Allahabad High Court
The Institute Of The Franciscan Clarist ... vs State Ofu.P. Thru Secretary ... on 18 February, 2020
Author: Pankaj Bhatia
Bench: Pankaj Bhatia
HIGH COURT OF JUDICATURE AT ALLAHABAD A.F.R. Reserved on 3.2.2020 Delivered on 18.2.2020 Court No. - 30 Case :- WRIT - C No. - 23232 of 2007 Petitioner :- The Institute Of The Franciscan Clarist Sisters Thru President Respondent :- State of U.P. Thru Secretary Registration U.P. Govt. And Ors. Counsel for Petitioner :- M.K. Gupta,Jaideep Bedi,J. Nagar (Senior Advocate), Pratik J. Nagar,Smt.Supriya Pratik Nagar Counsel for Respondent :- C.S.C. Hon'ble Pankaj Bhatia,J.
The petitioner, a society registered under the Societies Registration Act purchased a property by means of a sale deed dated 29.10.1998, whereby agricultural plots no. 774, 775, 784, 785, 786, 787, 789 and 790 admeasuring 9 Bigha, 12 Biswa from a Co-operative Society for a total sale consideration of Rs. 25 Lakhs. The said land being agricultural land, the stamp duty was paid in terms of the Property Valuation Rules, valuing the property at Rs. 66,36,000/-, which was the prescribed rate by the Collector, Agra being Rs. 30 Lakhs per hectare for agricultural lands and consequently, the stamp duty was paid thereupon.
A notice was served upon the petitioners in exercise of powers under Section 47-A of the Stamp Act proposing to redetermine the stamp duty. The petitioner-society filed its objections specifying therein that the land in question was an agricultural land and the entire area in the vicinity was undeveloped and thus for the purposes of valuation, the property was valued on the rates specified for agricultural properties and thus requested that show cause notice be dropped. An affidavit was also filed by the petitioner-society specifically stating therein that no declaration under Section 143 of the U.P. Z.A. & L.R. Act was made in respect of the property in question.
In support of the contentions of the petitioner-society, a copy of the revenue records as well as the map of the village showing that the village is not even connected to any road and the property was surrounded by agricultural plots was filed and evidence in the form of a sale deed dated 3.11.1999 in respect of the land in the same village, was also filed, wherein stamp duty was charged at the rate of Rs. 30,000,00/- per hectare and in proceedings arising out of the said sale deed, an order had been passed in case no. 1223 of 1999 by the respondent no. 2 himself holding that there were no deficiency in the stamp duty. The petitioner has also filed herein a Government Order dated 13th August, 1999, in which directions have been issued directing that the future use of the property should not be the basis for computation of the stamp duty.
Despite the said objections, the respondent no. 2 vide his order dated 28.1.2003 passed an order holding that there was deficiency of stamp duty of Rs. 19,90,200/- and further a sum of Rs. 50,000/- was imposed as penalty. Thus, the petitioners were directed to pay a total amount of Rs. 20,40,200/-.
A perusal of the said order reveals that the deficiency in stamp duty was imposed on the ground that the land in question has been sold by a Co-operative Housing Society and the purpose of the society is not to sell lands for agricultural purposes and further that the purchaser is a Christian Institution and as per the terms of the sale deed, the intention is to construct an Educational Institution thereupon and as such it was not possible to accept that an agriculture activity can be carried out over the property in question. It was also observed that on an inspection of the property in question, it was clear that no development had been carried out over the property in question and the property was being used for agricultural purposes. However, proceeded to hold that the stamp duty should be calculated for residential accommodations and on that basis proceeded to assess the deficiency of stamp duty, as recorded above.
Aggrieved against the said order, the petitioner preferred an appeal, in which as an interim measure, an interim order was passed on 8.4.2003 directing the petitioner to deposit 1/3rd of the disputed amount and the balance was stayed during the pendency of the appeal.
Ultimately vide order dated 12.1.2007, the appeal was dismissed on merits affirming the order passed by respondent no. 2, on the grounds on which the earlier order was passed.
