Madras High Court
Sundaram Medical Foundation vs Inspector General Of Registration on 8 June, 2018
Author: R. Subbiah
Bench: R. Subbiah, P.D. Audikesavalu
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 26.03.2018
Pronounced on : 08-06-2018
CORAM:
THE HONOURABLE MR. JUSTICE R. SUBBIAH
and
THE HONOURABLE MR. JUSTICE P.D. AUDIKESAVALU
Civil Miscellaneous Appeal No. 39 of 2009
and
M.P. No. 1 of 2009
---
Sundaram Medical Foundation
Dr. Rangarajan Memorial Hospital
Shanthi Colony, 4th Avenue
Anna Nagar, Chennai .. Appellant
Versus
1. Inspector General of Registration
Santhome High Road
Chennai
2. Special Deputy Collector of Stamps
Singaravelan Building
Rajaji Salai, Chennai
3. The Sub-Registrar
Anna Nagar, Chennai .. Respondents
Appeal filed under Section 47-A of The Indian Stamps Act, 1989 against the Order dated 06.10.2008 (received by the appellant on 15.10.2008) made in Suo-Motu Revision No.34397/E1/2003 passed by the first respondent
For Appellant : Mr. T.K. Seshadri, Senior Advocate
for Mr. T.K. Bhaskar
For Respondents : Mr. S.R. Rajagopal
Additional Advocate General
assisted by Mr. M. Venkatesh Kumar
Government Advocate (Civil side)
JUDGMENT
R. Subbiah, J This appeal is filed as against the Order dated 06.10.2008 passed by the first respondent enhancing the land value, which is the subject matter of the sale deed dated 11.09.2002 presented for registration by the petitioner, from Rs.625/- per square feet to Rs.1,250/- per square feet and called upon the appellant to pay a sum of Rs.70,85,000/- and Rs.5,45,000/- towards deficit stamp duty and penalty respectively within a period of sixty days.
2. The facts which led to the filing of the present appeal are that the appellant is a charitable trust running a hospital in the name and style of Sundaram Medical Foundation. The appellant purchased the land measuring an extent of 2 acres situated in R.S. Nos. 229/2, 230/4, 230/7 and 230/8 in Koyambedu Village by means of a registered sale deed dated 11.09.2002 executed by one Sri Krishna Tiles and Potteries (Madras) Private Limited and presented in the office of the third respondent, as the vendor was confronting financial difficulty. The said document was registered as document No. 3258 of 2002 dated 18.09.2002. The value of the property covered under the sale deed dated 11.09.2002 was indicated as Rs.4,68,00,000/- at the rate of Rs.536/- per square feet. After registration, the third respondent entertained a doubt regarding the value of the property indicated in the sale deed dated 11.09.2002 and therefore, he referred the matter to the second respondent for determination of the correct market value of the property, as contemplated under Section 47-A (2) of the Indian Stamps Act. The second respondent, after enquiry, passed an order dated 08.11.2002 determining the market value of the property at Rs.625/- per square feet. The appellant also remitted the deficit stamp duty assessed by the second respondent in the order dated 08.11.2002 on 13.11.2002. While so, to the shock and surprise of the appellant, a notice dated 21.01.2004 was sent by the first respondent, in which he referred to an earlier notice dated 02.10.2003 and stated as if the appellant has not given any reply to the earlier notice dated 02.10.2003 which was said to have been sent by invoking the suo moto revisional powers conferred on the first respondent under Section 47-A (6) of The Indian Stamp Act, 1899. According to the appellant, they have not received any such notice dated 02.10.2003. Accordingly, the appellant sent a reply dated 11.02.2004 denying the receipt of notice dated 02.10.2003 inter alia sought for a personal hearing. However, the first respondent, without affording an opportunity of hearing, has passed the order dated 08.03.2006 enhancing the value of the land from Rs.625/- per square feet to Rs.1,250/- per square feet. The said order dated 08.03.2006 was challenged by the petitioner by filing C.M.A. No. 1951 of 2007 before this Court. By order dated 22.11.2007, this Court allowed the appeal and remanded the matter back to the first respondent with a direction to the first respondent to re-consider the issue afresh after affording an opportunity of hearing to the appellant. Pursuant to such direction, the first respondent, without considering any of the points raised by the appellant has passed the order dated 06.10.2008, which is challenged in this Civil Miscellaneous Appeal.
