Allahabad High Court
Wasi Ur Rehman And Another vs Commissioner Moradabad Division And ... on 26 February, 2015
Author: Suneet Kumar
Bench: Suneet Kumar
HIGH COURT OF JUDICATURE AT ALLAHABAD A.F.R Reserved on 8.12.2014 Delivered on 26.2.2015 In chamber Case :- WRIT - C No. - 47533 of 2010 Petitioner :- Wasi Ur Rehman And Another Respondent :- Commissioner Moradabad Division And Others Counsel for Petitioner :- A.K. Rai,N.S. Dwivedi,Vishnu Kr. Singh Counsel for Respondent :- C.S.C. Hon'ble Suneet Kumar,J.
Petitioner purchased part of the property Khasra No.1621/01 admeasuring 0.072 hectare, situated within municipal area, vide instrument dated 4.1.2008, On reference by the Sub Registrar, a case was registered under Indian Stamp Act 18991. It was reported that the property in question was under valued, not disclosing that the property has commercial potential, whereas stamp duty was paid as applicable on agricultural property. The Collector (Stamp) Bijnor, inspected the property during the proceedings and found that the property is situated behind a Hospital in ward no.1, a commercial shop measuring 50 square metre exists on the property in question, a godown of 200 square metre and an area of 470 square metre of commercial property on a portion of the parcel of land of which the property in question is a part. Under Uttar Pradesh Stamp (Valuation of Property) Rules 19972 minimum value (circle rate) fixed by the Collector was @ Rs.8000/- per square metre for land and for covered area Rs. 60/- per month was the rental value, accordingly, deficiency of stamp duty of Rs.7,66,400/- was determined, Rs.76,000/- was imposed as penalty along with interest @ 1.5% from the date duty was due.
Aggrieved, by the order dated 23.2.2010, passed by the Collector, petitioner preferred appeal before the Chief Controlling Revenue Authority/Commissioner, Moradabad Division inter alia stating that the order passed by the Collector was an ex parte order, the property is recorded in the revenue record as an agricultural property, was not being used for non agricultural purposes, the petitioner has paid stamp duty on the instrument as payable on agricultural property.
The appellate authority dismissed the appeal vide order dated 23.2.2010, affirming the order passed by the Collector.
The petitioner by means of this petition under Article 226/227 of the Constitution of India is challenging the order dated 9.9.2009 passed by the Collector, Bijnor and the appellate order dated 22.3.2010.
I have heard the learned counsel for the parties and perused the record.
The only submission advanced by the learned counsel for the petitioner is that the property in question though situated within the municipal area is recorded as an agricultural property, hence stamp duty was accordingly paid, it was not open for the Collector to impose stamp duty treating the property as a commercial property.
In rebuttal, the learned standing counsel has defended the impugned orders and would submit that the value of the property is to be determined on the potential of the property irrespective of the nature of the property as recorded in the revenue records.
The facts are not in dispute. The property is situated within municipal area, activities in and around the property is purely commercial. The property is a small part admeasuring 0.072 Hectare, of Khasra No.1621/1, other properties situated on the same Khasra (plot) are of commercial nature namely shop (50 Square Metre), godown 200 square metre and commercial use of 470 square metre.
The learned counsel for the petitioner has not disputed the nature of the commercial activity in and around the property in question, minimum value (circle rate) of commercial property in the area is also not being disputed.
The question for determination is as to whether a property recorded in the revenue records as a agricultural property could be charged with stamp duty as applicable to a commercial property irrespective of the potential of the property in question.
The Indian Stamp Act 1899 is a law relating to revenue/stamps. Its applicability thus stands restricted to the scheme of the Act. The Stamp Act is a fiscal measure enacted with an object to secure revenue for the State on certain classes of instrument.
It is not enacted to arm a litigant with a weapon of technicality to defect the case of the Revenue. The stringent provisions of the Act are conceived in the interest of the Revenue.
It is a matter of common knowledge that in order to escape such duty by unfair practice, many a time under valuation of a property or lower consideration is mentioned in a sale deed. (Chiranji Lal (Dr.) v.Hari Das.3; Ramesh Chand Bansal versus District Magistrate/Collector4) A Stamp Act is a taxing statute and as regards a taxing statute , it is well settled that equity has no place in it. There is no presumption as to a tax, nothing is to be read in, nothing is to be implied, (Agra City Real State Development Organisation,Agra versus State of U.P & others)5.