Challenging the said two orders being order dated 28.1.2003 as well as the order dated 12.1.2007, the present writ petition has been filed.
I have heard Sri J .Nagar, Senior Advocate assisted by Sri Pratik J. Nagar, counsel for petitioner and Standing Counsel for the State-respondents.
Sri Nagar has assailed the said orders on the ground that there was no material on record to initiate proceedings under Section 47-A (4) of the Act, as the market value given in the instrument was same what was prescribed by Rule 3 of the U.P. Stamp (Valuation of Property) Rules, framed under the Act. He further submits that the orders suffer from error as the very basis of the order is the future use of the property, completely overlooking the fact that on the date of the purchase, the property in question was a purely agricultural property. He further submits that in respect of a similar plot in the same village, the respondent no. 2 had passed an order accepting the stamp paid on the valuation of Rs. 30 Lakhs per Hectare. He further argues that in respect of the land in question, no declaration under Section 143 of the U.P. Z.A. & L.R. Act had been made and there was no evidence on record to come to the conclusion that on the date of the execution of sale deed, the property was not agricultural in nature. He further argues that even in terms of the report furnished before the respondent no. 2, it was clear that the property was agricultural in nature and was being used for agricultural purpose only. His next contention is that the order was passed ignoring the Government Order dated 16.8.1989 as well as the judgments of this Court and thus prays that the impugned orders be set aside.
He has placed reliance on the following judgments of the Apex Court as well as this Court:-
1. State of Uttar Pradesh v. Ambrish Tandon and Another; 2012 Supreme Court Cases, Volume 5, Page 566.
2. Surendra Singh and Another v. State of U.P. and Others; 2009 Allahabad Daily Judgments, Volume 2, Page 560.
3. Rajesh Pandey v. State of U.P. and Others; 2011 Allahabad Daily Judgments, Volume 4, Page 801.
4. Maya Foods and Vanaspati Ltd. v. Chief controlling Revenue Auhtority; 1998 Allahabad Weekly Cases, Volume 4, Page 636.
5. Ratna Shanker Dwivedi v. State of U.P. and Others; 2012 Allahabad Daily Judgments, Volume 5, Page 414.
6. Dukhi v. State of U.P. and Others; 2013 Allahabad Daily Judgments, Volume 6, Page 622.
7. Smt. Munni Devi v. Chief Controlling Revenue Authority and Others; 2013 Allahabad Daily Judgments, Volume 8, Page 425.
8. Varun Gopal v. State of U.P. and Others; 2015 Allahabad Daily Judgments, Volume 2, Page 311.
9. Sumati Nath Jain v. State of U.P. and Another; 2016 Allahabad Daily Judgments, Volume 2, Page 533.
10. Ashwani Kumar v. State of U.P. and Others; 2017 Allahabad Daily Judgments, Volume 2, Page 661.
11. Reena Gupta v. State of U.P. and Others; 2020 Allahabad Daily Judgments, Volume 2, Page 162.
12. 2011 (3) Allahabad Daily Judgments, 888.
13. 2014 (1) Allahabad Daily Judgments, 415.
The State has filed its counter affidavit denying the allegations in the writ petition, however with regard to the specific case of the petitioner that in respect of a sale deed dated 3.11.1999 pertaining to similar land in the same village, an order had been passed holding that the instrument sufficiently stamped at the rate of Rs. 30 Lakhs per Hectare. Following are the relevant pleadings, para 19 of the writ petition is quoted hereinbelow:-
"That the petitioner filed certified copy of the sale deed dated 3.11.99 with respect to the land of the same Village and also the order of Additional District Magistrate (Finance and Revenue) dated 14.8.2000 in proceedings under Section 47-A of the Stamp Act being Case No. 1223 of 1999 to demonstrate that the sale deed dated 3.11.99 was held to be sufficiently stamped at the rate of Rs. 30 Lacs per hectare. The valuation of the land which is subject matter of the instrument in question in the instant appeal was also valued at the same rate for purpose of payment of stamp duty, though, in fact, it was purchased for much lessor price. Respondent No. 2 committed a manifest error of law in not taking into consideration the same exemplar filed by the petitioner herein."