3. The learned Senior counsel appearing for the appellant would submit that the appellant had purchased the property in question by means of a registered sale deed dated 11.09.2002 having executed by M/s. Sri Krishna Tiles and Potteries (Madras) Private Limited, which is a company incorporated under the Indian Companies Act. In the said sale deed dated 11.09.2002, M/s. Rohini Holdings Private Limited, a company incorporated under the Indian Companies Act was shown as a confirming party inasmuch as charge was created in respect of 2 acres of land mentioned in the B Schedule Property in favour of the confirming party and that is the reason why they were also made as a party to the sale deed dated 11.09.2002. Further, the appellant is a Public charitable institution and all the parties to the sale deed dated 11.09.2002 are independent parties and they have no relationship with each other.
4. The learned Senior counsel for the appellant would further contend that the recitals in the sale deed dated 11.09.2002 would indicate that the vendor of the sale deed namely M/s. Sri Krishna Tiles and Potteries (Madras) Private Limited have executed four mortgage deeds dated 19.01.1999, 29.01.1999, 19.02.1999 and 02.03.1999 which were registered on the file of Sub-Registrar, Anna Nagar, Chennai in favour of the confirming party and a charge was created with respect to 2 acres of the land indicated in B Schedule property in favour of the confirming party. The recitals would further indicate that pending discharge of the mortgage in favour of the confirming party, M/s. Global Trust Bank Limited has filed O.A. No. 302 of 2001 before the Debts Recovery Tribunal chennai against the Vendor and certain others for recovery of the amount owed by the Vendor with the Bank. Pending the O.A. No. 302 of 2001, the Bank has also taken out interim application in I.A. No. 818 to 820 of 2001 which were disposed of by the Tribunal on 07.01.2002 permitting the vendor to sell the property over which charge was created subject to compliance with certain conditions regarding the appropriation of part of the sale proceeds towards the amount outstanding to the Bank. Pursuant to such an order passed by the Tribunal, the sale deed came to be executed by the vendor in favour of the appellant. The learned Senior counsel for the appellant would further contend that since the charge on a portion of the B Schedule property in the sale deed dated 11.09.2002 in favour of the confirming party was not brought to the notice of the Tribunal, either in the original application or in the interim application, which led to the passing of the order dated 07.01.2002, an application for modification of the interim order dated 07.01.2002 was filed before the Tribunal by the vendor in which the Tribunal passed an order dated 15.03.2002, modiying the order dated 07.01.2002 permitting the sale of the 2 acres of land forming part of the B Schedule Property is in pursuance of the rights of the confirming party to enforce their security, the condition regarding appropriation of the sale proceeds imposed in the order dated 07.01.2002 will not apply to the sale of the 2 acres of land forming part of the B Schedule Property for settlement of the amount due to the Bank under the mortgage deeds. Thereafter, another application in I.A. No. 674 of 2002 in I.A. Nos. 818 to 820 of 2001 in O.A. No. 302 of 2001 was filed seeking leave to purchase the property measuring 2 acres either by the confirming party or through a nominee. In the said application, the confirming party also filed a sketch identifying the 2 acres of contiguous land in the B Schedule. The Tribunal, after considering the same, has passed an order dated 16.08.2002 and 28.08.2002 granting leave to the confirming party to purchase by itself or through its nominee the 2 acres of land as per the sketch filed along with the application and adjust the total amount due from the Vendor to the confirming party from and out of the sale consideration. Thus, as per the order passed by the Tribunal, the Vendor is empowered to sell 2 acres of land in B Schedule Property and to utilise the sale proceeds for discharging the mortgage in favour of the confirming party. In effect, only after the leave granted by the Tribunal the sale deed dated 11.09.2002 came to be executed in favour of the appellant and it was registered on the file of the third respondent.
