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Section 22: Effect of statement of rate of exchange or average price

Indian Stamp Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1899
Section 21 All 78 Sections Schedule I (Arts 1–65) Section 23

Legal Commentary & Landmark Judgments: Section 22

Section 22 of the Indian Stamp Act, 1899 creates a rebuttable statutory presumption of due stamping in favour of an instrument that explicitly recites the rate of exchange or average market price and is stamped in accordance with such statement, shifting the burden of proof to the revenue.

  • Rebuttable Statutory Presumption of Proper Stamp: Where an instrument contains an express statement of the current rate of exchange (under Section 20) or average stock price (under Section 21) and is stamped accordingly, it shall be presumed to be duly stamped until the contrary is proved.
  • Proviso for Fraudulent or Falsified Statements: The statutory presumption is completely vitiated where the rate of exchange or average price was falsely or fraudulently stated to evade duty, exposing parties to penalties and criminal prosecution under Section 64.
  • Procedural Advantage in Civil Litigation: Shifts the initial burden of proof to the revenue authority or contesting litigant who challenges the sufficiency of the stamp, shielding commercial transactions from vexatious preliminary objections.
Key Landmark Precedents:
  • Hindustan Lever v. State of Maharashtra (2004) 9 SCC 438: The Supreme Court noted that statutory valuation recitals framed under the Stamp Act create operational certainty for commercial entities, provided there is no fraudulent suppression of material facts.
  • Trustees of H.C. Dhanda Trust v. State of M.P. (2020) 9 SCC 510: The Supreme Court held that bona fide statements of valuation in an instrument entitle the party to fair treatment under the Stamp Act; penal consequences cannot be visited upon an executant absent proof of deliberate intent to defraud revenue.
Courtroom Practice & Strategic Litigation Guidance:

Always draft an explicit 'Valuation and Stamp Duty Declaration' clause in international contracts or share transfer deeds, stating the exact foreign exchange reference rate or stock exchange average price on the execution date. This immediately triggers the statutory presumption under Section 22, placing the evidentiary burden on any opposing party or Collector alleging deficit stamping.

Section 21 All 78 Sections Schedule I (Arts 1–65) Section 23