In paragraph 13 of the counter affidavit, reply of para 19 of the writ petition has been given, which is quoted hereinbelow:-
"That the contents of para 19 and 20 of the writ petition are irrelevant for the present controversy of market value with regards to the impugned sale deed. The petitioner cannot escape from the liability of payment of stamp duty on the grounds of some incorrect order passed earlier."
The Standing Counsel, on the basis of the pleadings on record, submits that the writ petition is liable to be dismissed, as there is no error in the order passed. In reply to the averments made in para 10 of the writ petition that the order in respect of sale deed dated 3.11.1999, the order of the respondent no. 2 was brought on record. The reply given in para 8 of the counter affidavit is that an incorrect order cannot be made basis for passing subsequent orders.
In view of the pleadings exchanged and the arguments advanced at the bar, the sole question to be decided is whether, a property which is agricultural and has not been declared as non-agricultural under Section 143 of the U.P. Z.A. & L.R. Act can be valued at non-agricultural rates only on the ground that in future the same may be used for non-agricultural purposes.
Referring to the judgments cited by Sri Nagar, the first case being State of Uttar Pradesh Vs. Amrish Tandon and Another (Supra), the Supreme Court in view of the fact of the case recorded as under:-
"The impugned order of the High Court shows that it was not seriously disputed about the nature and user of the building, namely, residential purpose on the date of the purchase. Merely because the property is being used for commercial purpose at the later point of time may not be a relevant criterion for assessing the value for the purpose of stamp duty. The nature of user is relatable to the date of purchase and it is relevant for the purpose of calculation of stamp duty. Though the matter could have been considered by the Appellate Authority in view of our reasoning that there was no serious objection and in fact the said alternative remedy was not agitated seriously and in view of the factual details based on which the High Court has quashed the order dated 27.09.2004 passed by the Additional District Collector, we are not inclined to interfere at this juncture."
The next case cited is Surendra Singh (Supra), wherein this Court held as under:-
"8. In M/s Maya Food and Vanaspati Ltd. Co. v. Chief Controlling Revenue Authority (Board of Revenue) Allahabad, 1990 (90) RD 57, the Court held that the market value of the land could not be determined with reference to the use of the land to which the buyer intends to put in use. The Court held that a buyer may intend to establish an industrial undertaking thereon and that another buyer may intend to use it for agricultural purposes and a third person may intend to dedicate it for charitable purposes and that these different intentions of individual buyers may affect the price of each of them would be willing to pay for the property but the market value would not depend upon what each individual would offer for the property in question and that the market value would be that which a general buyer would offer and what the owner reasonably accepts for that property, the court held that in determining the market value, the potential of the land as on the date of sale alone could be taken into account in determining the market value and that the potential value of the land that could be put in use in future could not to be taken into consideration.
13. None of the authorities below besides the report of the Sub-registrar has referred any other material in support of their orders. In Ram Khelawan @ Bachha v. State of U.P. through Collector, Hamirpur and another, 2005 (98) RD 511, it has been held that the report of the Tehsildar may be a relevant factor for initiation of the proceedings under Section 4-A of the Act, but it cannot be relied upon to pass an order under the aforesaid section. In other words, the said report cannot form itself basis of the order passed under Section 47-A of the Act. In the case of Vijai Kumar v. Commissioner, Meerut Division, Meerut, 2008(7) ADJ 293 (para 17), the ambit and scope of Section 47-A of the Act has been considered with some depth. Taking into consideration the Division Bench judgment of this Court in Kaka Singh v. Additional Collector and District Magistrate (Finance and Revenue), 1986 ALJ 49; Kishore Chandra Agrawal v. State of U.P. and others, 2008 (104) RD 253 and various other cases it has been held that under Section 4-A (3) of the Act, the burden lay upon the Collector to prove that the market value is more than minimum as prescribed by the Collector under the Rules. The report of the Sub-registrar and Tehsildar itself is not sufficient to discharge that burden.