5. The learned Senior counsel for the appellant would further contend that the third respondent entertained a doubt regarding the value of the land mentioned in the sale deed dated 11.09.2002 and referred it to the second respondent under Section 47-A (2) of the Indian Stamp Act, 1899. The second respondent also, after considering the reference so made by the third respondent, passed an order enhancing the value of the land covered in the sale deed dated 11.09.2002 from Rs.536/- per square feet to Rs.625/- per square feet and the enhancement so made by the second respondent was also accepted by the appellant and the deficit stamp duty of Rs.10,01,000/- payable thereof was paid on 08.11.2002. While so, after a lapse of two years, the first respondent, in exercise of the powers conferred under Section 47-A (6) of The Indian Stamp Act, 1899 issued the notice dated 21.01.2004 in the form of a reminder in which reference was made to a notice dated 02.10.2003 said to have been sent by the first respondent and called upon the appellant to submit their objections if any within 15 days. In response, the appellant sent a reply dated 11.02.2004 in which they have enclosed all the requisite documents that may be required for consideration of the first respondent. In the reply dated 11.02.2004, the appellant also categorically stated that they have not received any notice dated 02.10.2003 as referred to in the notice dated 21.01.2004. In the reply dated 11.02.2004, the appellant also requested the first respondent to furnish them the records based on which the first respondent proposed to enhance the market value of the property covered under the sale deed dated 11.09.2002 and also to afford them an opportunity of hearing in person. Thereafter, the first respondent sent another show cause notice dated 19.05.2004 for which also the appellant sent a reply dated 14.06.2004. Thereafter, by a communication dated 26.12.2005, the first respondent called upon the appellant to appear for a personal hearing on 09.01.2006. However, the appellant, through a messenger, sent a letter dated 09.01.2006 requesting to adjourn the hearing of the enquiry. Notwithstanding the same, the first respondent has passed the order dated 08.03.2006 determining the value of the land at Rs.1,250/- per square feet and called upon the appellant to pay the deficit stamp duty. Challenging the same, the appellant filed C.M.A. No. 1951 of 2007 and this Court, by the order dated 22.11.2007 allowed the appeal and remanded the matter back to the first respondent for fresh consideration. After remand, the first respondent has passed the order dated 30.10.2008 confirming the assessment of the value of the land in question at Rs.1,250/- per square feet, as made earlier.
6. The learned Senior counsel for the appellant would further contend that Section 47-A (6) of The Indian Stamp Act, 1989 can be invoked by the first respondent only if it appears that by reason of improper assessment of the land value by his subordinates, prejudice has been caused to the interest of the revenue. However, in the impugned order, the first respondent has not recorded as to whether any prejudice has been caused to the interest of the revenue by reason of the order dated 08.11.2002 passed by the second respondent, enhancing the market value of the land from Rs.536/- per square feet to Rs.625/- per square feet in exercise of powers conferred under Section 47 (A) (2) of The Indian Stamp Act.
7. According to the learned Senior counsel for the appellant, earlier, the property in question was a barren land where brick industry was in operation with deeply pitted and undulated terrain with huge overgrown bushes. Further, the property has no infrastructural amenity such as well formed roads, rain water or storm water drains, street lighting and water pipelines at the time of purchase of the property on 11.09.2002. Even otherwise, as on the date of purchase of the property on 11.03.2002, the guideline value indicated by the third respondent was only Rs.315/- per square feet, however, the appellant has paid a sum of Rs.536/- per square feet as stamp duty for registration of the document, which was further enhanced by the second respondent at Rs.625/- per square feet. Even otherwise, the value of Rs.315/- per square feet was indicated in the records maintained by the third respondent with respect to the lands located in Pillaiyar Koil Street, however, the subject matter of the property is situated 300 feet interior from Pillaiyar Koil Street and therefore, even the guide line value of the property will be lesser than Rs.315/- per square feet at the time of purchase. The land in question was not a developed plot at the time of purchase and it was the appellant who applied for conversion and re-classification of the land.
