The Madhya Pradesh government has in its budget 2015-16 reintroduced a levy on arms licences that had been earlier brought in another form in budget 2011-12, was termed illegal by the high court, and set aside.
The 'backdoor' attempt to extract the levy from arms licence holders seems to be an attempt to circumvent the high court order that had set aside the previous attempt to impose the levy.
On Wednesday, finance minister Jayant Malaiya had proposed that stamp duty be imposed on both, issue of fresh arms licences and renewal of existing ones.
As per the proposal, Rs 10,000 stamp duty would be charged on license documents for pistol/revolver and license for other weapons would attract Rs 2,000 as stamp duty.
Moreover, renewal of licence of pistol/revolver would attract Rs 5,000 as stamp duty and renewal of other weapon licenses would attract stamp duty of Rs 1,000.
In budget 2011-12, the state government had proposed a processing fee on issue of fresh licenses and renewal of existing ones.
The rates proposed then included Rs 5,000 for issue of fresh license/renewal of existing one of revolver/pistol; Rs 2,000 for issue of fresh license/renewal of existing of rifle category and Rs 500 for issue of fresh license/renewal of existing of gun category.
The rationale extended was that the police had to go out of their way for carrying out verifications and hence charge the processing fee.
The orders were challenged in MP high court and in December 2012, a division bench of chief justice SA Bobde and Justice MC Garg had while disposing of a series of petitions ruled that the state government had no jurisdiction to legislate on the arms act which is a central act.
The state government’s contention that law and order was a state subject and hence the processing fee was being levied through an executive order was also rejected by the HC.
In the ruling, the judges had observed, "The state government has in the circumstances no power whatsoever to legislate or to take executive action in respect of arms in general and in any case in respect of imposing or enhancing license fee either for the initial grants or renewals."
The state government now says that by imposing a stamp duty it is levying a tax it has a right to.
"We checked the previous ruling on the matter and hence decided to impose stamp duty allowed under the stamp act," said principal secretary, commercial taxes, Manoj Shrivastava when asked if the government goes into the legality of a tax before imposing it.
The state expects to collect Rs 3 crore annually from the enhanced levy, not a substantial sum considering the Rs 1.31 lakh crore budget. Bhopal alone has about 8,000 licence weapons.