14. Viewed as above, it is, thus, evident that the report of the Sub-registrar could not legally form basis of the impugned order. There is no material in possession of the respondents to show that on the date of the execution of the sale deed, the land in dispute was not agricultural land. The laying of foundation subsequent to the sale deed is of little consequence so far as it relates to the determination of the payment of stamp duty under Section 47-A of the Act is concerned. Additionally, the learned counsel for the petitioners submits that still the land in dispute is being used for agricultural purposes. In this connection, he has placed reliance upon the extract of Khasra of 1414 Fasli. In the said Khasra it is mentioned that cattle fodder has been sown on the spot. However, in the Khasra under heading category in column 18 of the said Khasra the entry is "Abadi/Shamil Jot". The use of words ''Sha Ja' have been explained by the counsel for the parties as "Shamil Jot" which means joint cultivation. At this stage, the learned Standing Counsel submits that entry of " Abadi" reflects that the property in dispute is not agricultural property. Along with the counter affidavit the revenue extract (Khasra) of 1412 Fasli which corresponds to the year 2007 has been annexed. From this Khasra it is evident that crop of Urd was sown in Kharif season in the land in question. However, there is an entry of "Abadi/Shamil Jot" under the column 18. The said document does not relate to the date of the execution of the sale deed nor appears to have been filed before the authorities below and as such is liable to the ignored. Besides above, the fact that the crop was sown and factum of joint cultivation mentioned in the said document are also liable to be taken into consideration and cannot be ignored. The fact remains that there is no cogent or convincing material on the record to show that the land on the date of execution of the sale deed was other than the agricultural land, at least."
The next case cited is Rajesh Pandey (Supra), the same related to valuation of the constructions. The said judgment has no applicability to the facts of the present case.
Coming to the next judgment in the case of Maya Foods and Vanaspati Ltd. (Supra), this Court recorded as under:-
"20. I have reproduced paragraph 5 of the impugned order dated 14.11.94 for a certain purpose. Learned Chief Controlling Revenue authority has observed that the land was purchased for an industrial purpose and the Collector is not arbitrary in deciding the price of the land on the basis of the proposed usage. This proposition is legally incorrect. The market Value of the land cannot be determined with reference to the use of the land to which buyer intends to put it. One buyer may intend to establish an industrial undertaking thereon, another may intend to use it for agricultural purpose and a third person may intend to dedicate it for charitable purposes like leaving it open as pasture ground or a cremation ground or a playground. These different Intentions may affect the price that each of them may be willing to pay for the property and such prices have wide variations but the market value is not what each such individual may offer for the property. The market value is what a general buyer may offer and what the owner may reasonably expect. In determining the market value, the potential of the land as on the date of sale alone can be taken into account and not what potential it may have in the distant future."
The next judgment is in the case of Ratna Shanar Dwivedi (Supra), wherein this Court considering the similar controversy recorded as under:-
"16. Rule 7 of 1997 Rules while providing for determination of market value nowhere refers to either minimum value fixed under Rule 4 or 5 of 1997 Rules or provides that the market value shall be determined by the Collector which must be in all cases higher than the value set forth in the instrument by the parties concerned. The question as to how and what manner market value would have to be determined by the Collector has been discussed in detail and various aspects have been considered by this Court in Ram Khelawan (Supra). Thus, the Collector is under a statutory obligation before holding that an instrument does not set forth correct market value, to determine as to what is the market value of the property in question. The contention as raised by learned Standing Counsel that immediate potential user of the land is relevant for the purpose of determining market value, cannot be disputed but that is one of the relevant consideration and can not be the sole basis for holding that the value of the property as set forth in the instrument is not correct and it must be higher than that. Learned Standing Counsel also failed to point out as to which kind of land has no potential at all for user as residential purposes in future. The nature and character of land can always be changed subject to its use by its inhabitants in future. Hence future potential of the land for residential user by itself would not be a sole determinative factor for determining market value though, of course, it may be one of the relevant consideration for the same. The Collector however has to examine all relevant aspects in the matter and thereafter to find out what is the correct market value of the property in question. He cannot proceed merely by saying that since the land is adjacent to Abadi, therefore, it must be valued at the rate of residential land and duty must be charged accordingly.