8. In support of his contention, the learned Senior counsel for the appellant relied on the decision rendered in the case of (V.N. Devadoss vs. Chief Revenue Control Officer-cum-Inspector and others) reported in (2009) 7 Supreme Court Cases 438 wherein it was held in Para No.13 as follows:-
13. Sub-sections (1) and (3) of Section 47-A clearly reveal the intention of the legislature that there must be a reason to believe that the market value of the property, which is the subject matter of the conveyance, has not been truly set out in the document. It is not a routine procedure to be followed in respect of each and every document of conveyance presented for registration without any evidence to show lack of bona fides of the parties to the document by attempting fraudulently to undervalue the subject of conveyance with a view to evade payment of proper stamp duty and thereby cause loss to the revenue. Therefore, the basis for exercise of power under Section 47-A of the Act is wilful undervaluation of the subject of transfer with fraudulent intention to evade payment of proper stamp duty.
9. It is contended by the learned Senior counsel for the appellant that in the impugned order, no subjective satisfaction, as to how the order passed by the second respondent is prejudicial to the interest of the revenue, was recorded by the first respondent. Further, the first respondent has not assigned any reason as to how the sum of Rs.1,250/- has been arrived as market value of the property in question. The first respondent also failed to take into account the various factors for determining the market value of the property. On the contrary, the second respondent, after conducting an enquiry with respect to the location of the property and the guideline value of the property at the time of registration of the sale deed, enhanced the market value of the property from Rs.536/- per square feet to Rs.625/- per square feet and it was also paid by the appellant.
10. The learned Senior counsel for the appellant also invited the attention of this Court to Section 263 of The Income Tax Act, which confers similar powers to the Commissioner of Income Tax to revise an order passed by his subordinates. Section 263 of The Income Tax, the Commissioner of Income Tax Act empowers the Commissioner of Income Tax to revise, modify or vary any order passed by his subordinates if it is found that order passed by the assessing officer is erroneous and it is prejudical to the interest of the revenue. In this context, the learned Senior counsel for the appellant placed reliance on the decision of the Honourable Supreme Court in the case of (Malabar Industrial Co., Ltd., vs. Commissioner of Income Tax, Kerala State) reported in (2000) 2 Supreme Court Cases 718 wherein in Para No.10, it was held as follows:-
10. The phrase prejudical to the interest of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudical to the interests of the Revenue. For example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the Revenue unless the view taken by the Income Tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interest of the revenue.
11. For the very same proposition of law reiterated by the Honourable Supreme Court in the aforesaid decision, the learned Senior counsel for the appellant also relied on the decision of the Division Bench Judgment of the Bombay High Court in the case of (Commissioner of Income Tax vs. Gabriel India Limited) reported in (1993) 114 CTR (BOM) 81 wherein the Division Bench held as under in para No.9 as follows:-
9. From a reading of sub-section (1) of Section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the Income Tax Officer is 'erroneous in so far as it is prejudicial to the interest of the revenue.' It is not an arbitrary or unchartered power. It can be exercised only on fulfilment of requirements laid down in sub-section (1). The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interest of the revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all proceedings; that state issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity.
12. The learned Senior counsel for the appellant would further invite the attention of this Court to the decision of the Division Bench of this Court in the case of (Venkatakrishna Rice Company vs. Commissioner of Income Tax) reported in 1987 163 ITR 129 (Mad) wherein it was held in para-22 as follows:-
22. .....As we had earlier observed, the power conferred on him by this section is in the nature of a supervisory power. We have referred to another revisional power under Section 264 which might be regarded as a regular revision. Section 263, however, is a special power, which, so far as we know, has no parallel in any other statute or legal system. It is an extraordinary revisional power. It is also sui generis, in its nature, and in the occasion for its exercise, it is to be employed not as a jurisdictional corrective or as a review of a subordinate's order in exercise of supervisory power. It is, on the contrary, to one invoked and employed only for the purpose of setting right distortions and prejudices to the revenue, which, as we have endeavoured to point out earlier, is a unique conception which has got to be understood in the context of and in the interests of revenue administration. The power, as we conceive it, is intended to maintain the tone of the revenue administration and the moral of the Officers manning it. Such a power cannot, in any manner, be equated to, or regarded as approaching in any way the appellate jurisdiction or even the ordinary revisional power conferred on the Commissioner under Section 264 of the Act.
