is not, however, the only criterion of repugnancy, for if a competent Legislature with a superior efficacy expressly or impliedly evinces by Its legislation an intention to cover the whole field, the enactments of the other Legislature whether passed before or after would be overborne on the ground of repugnance. Where such is the position, the inconsistency is demonstrated not by a detailed comparison of provisions of the two statutes but by the mere existence of the two pieces of legislation.
24. In State of U. P. v. Bar Council of U. P. (supra), this Court held that the stamp duty mentioned in different articles in Schedule 1-B is chargeable by virtue of Section 3 of Indian Stamp Act. Against the aforesaid Judgment, an appeal was preferred by the Bar Council in Supreme Court and in Bar Council of Uttar Pradesh v. State of U. P. and Anr., AIR 1973 SC 231, it was held that :
"Although the Advocates Act relates to legal practitioners, in its pith and substance, it is an enactment dealing with qualifications, enrolment, right to practice and discipline of the advocates. The fee of Rs. 250 which an advocate must pay under the provisions of Section 24(f) of the Act is covered by Entry 96 in List 1, which expressly relates to fees in respect of any of the matters in that list, The stamp duty, which is payable on the certificate of enrolment pertains to the domain of taxation and it is hardly possible to regard it as a condition, which can be prescribed for enrolment under the Entries in List I. The imposition of such a duty falls in pith and substance under Entry 44 of List III and the prescribing of rates under Entry 63 of List II.
Thus, the U. P. State Legislature is competent to legislate and impose stamp duty on the certificate of enrolment under Section 22 of Advocate Act to be Issued by the State Bar Council of U. P. Hence, Section 11 (Court), Schedule 1B Article 17A and Schedule 1B Article 30 of Stamp Act as amended from time to time in its application to U. P. are constitutionally valid."
25. Now we have to determine whether by imposing the stamp duty on the licence of arms and ammunitions by the Impugned Act, the State Legislature has provided a condition for issuing a licence under the Arms Act indirectly. The question on which the whole controversy has centered is whether the levy of the stamp duty on the licence of the arms and ammunitions is a purely taxation measure or whether it is part of the condition prescribed for issuing licence under the Arms Act which an applicant for the licence must satisfy before he becomes entitled to hold the licence. If, the requirement of the payment of such a duty is a condition precedent to the conferment on a person of the authority to hold arms and ammunition then, it can be argued that such legislation is within the competence of the Parliament. If however, it is purely a taxation measure then, it would fall within Entry 44 of the concurrent List in which even both the Parliament and the State Legislature would be competent to enact legislation for the levy of the duty ; although it is only under Entry 63 of List II that rates can be prescribed by the State Legislature. In other words, the charging provisions can be enacted by both the Parliament and the State Legislature subject to the provisions of Article 254 of the Constitution. It is well-settled that the scheme of the entries in the various lists is that taxation is not Intended to be comprised in the main subject in which "it might on an extended construction be regarded as included but is treated as a distinct matter for the purpose of legislative competence". The Parliament has not imposed any stamp duty on the licence of the arms and ammunitions under Entry 44 of the Concurrent List. So the State Legislature can occupy that field provided under Entry 44 of the Concurrent List. No doubt, the Arms Act provides certain conditions for issuing a licence but the State has not provided any condition for providing the licence and the licensing authority can issue a licence without imposing a stamp duty. There is no bar in the impugned Act that no licence can be issued without getting the stamp duty. But if, the licence is issued, the Stamp Act will apply and there will be a liability to pay the stamp duty on the licence issued by the licensing authority because under the impugned Act, the licence is chargeable with stamp duty and if, the stamp duty is not paid after getting the licence, or licence is not Issued on the stamp paper then, all the consequences as provided under the Stamp Act will entail under the law. So the stamp duty, which is payable on the licence of arms and ammunitions, pertains to the domain of taxation and it is hardly possible to regard It as a condition which can be prescribed for issuing licence under the Arms Act. The imposing of such a duty falls in pith and substance under Entry 44 of List III and the prescribing of rates under Entry 63 of List II as has been held in M.P.V. Sundaramier and Co. v. State of Andhra Pradesh (supra) that taxation is not intended to be comprised in the main subject in which it might on an extended construction be regarded as included, but is treated as distinct matter for purpose of legislative competence. In S. Ananthakrishnan v. State of Madras, AIR 1952 Mad 395, it was held that the levy of stamp duty on a document which gives a person the privilege falls within the power of taxation. It is difficult to escape the conclusion that the levy of stamp duty by means of the impugned Act in the State of U. P. was not covered by any of the entries in List I and, therefore, it cannot be said that it amounts to amendment in the Arms Act or it imposes any condition for issue of licence or it overlaps any provision of the Arms Act or the field which is already occupied by any legislation of the Union Parliament.
26. The doctrine of 'pith and substance' provides that if, an enactment substantially falls within the powers expressly conferred by the Constitution upon the Legislature which enacted it, it cannot be held to be invalid, merely because it incidentally encroaches on matters assigned to another Legislature. When a law is impugned as ultra vires, the true character of the legislation has to be ascertained and if, on such examination, it is found that the legislation is in substance one on a matter assigned to the Legislature, then it must be held to be valid in its entirety, even though it might incidentally trench on matters which are beyond its competence. In a situation of overlapping, the rule of pith and substance has to be applied to determine to which entry does a given piece of legislation relate. Thereafter, any incidental trenching on the field reserved to the other Legislature is of no consequence,
27. In the Instant case, we find that it is a taxing statute and both Union of India and State Legislature are competent to impose stamp duty under Entry 44 of List III and so far as rates on such instruments are concerned, it is State Legislature which is competent to prescribe the rate of such stamp duty. So we are of the opinion that in the instant case, the impugned legislation has been enacted after exercising the power in the field of legislation under Entry 44 of List III and Entry 63 of List II and it cannot be held to be invalid merely because it incidentally trenches the Arms Act which is exclusive domain of the Union Parliament. The true character of the impugned Act is clear by mere perusal of the impugned Act. It is the legislation in the field, which is assigned to the State Legislature. Therefore, the impugned legislation is intra vires of the Constitution and it cannot be said that mere Imposition of stamp duty on the instruments which are the subject-matter of any entry in the Union List will make any legislation ultra vires of the Constitution. There are so many entries in Schedule 1B of the Stamp Act, which relate to the subject given in the Union Lists but because of the provisions of the Entry 44 of List III and Entry 63 of List II, the State is always competent to impose stamp duty on the instruments as defined under the Stamp Act.
28. In result, the writ petition is dismissed.