Market value has not been defined under the Act, in proceedings under section 47-A(3) refers "to instrument on which duty is chargeable on the market value of the property", Article 23 provides for stamp duty payable on conveyance which refers to market value of immovable property which is subject of such conveyance.
Market value as referred to in the expression conveyance is the price which a willing purchaser would pay to a willing seller for the property. The court in Vijay Kumar and another Versus Commissioner6, explained the expression "market value":
"The 'market value' means what a willing purchaser would pay to a willing seller for the property having regard to the advantages available to the land and the development activities which may be going in the vicinity and potentiality of the land."
Again in Ratna Shankar Dwivedi versus State of U.P 7the Court held that:
"The term "market value" has not been defined under the Act. However there are some precedents laying down certain guidelines as to how and in what manner a market value would be determined. The consensus opinion is that the market value of any property is the price which the property would fetch or would have fetched if sold in the open market."
The sine qua non for invoking provisions of Section 47-A(3) of the Act is that the Collector had reason to believe, that the value had not been properly set forth in the instrument as per market value of the property. Once the instrument is registered and the stamp duty as prescribed by the Collector was paid, the burden to prove that the market value was more than the minimum prescribed by the Collector under the rules, was upon the Collector. The report of the sub-Registrar or Tehsildar was not sufficient to discharge that burden. (Vijay Kumar v. Commissioner, Meerut Division8 .
The expression "reason to believe" is not synonymous with subjective satisfaction of the officer. The belief must be held in good faith, it cannot be merely a pretence. It is open to the court to examine the question whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not irrelevant or extraneous to the purpose of the section. (Dr. Pratap Singh V. Director of Enforcement Foreign Exchange Regulation Act 9; State of Punjab versus Mahavir Singh10; ITO versus Lakhmana Mewal Deas11).
The term "reason to believe"occurring in sub section (3) of Section 47-A spells out that the Registering Officer, must have some material-direct, circumstantial or even intrinsic evidence on the basis of which he may come to a reasonable belief that the market value of the property has not been truly set forth in the instrument. (Duncans Industries Ltd. Versus State of U.P 12 (affirmed by Supreme Court in appeal)13 .
It was not enough for the authority for the purpose of invoking section 47-A of the Act that the consideration amount shown in the agreement for sale was less than the prevailing market value, but the authority must be satisfied as to an attempt on the part of the party to under value the property. (Residents Welfare Association v. State of U.P14 ) It is open to the Court to examine the question whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not irrelevant or extraneous to the purposes of the section. (Dr.Pratap Singh versus Director of Enforcement Foreign Exchange Regulation Act15 ).
The object of the Act is to collect proper stamp duty on an instrument or conveyance. An obligation is cast on the authorities to properly ascertain its true value. The market value of a property may vary from village to village, from location to location and even may differ from the sizes of land area and other relevant factors viz. predominant land-use. Entry in revenue record though relevant is not the sole determining factor of the market value under the Act. This apart there has to be some material before the authority as to what is the likely value of such property in that area. Such 'reason to believe' must be based on tangible, relevant and legally admissible evidence. There must be an intelligible nexus between the 'reason' and the 'belief'. Such belief should not be substitute for roving enquiries or the authorities 'reason to suspect'.
It is urged on behalf of the petitioner that the property being recorded as an agricultural property in the revenue records, therefore, the property should have been valued as such and not as a property having commercial potential. The contention cannot be accepted. Market value is dependent on several factors and not merely on the nature of the property as described in the revenue record.
The Court in Aniruddha Kumar and Ashwini Kumar Versus Chief Controlling Revenue Authority U.P. Alld. and another16, laid down that where in respect of agricultural land there is no declaration under section 143 of the U.P.Z.A. & L.R. Act 1950 its nature would not change and its market value for the purposes of payment of stamp duty would be determined on the basis of the agricultural character of the land not on the future potentiality.
A Division Bench in Kishore Chandra Agarwal Versus State of U.P. and others17, in the facts of that case, where the land which was recorded as a bhoomidhari or agricultural land and stamp duty was being demanded treating the land commercial land to be in semi-urban area. The Court made following observation:-
" The agricultural land situate on the roadside of a highway in semi-urban area or countryside area cannot be treated as commercial or residential unless that area is declared as commercial or residential in the Master Plan prepared by the State Government."