13. By placing reliance on the aforesaid decisions, the learned Senior counsel for the appellant would contend that while invoking the powers under Section 47-A (6) of the Act, the first respondent has to arrive at a subjective satisfaction that prejudice has been caused to the interest of revenue by reason of the order passed by his subordinates. However, the order, which is impugned in this appeal, was passed by the first respondent without any material evidence to show that there is prejudice caused to the interest of the revenue. The suo motu powers conferred with the first respondent under Section 47-A (6) of The Indian Stamp Act can be exercised only if the order passed by his subordinates, in exercise of power under Section 47-A (2) or 47-A (3) of the Indian Stamp Act, is prejudicial to the interest of the revenue, supported by material documents. In the present case, the first respondent has passed the order mechanically and enhanced the market value of the property without any reasons and in the absence of any evidence to show that prejudice has been caused to the interest of revenue by reason of an order passed by his subordinate. Therefore, the learned Senior counsel for appellant prayed to set aside the impugned order and allow this appeal.
14. Countering the submissions made by the learned Senior counsel for the appellant, the learned Additional Advocate General appearing for the respondents would vehemently contend that in this case the invocation of the suo motu powers vested with the first respondent under Section 47-A (6) of The Indian Stamp Act, 1989, is proper and wholly justified. According to the learned Additional Advocate General appearing for the respondents, earlier, a reference was made by the third respondent to the second respondent for determination of the correct market value of the property and the second respondent also enhanced it from Rs.536/- per square feet to Rs.625/- per square feet. Admittedly, the differential amount was paid by the appellant without any protest. The first respondent, after examining the order passed by the second respondent enhancing the market value of the property to Rs.625/- per square feet, satisfied himself that the market value arrived at by the second respondent is not proper and therefore, in exercise of the powers conferred under Section 47-A (6) of The Indian Stamp Act, 1989 invoked his suo motu powers and called upon the appellant to show cause as to why the market value of the property arrived at by the second respondent be not enhanced. In fact, in the impugned order, reference was made to the fact that the property in question is located within a distance of 1600 feet from the arterial Jawaharlal Nehru Road. It was further stated that there are several arterial roads located in and around the property, there are hospitals, hotels residential and commercial buildings exist thereon. Therefore, taking note of the above locational advantages the property enjoys, the first respondent has arrived at the conclusion that the market value of the property has to be fixed at Rs.1,250/- per square feet, otherwise, it would cause prejudice to the interest of the revenue. Therefore, according to the learned Additional Advocate General appearing for the respondents, it is not as if the property in question is situated in an undeveloped locality as contended by the petitioner, rather, the property is situated in a well developed locality and therefore, he would justify the order passed by the first respondent. Furthermore, it was contended by the learned Additional Advocate General appearing for the respondents that before fixing the market value of the land, an opportunity of hearing was given to the appellant and after examining all the documents submitted by the petitioner, the first respondent has arrived at the conclusion that fixing the market value of the property at Rs.1,250/- per square feet would be proper. It is further stated that the first respondent has taken into account the market value of the property on the date of presentation of instrument for registration and concluded that the second respondent failed to consider the market value of the property in question, thereby interest of the revenue is prejudiced. In order to lend support to his contentions, the learned Additional Advocate General appearing for the respondents relied on the decision of the Honourable Supreme Court in the case of (State of Rajasthan and others vs. Khandara Jain Jewellers) reported in (2007) 14 Supreme Court Cases 339 wherein it was held as follows:-
26. Accordingly, we are of the opinion that the view taken by the learned Single Judge as well as by the Division Bench cannot be sustained and the same is set aside. The Collector shall determine the valuation of the instrument on the basis of the market value of the property at the date when the document was tendered by the respondents for registration and the respondent shall pay the stamp duty charges and surcharge, if any, as assessed by the Collector as per the provision of the Act. The appeal of the State is allowed. No order as to costs.
