A dispute arose when authorities demanded 3% additional stamp duty as a “social security fund” on a property transfer executed within the limits of the Municipal Council, Gidderbaha. The Sub- Registrar impounded the deed and referred it to the Collector, who imposed the charge under Section 3C of the Indian Stamp Act, 1899, as amended in Punjab.

The core question was whether the 3% social security fund applied to property transfers within a Category-B (Class-II) municipality like Gidderbaha. The petitioner argued that the levy was illegal, as Section 3C clearly restricts this additional duty to Municipal Corporations and Class-I Municipalities only.

The Court examined the statutory language of Section 3C and the 2005 government notification. It observed that both explicitly limit the applicability of the additional duty to Class-I municipalities and Municipal Corporations. The Municipal Council, Gidderbaha, was officially certified as a Class-II municipality, making the levy invalid.

The Court further noted that the authorities had completely misread the provision by extending its scope to a lower-class municipality. Even the Collector’s observation that the land fell within a five- kilometre radius of the municipal area was found irrelevant, as the provision did not authorize such interpretation.

Holding the orders of the Collector and Commissioner legally unsustainable, the Court set them aside. It ruled that the imposition of the 3% social security fund on the transfer deed was erroneous and without authority of law, reaffirming that statutory charges must be levied strictly within the scope of legislation.