17. In Aniruddha Kumar and Ashwini Kumar Vs. Chief Controlling Revenue Authority U.P. Alld. and another 2000(3) AWC 2587 this Court has clearly laid down that where in respect of agricultural land there is no declaration under Section 143 of the U.P. Z.A.and LR Act 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.
18. In M/s. Maya Food and Vanaspati Ltd. Co. Vs. Chief Controlling Revenue Authority (Board of Revenue ) Allahabad, 1990 (90) RD 57 this Court has 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.
19. In view of the aforesaid legal position and the facts and circumstances of the case, as the land in dispute is of agricultural nature, in the absence of any declaration under Section 143 of the U.P. Z.A. and LR Act coupled with the fact that its potential use is of no relevance, the authorities below has manifestly erred in law in treating it to be an abadi land and applying the circle rate prescribed for abadi land for the area."
The next judgment is in the case of Dukhi (Supra), wherein this Court was confronted with the similar issue pertaining to future potential as being a factor for determining the market value of the land for the purpose of stamp duty. This Court considered the entire gamut of judgments and placing reliance in the case of Maya Foods, recorded as under:-
"19. The Division Bench of this court in 2004 (5) AWC 3952, Rakesh Chandra Mittal and others Vs. State of U.P. and another has held that it is well settled principle that market value of the property has to be determined with reference to the date on which the document is executed. The Division Bench while holding the above proposition has noticed that land therein was being used for agricultural purpose at the time of purchase and after long time of purchase of the land, a small machine for extracting peppermint oil over a very small part of the land was installed. It has held that any subsequent improvement or change in the nature or user of the land , which may result into enhancement of the market value of the property is not to be taken into account and it is only the value of the property on the date of execution of the document that is to be considered for the purpose of determination of proper stamp duty payable on the instrument.
20. In view of the above discussion, proposition of law as as laid down in the case of M/s Maya Foods and Vanaspati Ltd., Allahabad (Supra) relied upon by this court is the settled law and squarely applies in the facts of the present case. Accordingly reasoning given by the authorities below on the question of imposition of stamp duty on future potential value is unsustainable. The orders passed by both the authorities i.e. respondents no 2 and 3 are hereby set aside."
The next judgment is in the case of Smt. Munni Devi (Supra), wherein this Court recorded as under:-
"7. The petitioner in paragraph 3 of the writ petition has categorically stated that the land purchased by him was agricultural land. No reply to this paragraph has been made by the respondents in their counter affidavit.
8. In paragraph 4 of the writ petition, the petitioner has categorically stated that after the purchase of the land his name was mutated as a bhumidhar in the khatauni, which fact is admitted by the respondents in paragraph 3 of the counter affidavit.
9. In the light of the aforesaid, the valuation, if any, has to be calculated on the basis of the land revenue and not on the basis of the circle rate or on the basis of the potential value of the land."
The next judgment in the case of Varun Gopal (Supra) deal with a similar issue and the Court after considering the entire line of judgments recorded as under:-
"24. 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 Division, 2008(7) ADJ 293)
32. In the facts of the case, it is admitted that the property is agricultural property and is being used for agricultural purpose, the property adjoining the property is also agricultural property. The basis of the Collector concluding that the property is undervalued is the spot inspection report, stating that the adjoining agricultural property is being plotted for residential purpose. The exemplars (sale deeds) referred to have not been discussed, nor does it show they are comparable with the property in question. The property on which plotting is taking place is agricultural land and not abadi. It is not the case of the State that the land in and around the property in question has become abadi primarily. The minimum value fixed by the Collector is Rs. 55 lacs per hectare for agricultural land whereas the Collector has determined the market value at Rs. 210 lac per hectare i.e. four times over and above the minimum value fixed under the Rules, which on the face of it appears to be irrational. The 'belief' must not be arbitrary or purely subjective satisfaction, belief must have rational connection or relevant bearing to the formation of the belief/opinion."