15. The learned Additional Advocate General appearing for the respondents would contend that as far as the decisions relied on by the learned Senior counsel for the appellant in relation to Section 263 of The Income Tax Act, they pertain to erroneous orders passed by the Assessing Officer or Income Tax Officer over which a suo motu revisional power was invoked by the Commissioner of Income Tax Officer. In the present case, the first respondent, reviewed the order passed by the second respondent who determined the value of the property in question at a lesser rate than the one which has to be properly fixed. In such circumstances, the learned Additional Advocate General appearing for the respondents would contend that the decisions relied on by the learned Senior Counsel for the appellant related to Income Tax Act and they have no application to the facts of the present case. In any event, according to the learned Additional Advocate General appearing for the respondents, the order passed by the first respondent, which is impugned in this appeal, was the one passed to subserve the interest of the revenue. The first respondent has assigned reasons for enhancing the market value of the property in question and such order was also passed after hearing the appellant. While so, the learned Additional Advocate General appearing for the respondents would submit that interference of this court is not warranted over the order passed by the first respondent and he prayed for dismissal of the appeal.
16. We have given our anxious consideration to the rival submissions made and perused the materials placed on record. On appreciation of the rival contentions, the questions that arise for our consideration in this appeal are as follows:-
(i) Whether the first respondent is justified in invoking his suo motu powers conferred under Section 47-A (6) of The Indian Stamp Act, 1989 to enhance the market value of the property in question
(ii) Whether the first respondent is right in enhancing the market value of the property from Rs.625/- per square feet to Rs.1,250/- per square feet as per the prevailing guideline value at the time of registration of the sale deed by the appellant on 11.09.2002.Question Nos. 1 and 2
17. Before proceeding to consider the rival submissions, it would be relevant to look into Sub-Sections (2), (3) and (6) of Section 47-A of The Indian Stamp Act, 1989, which reads as follows:-
(2) On receipt of a reference under sub-section (1), the Collector shall, after giving the parties a reasonable opportunity of being heard and after holding an enquiry in such manner as may be prescribed by rules made under this Act, determine the market value of the property, which is the subject matter of conveyance, exchange, gift, release of benami right or settlement and the duty as aforesaid. The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty.
(3) The Collector may, suo motu or otherwise, within five years from the date of registration of any instrument of conveyance, exchange, gift, release of benami right or settlement not alreadh referred to him under sub-section (1), call for and examine the instrument for the purpose of satisfying himself as to the correctness of the market value of the property, which is the subject matter of conveyance, exchange, gift, release of benami right or settlement and the duty payable thereon and if after such examination he has reason to believe that the market value of the property has not been truly set forth in the instrument, he may determine the market value of such property and the duty as aforesaid in accordance with the procedure provided for in sub-section (2). The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty;
Provided that nothing in this sub-section shall apply to any instrument registered before the date of commencement of the Indian Stamp (Tamil Nadu Amendment) Act, 1967.
4. ......
5. ......
(6) The Chief Controlling Revenue Authority may, suo motu, call for and examine an order passed under sub-section (2) or sub-section (3) and if such order is prejudicial to the interest of revenue, he may make such inquiry or cause such enquiry to be made and, subject to the provisions of this Act, may initiate proceedings to revise, modify or set aside such order and may pass such orders thereon as he thinks fit.
18. Undoubtedly, as per Section 47-A (6) of The Indian Stamp Act, 1989, the first respondent is conferred with suo motu powers to review, vary, modify or set aside an order passed by his subordinates, if it is shown that by reason of such order passed by his subordinates, under Section 47-A (2) and 47-A (3) of The Indian Stamp Act, interest of the revenue is prejudiced. For arriving at such conclusion, the first respondent has to make an enquiry or cause his subordinates to make such enquiry to gain information before hand that the market value of the property, on the date of registration of the instrument, was either under valued or not properly valued befitting the guideline value of the property.