In Prakashwati Vs. Chief Controlling Revenue Authority Board of Revenue, Allahabad,18 the Hon'ble Supreme Court held that situation of a property in an area close to a decent colony would not by itself make it part thereof and should not be a factor for approach of the authority in determining the market value. Accordingly, valuation has to be determined on constructive materials, which could be made available before the authorities concerned.
This Court in Shivkali Devi Versus Commissioner,19 relying upon Prakashwati (supra) and Kishore Chandra Agarwal (supra), observed that the land recorded in revenue record as an agricultural land cannot be treated as non an agricultural land merely on the report of Additional Collector.
Market value of the property has to be seen irrespective of the fact whether it is residential, commercial or agricultural. Nature of the land and its current use may not be relevant, if around the plot in question, properties were being sold and bought at commercial rates, then for determination of stamp duty, market value of the property would be the same as that of property bought for commercial use. (D.P.R. Foods (P) Ltd. Versus State of Uttar Pradesh 20).
Evidence of bonafide sales between prudent vendor and prudent vendee of land acquired or situated near about land possessing same or similar advantageous features would furnish basis to determine the market value. (Jawajee Nagnatham versus The Revenue Divisional Officer 21 ).
The Supreme Court in Neeraj Jain Versus State of U.P. and others,22 decided on 26.08.2014, observed that "the Court should require State Government to put forth the material on record that there has been a change of user or there are other contemporaneous sale deeds in respect of adjacent area and the market value has been increased or there has been a change in the agricultural land to the urban agglomeration and such other ancillary aspects."
In M/s. Maya Food and Vanaspati Ltd. Co. Vs. Chief Controlling Revenue Authority (Board of Revenue ) Allahabad,23 the Court held that market value of the land for the purposes of payment of stamp duty can not be determined with reference to its future use or the intended use to which it is likely to be put by the purchaser.
The decided cases referred above do not detail the norms or parameters for determination of the market value, it would vary from facts of each case depending upon a number of factors including entry of the nature of the property in revenue record.
Though entry in the revenue record regarding the nature of the property may be relevant but cannot be the sole factor in determining the market value. Market value is dependent upon other factors viz. change of user in adjacent area or change of agricultural land to urban agglomeration or if the properties were being sold and bought at commercial rates then for the purposes of stamp duty market value of the property would be the same as that of the property bought at commercial rate, irrespective of the entry in the revenue record.
The Collector also while determining the minimum value (circle rate) under Rule 4 of 1997 Rules will also have to take into consideration, the nature of the activity in the locality and the prevailing rent in the locality as mentioned in Rule 4(1)(c).
Rule 4 (1)(c) reads as follows:
4. Fixation of minimum rate for valuation of land, construction value of non-commercial building and minimum rate of rent of commercial building
(c) in case of commercial building-
(i) prevailing rent in locality; and
(ii) nature of economic activity in the locality The person presenting the instrument is required to disclose nature of economic activity, industrial developmental if any, prevailing in the locality where the property is situated, and to mention any other special feature affecting the value of the property. (Rule 3 and Rule 6).
Having due regard to the facts of the present case, it is not being disputed by the petitioner that the property which is a part of Khasra 16021/1 is being used for commercial purposes namely shop, godown and other commercial activities. The area of land purchased by the petitioner is barely 0.072 hectare which is approximately 720 square metre situated within municipal area on a plot where the predominant use is non-agricultural. The petitioner has not referred to any exemplar to show that agricultural activity is predominant in the vicinity where the property in question is located. The entire property Khasra no.1621/1 is being used for non agricultural purpose, having shop, godown and other commercial property.
Merely because the property is recorded as agricultural property and there being no declaration under section 143 of the U.P .Zamindari Abolition & Land Reforms Act 1950 cannot be said that the property does not have commercial potential on the date of execution of the deed. Further, under section 142 of the U.P. Zamindari Abolition & Land Reforms Act, the owner can use the agricultural property for any purpose including for non agricultural purpose and once a owner chooses to use the property for non agricultural purpose, he cannot turn around to take a plea that since the property is entered in the revenue records as an agricultural property, the nature and use of the property is agricultural. The nature and use of the property is the actual use on the spot coupled with the predominant activity in the locality where the property is situated. If the property of similar nature is being sold and bought at commercial rate, for the purposes of stamp duty, the property would be valued at commercial rate. The entry in revenue record that the property is agricultural or residential would have no bearing in determination of the value.
For the reasons and law stated herein above, the writ petition fails and is, accordingly, dismissed.
No order as to costs.
Order Date :- 26 /02/2015 IB