In a landmark ruling, the Supreme Court laid down its verdict on the issue of stamp duty imposition on insurance policies within the confines of a state’s jurisdiction. The case, pitting the Life Insurance Corporation (LIC) against Rajasthan’s stamp duty demand of approximately Rs 1.19 crores, concluded with the apex court dismissing LIC’s appeals.
Justices PS Narasimha and Aravind Kumar presided over the bench and articulated the Court’s stance, emphasizing the state’s legislative competence in levying stamp duty on insurance policies executed within its territory. Central to their decision was the analysis of where the insurance policies were issued, a determinant factor in the state’s jurisdiction to impose stamp duty.
The judgment clarified the nuances between parliamentary and state legislative powers concerning stamp duty rates. While acknowledging the exclusive authority of Parliament to set stamp duty rates under Entry 91 of List I, the Court underscored the states’ capacity to enact laws imposing stamp duty under Entry 44 of List III.
The legal wrangle stemmed from the Rajasthan Government’s demand for stamp duty against LIC’s insurance policy executions within the state’s ambit, referencing the Rajasthan Stamp Law (Adaptation) Act, 1952. LIC contested this demand, citing constitutional provisions that seemingly limited the state’s authority in such matters.
The Court’s deliberations traversed through constitutional nuances, notably Article 254(2), which delineates the precedence of state laws over parliamentary enactments in certain scenarios. Here, the Court affirmed the supremacy of the Rajasthan Stamp Law (Adaptation) Act, 1952, over the Indian Stamp Act, 1899, within Rajasthan’s jurisdiction.
In its concluding remarks, the Court upheld the state’s power to levy and collect stamp duty on insurance policies while directing the state government not to enforce the demanded stamp duty.
The verdict stands as a testament to the delicate balance between state and central legislative authorities, delineating their respective roles in matters of stamp duty imposition on insurance policies.
As the gavel fell on the case, it echoed not just a legal victory, but a reaffirmation of the intricate constitutional fabric underpinning India’s fiscal regulations.
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