19. The principal object with which The Indian Stamp Act, 1899 was enacted is to ensure generation of revenue and to protect the interest of revenue by adopting fiscal measures. For achieving the objects of this Act, certain yardsticks have to be adopted to ensure that the interest of the revenue is not in any manner prejudiced by reason of under quoting the value of a property or improper valuation of the property. Section 47-A (2) and 47-A (3) of the Act empower the authorities under the Act to cause appropriate enquiry, if, they have reason to believe that interest of revenue is in any way prejudiced by reason of under valuing the property or improperly valuing the property while registering an instrument before the competent registration authority. On the contrary, Section 47-A (6) of the Act empowers the Inspector General of Registration to cause suo motu enquiry if he was of the opinion, after arriving at a subjective satisfaction, that interest of revenue is prejudiced by reason of any order passed by his subordinates in exercise of the powers conferred on them under Section 47-A (2) and 47-A (3) of the Act. In other words, for invoking the powers conferred under Section 47-A (6) of the The Indian Stamp Act, the Chief Controlling Authority/ Inspector General of Registration has to record his subjective satisfaction that by reason of an order passed by his subordinates, interest of revenue is prejudiced or affected. Thus, by and large, the Act confers power upon the authorities under the Act largely to ensure that interest of revenue is fully and adequately protected. It is needless to mention that the suo-motu powers conferred on the Inspector General of Registration/Chief Controlling Revenue Authority can be exercised only on examination of the records of any proceedings under this Act and after arriving at a subjective satisfaction that the order passed by his subordinate is erroneous and he considers such an order passed is prejudicial to the interest of the revenue. Thus, only upon arriving at a subjective satisfaction as regards the prejudice caused to the interest of the revenue, the Inspector General of Registration can invoke the powers conferred under Section 47-A (6) of The Indian Stamp Act.
20. In the present case, a sale deed was presented for registration by the appellant on 11.09.2002 in which the appellant has valued the property at Rs.526/- per square feet and the total value of the property was arrived at Rs.4,68,00,000/-. According to the appellant, the guideline value of the property, at the time of presentation of the sale deed dated 11.09.2002 itself was Rs.325/- per square feet, however, the market value of the property was fixed at Rs.526/- per square feet. Inspite of the same, upon registration of the instrument, the third respondent doubted the value indicated thereon and therefore, he referred the instrument to the second respondent, as contemplated under Section 47-A of The Indian Stamp Act for determination of the correct market value. The second respondent, after conducting an enquiry, enhanced the market value from Rs.536/- per square feet to Rs.625/- per square feet, whereby the appellant was called upon to pay additional deficit stamp duty. The appellant also paid the sum of Rs.10,01,000/- being the differential stamp duty payable on the instrument on 08.11.2002. Notwithstanding the above, the first respondent, in exercise of his suo motu powers conferred under Section 47-A (6) of The Indian Stamp Act, 1989 has proposed to enhance market value and accordingly, by the order dated 06.10.2008, enhanced the market value from Rs.625/- per square feet to Rs.1,250/- per square feet. However, no reason was assigned as to how the interest of revenue is prejudiced by reason of the order passed by the second respondent enhancing the market value of the property to Rs.625/- per square feet.
21. On perusal of the order dated 06.10.2008, we find that the first respondent has not assigned any reason as to what prompted him to enhance the market value of the land from Rs.625/- to Rs.1,250/- per square feet. Absolutely, there is no material to show that the first respondent has arrived at a subjective satisfaction that interest of revenue has been prejudiced by reason of the order passed by the second respondent in determining the market value of the property. The order passed by the first respondent is bereft of any material particulars and it was mechanically passed. The first respondent also did not take any effort to compare the documents that might have been registered during the period when the appellant had presented the sale deed dated 11.09.2002. In fact, in the impugned order, the first respondent had discussed about the opportunity given to the appellant on various dates and the submissions made by the Legal Officer of the appellant as against the proposal to enhance the market value. However, no where, the first respondent has discussed as to what was the prevailing guideline value or market value at the time of presentation of the sale deed dated 11.09.2002 and whether the valuation of the property disclosed in the sale deed dated 11.09.2002 reflects the then prevailing guideline value. The first respondent also did not refer about any other instrument presented for registration in respect of the same locality during the relevant time. The first respondent also did not cause any enquiry, as required under Section 47-A (6) of The Indian Stamp Act, 1989. After discussing about the factual matrix of the case, in the impugned order it is only stated that the property is located in a prominent locality and therefore fixing the guideline value at Rs.1,250/- per square feet is proper. The relevant portion of the order passed by the first respondent can usefully be extracted:-