The next judgment is in the case of Sumati Nath Jain (Supra), wherein this Court while hearing an intra-court appeal arising out of a writ petition, filed challenging a show cause notice issued on the basis of a unsubstantiated assumption that the property is situate in NOIDA and in future it may be put to non-agricultural use, the Division Bench of this Court hold as under:-
"15. It is apparent that the notice on the basis of which proceedings were initiated against the appellant suffered from the same fundamental flaws and defects as were noticed by the Bench in Smt. Vijaya Jain. We may also note that the requirements of a valid show cause notice were lucidly explained by the Supreme Court in Oryx Fisheries (P) Ltd. Vs. Union of India in the following terms: -
"27. It is no doubt true that at the stage of show cause, the person proceeded against must be told the charges against him so that he can take his defense and prove his innocence. It is obvious that at that stage the authority issuing the charge-sheet, cannot, instead of telling him the charges, confront him with definite conclusions of his alleged guilt. If that is done, as has been done in this instant case, the entire proceeding initiated by the show cause notice gets vitiated by unfairness and bias and the subsequent proceedings become an idle ceremony.
31. It is of course true that the show cause notice cannot be read hypertechnically and it is well settled that it is to be read reasonably. But one thing is clear that while reading a show cause notice the person who is subject to it must get an impression that he will get an effective opportunity to rebut the allegations contained in the show cause notice and prove his innocence. If on a reasonable reading of a show cause notice a person of ordinary prudence gets the feeling that his reply to the show cause notice will be an empty ceremony and he will merely knock his head against the impregnable wall of prejudged opinion, such a show cause notice does not commence a fair procedure..."
16. We find in the facts of the present case that not only was there a complete non disclosure of the relevant material to which the appellant could respond to establish his innocence, the notice itself was couched in tenor and language which would have led any person to face the specter of what the Supreme Court described as the "impregnable wall of prejudged opinion".
INVOCATION OF SECTION 47A
17. Section 47A (3) as a plain reading of the provision would indicate comes into operation if the Collector has before him material which may lead him to believe that the market value of the property comprised in an instrument has not been truthfully disclosed. In the present case the Collector proceeded in the matter solely on the basis of the report of the Sub Registrar dated 7 February 2012. This report doubted the valuation of the property on the ground that in the area abutting it, various residential houses had come up and that Greater NOIDA had become a development hub. Bearing in mind the location of the plot and its likely use, the Sub Registrar opined, it would be inappropriate to value the property at agricultural rates. We find that the very bedrock upon which the opinion of the Sub Registrar based his report was faulty and could not have consequently formed the basis for further action under section 47A (3).
18. We may note that on the date of execution of the instrument the land was admittedly recorded as agricultural. In fact the Khasra of the property remained unchanged throughout and continued to represent the land as recorded for agricultural purposes. The respondents were in our opinion wholly unjustified in initiating proceedings based on an unsubstantiated assumption that the property in future was likely to be put to non-agricultural use.
19. The perceived or presumed use to which a buyer may put the property in the future can never be the basis for adjudging its value or determining the stamp duty payable. The Act, we may note is a fiscal statute. The taxable event with which it concerns itself is the execution of an instrument which is chargeable to duty. The levy under the statute gets attracted the moment an instrument is executed. These propositions clearly flow from a plain reading of the definition of the words "chargeable", "executed" and "instrument" as carried in the Act. In the case of an instrument which creates rights in respect of property and upon which duty is payable on the market value of the property comprised therein, since the tax liability gets fastened immediately upon execution it must necessarily be quantified on the date of execution. The levy of tax or its quantum cannot be left to depend upon hypothetical or imponderable facets or factors. The value of the property comprised in an instrument has to be adjudged bearing in mind its character and potentiality as on the date of execution of the instrument. For all the aforesaid reasons we fail to find the existence of the essential jurisdictional facts which may have warranted the invocation of the powers conferred by section 47A (3). We are therefore of the firm opinion that the initiation of proceedings as well as the impugned order based upon a presumed future use of the property for residential purposes was wholly without jurisdiction and clearly unsustainable. Dealing with this aspect of the matter and after noticing the consistent line of precedent on the subject the Division Bench in Smt Vijaya Jain observed: -
"This Court on more than one occasion has held that the market value of the land is not liable to be determined with reference to the use to which a buyer intends to put it in future. The market value of the property is to be determined with reference to its character on the date of execution of the instrument and its potentiality as on that date.
xxx xxx xxx The above principles of law enunciated in the aforementioned judgments have been consistently followed by this Court. We however find that the order of the Collector relies upon no evidence which would support imposition of residential rates on a property which was stated to be agricultural on the date of execution of the instrument."