brhj;jhdJ nfhak;ngL fpuhkk; rh;nt vz;/292-02. 230-04. 230-7A kw;Wk; 230-08 Vf;fh; 2/00 brhj;jhFk;/ ,r;brhj;jhdJ $tcwh;yhy; neU rhiyapypUe;J bry;y tHpapid bfhz;L Rkhh; 1600 rJuo J}uj;jpy; mike;Js;sJ vd;Wk;. Kfg;g[ gFjp $tcwh;yhy; neU rhiyapy; mike;Js;sjhYk; ,e;j brhj;jpid Rw;wp mLf;Fkho FoapUg;g[fs;. tzpftshf';fs;. kUj;Jtkidfs;. cztf';fs; trjpfisa[k; bfhz;l 100 mo rhiyahd $tcwh;yhy; neU rhiyia xU g[wj;nj bfhz;Ls;s bkhj;j brhj;jhFk;/ rJuo U:/1200 kjpg;g[ eph;zakhdJ bghUj;jkhdJ vdt[k; brd;id Jizg;gjpt[j;Jiwj; jiyth; ghpe;Jiu bra;Js;shh;/
22. It is evident that the first respondent has merely stated that the property in question is situated in close proximity to Jawaharlal Nehru Road and therefore, it is desirable to fix the market value of the property at Rs.1,250/- per square feet. In our opinion, such reasons assigned by the first respondent cannot be sustained. When suo motu powers are exercised by the first respondent, as contemplated under Section 47-A (6) of The Indian Stamp Act, he has to satisfy himself that interest of the revenue has been prejudiced by reason of any order passed by his subordinates without considering the under valuation or improper valuation of the market value in the instrument presented for registration. Merely because a property is situated in close proximity to an arterial road, it is not sufficient for the first respondent to enhance the market value of the property that prevailed on the date of presentation of the instrument especially when there is no reason recorded by the first respondent that the market value of the property indicated in the instrument is far below than the guideline value maintained by the third respondent. Therefore, we feel that this is not a fit case where the first respondent is justified in invoking his suo motu powers to modify or vary the order passed by the second respondent.
23. In the present case, we also see that no reason was assigned by the first respondent to conclude that the market value of the property has to be fixed at Rs.1,250/- per square feet. Such conclusion arrived at by the first respondent is not supported by any material evidence or any arithmetical calculation. In the words of the Honourable Supreme Court in the case in (Steel Authority of India Limited vs., Sales Tax Officer, Rourkela-I Circle and others) reported in (2008) 16 VST 181 (SC) reasons are the heart-beat for any conclusion and in the absence of the same, the order passed by the authority cannot be sustained. Applying the said principle to the case on hand, we find that the order dated 06.10.2008 of the first respondent was passed by the first respondent without assigning any reasons. Therefore, we are of the view that the order dated 06.10.2008 of the first respondent is per se bereft of any material particulars and it was passed mechanically without any application of mind. We are also of the opinion that in the present case, the first respondent has not arrived at a subjective satisfaction, supported by any material evidence, to conclude that by reason of the order passed by his subordinates under Section 47-A (2) or 47-A (3) of The Indian Stamp Act, prejudice is caused to the interest of revenue warranting the first respondent to exercise his suo motu powers as contemplated under Section 47-A (6) of The Indian Stamp Act, 1989. Further, the appellant has given a detailed reply to the show cause notice repudiating the proposed enhancement with documentary evidence but the same has also not been considered by the first respondent. In any event, in the absence of any proof to show that interest of the revenue is prejudiced by reason of the orders passed by his subordinates, the impugned order passed by the first respondent, in exercise of suo motu powers conferred under Section 47-A (6) of The Indian Stamp Act, cannot sustain. Accordingly, we answer both the questions formulated in this appeal against the respondents and in favour of the appellant.
24. In the result, we set aside the Order dated 06.10.2008 passed by the first respondent, which is impugned in this appeal. Resultantly, the Civil Miscellaneous Appeal is allowed. No costs. Consequently, connected miscellaneous petition is closed.
(R.P.S.J.,) (P.D.A.J.,)
08-06-2018
rsh
Index : Yes / No
To
1. Inspector General of Registration
Santhome High Road
Chennai
2. Special Deputy Collector of Stamps
Singaravelan Building
Rajaji Salai, Chennai
3. The Sub-Registrar
Anna Nagar, Chennai
R. SUBBIAH, J
and
P.D. AUDIKESAVALU, J
rsh
Pre-delivery Judgment in
CMA No. 39 of 2009
08-06-2018