The other judgments in the case of Ashwani Kumar (Supra), ; Rajendra Kumar v. State of U.P. and Others [2011(3) ADJ 888]; Sarvoday Babu Uddeshiya Vikas Samiti v. Commissioner, Kanpur Division and Others: [2014(1) ADJ 415] deal with similar issues and as such are not being reproduced for the sake of brevity.
This Court in Writ-C No. 57052 of 2010 (Reena Gupta v. State of U.P. and Others) had the occasion to deal with a similar issue and the writ petition was allowed by means of a judgment dated 18.1.2020 relying upon another judgment of this Court in the case of M/s Properous Buildcon Pvt. Ltd. v. State of U.P. and others, wherein it was held as under:-
"This Court while considering the similar question in the case of M/s Prosperous Buildcon Pvt. Ltd. v. State of U.P. and others, recorded as under:-
"A Division Bench of this Court in 2015 (9) ADJ 503, Smt. Vijaya Jain vs. State of U.P. and Others has held in paragraphs 20 and 23 which read as under:
"20. Having extracted the relevant statutory provisions above, the following principles emerge therefrom. Sub-section (1) (a) of Section 47-A of the Act empowers the registering officer to call upon the person who has presented an instrument for registration to pay deficit stamp duty. This power is exercisable by the registering officer immediately after presentation of an instrument and before accepting it for registration and taking any action under Section 52 of the Act. This power is liable to be exercised in a situation where the market value of the property as set forth in the instrument is less than even the minimum value fixed by the Collector in accordance with the rules made under the Act. In distinction to the above, the power under sub-section (3) of Section 47-A is exercised by the Collector either suo motu or on a reference from any Court or from the Commissioner of Stamps or an Additional Commissioner of Stamps, Deputy Commissioner of Stamps, an Assistant Commissioner of Stamps or any officer authorized in that behalf by the State Government. This power confers jurisdiction and authority on the Collector to call for and examine any instrument for the purpose of satisfying himself as to the correctness of the market value of the property which forms the subject matter of the instrument and if upon such examination, he has reason to believe that the market value of such property has not been truly set forth in such instrument, he may proceed to determine the market value of such property and the duty payable thereon. The first distinguishing feature of sub section (3) is that it is available to be exercised even after the instrument has been registered. Secondly the Collector proceeds under sub section (3) upon finding that the "market value" of the property has not been truly set forth in the instrument as distinct from the "minimum value fixed by the Collector in accordance with the rules made under the Act" which is the benchmark for initiation of action under sub section (1).
23. From the provisions extracted above, it is apparent that the Collector proceeds under sub section (3) of Section 47-A read with rule 7 when he has reason to believe that the market value of the property comprised in the instrument has not been truly set forth and that in the opinion of the Collector, circumstances exist warranting him to undertake the enquiry contemplated under rule 7. What we however find from the notice dated 09 September 2013 is that the Collector has proceeded to record, albeit prima facie, that the instrument in question has been insufficiently stamped to the extent of Rs.8,89,000/-. The notice apart from referring to a note dated 20 May 2013, received from the Assistant Inspector General of Registration neither carries nor discloses any basis upon which the Collector came to the prima facie conclusion that the appellant was liable to pay Rs. 8,89,000/ as deficit stamp duty. In our opinion a notice of this nature must necessarily disclose to the person concerned the basis and the reasons upon which the Collector has come to form an opinion that the market value of the property has not been truly set forth. In the absence of a disclosure of even rudimentary details on the basis of which the Collector came to form this opinion, the person concerned has no inkling of the case that he has to meet. A notice in order to be legally valid and be in compliance with the principles of natural justice must necessarily disclose, though not in great detail, the case and the basis on which action is proposed to be taken against the person concerned. Not only this and as is evident from a bare reading of rule 7, at the stage of issuance of notice, the Collector has to proceed on the basis of material which may tend to indicate that the market value of the property has not been truly and faithfully disclosed in the instrument. The stage of computation of market value comes only after the provisions of sub rules (2) (3) and (4) of rule 7 come into play. At the stage of issuance of notices, the Collector calls upon the person concerned to show cause "as to why the market value of the property.... be not determined by him".
There is another aspect of the matter, which ought not to go un-mentioned, namely, the notice under Section 47-A (2) of the Act, 1899 refers to the potential value of the land as being more than the rates prescribed by the Collector for residential land. It is not denied by the authorities that the land in question was agricultural land but the authorities have proceeded for determining the stamp duty on a presumption that the said land has a potential of future user for residential purposes because the Village Shahpur Bamhaita, Pargana Dasna, District Ghaziabad has been declared as Hi-tech City and Integrated City. The Supreme Court and this Court have time and again held that the potential user of the property cannot be the determining factor for computing its market value or the consequent stamp duty payable thereon.
In (2012) 5 SCC 566, State of U.P. Vs. Ambrish Tandon and others, the Supreme Court has held that merely because the property is being used for commercial purposes at the later point of time may not be a relevant criterian for assessing the value for the purpose of the nature of user is relatable to the date of purchase and it is relevant for the purpose of calculation of stamp duty.
The judgment of the Supreme Court in the case of Ambrish Tandon (supra) has been followed by the Full Bench of this Court reported in 2015 (3) ADJ 136 (Smt. Pushpa Sareen Vs. State of U.P.) wherein the Full Bench has also held that the nature of the user is relatabe to the date of purchase which is relevant for the purposes of computing the stamp duty. Where however the potential of the land can be assessed on the date of execution of the instrument itself by referring to exemplar or comparable sale instances that is clearly a circumstances which is relevant and germane to determine the true market value. Paragraph 27 of the said judgement reads as under:
"27.The fact that the land was put to a particular use, say for instance a commercial purpose at a later point in time, may not be a relevant criterion for deciding the value for the purpose of stamp duty, as held by the Supreme Court in State of U.P. and others vs. 23 Ambrish Tandon and another, 2012 (5) SCC 566. This is because the nature of the user is relatable to the date of purchase which is relevant for the purpose of computing the stamp duty. Where, however, the potential of the land can be assessed on the date of the execution of the instrument itself, that is clearly a circumstance which is relevant and germane to the determination of the true market value. At the same time, the exercise before the Collector has to be based on adequate material and cannot be a matter of hypothesis or surmise. The Collector must have material on the record to the effect that there has been a change of use or other contemporaneous sale deeds in respect of the adjacent areas that would have a bearing on the market value of the property which is under consideration. The Collector, therefore, would be within jurisdiction in referring to exemplars or comparable sale instances which have a bearing on the true market value of the property which is required to be assessed. If the sale instances are comparable, they would also reflect the potentiality of the land which would be taken into consideration in a price agreed upon between a vendor and a purchaser."
A Division Bench of this Court in 2016 (2) ADJ 533 (DB) Sumati Nath Jain Vs. State of U.P. and another has held in paragraphs 18 and 19 as under:
"18. We may note that on the date of execution of the instrument the land was admittedly recorded as agricultural. In fact the Khasra of the property remained unchanged throughout and continued to represent the land as recorded for agricultural purposes. The respondents were in our opinion wholly unjustified in initiating proceedings based on an unsubstantiated assumption that the property in future was likely to be put to non-agricultural use.
19. The perceived or presumed use to which a buyer may put the property in the future can never be the basis for adjudging its value or determining the stamp duty payable. The Act, we may note is a fiscal statute. The taxable event with which it concerns itself is the execution of an instrument which is chargeable to duty. The levy under the statute gets attracted the moment an instrument is executed. These propositions clearly flow from a plain reading of the definition of the words "chargeable", "executed" and "instrument" as carried in the Act. In the case of an instrument which creates rights in respect of property and upon which duty is payable on the market value of the property comprised therein, since the tax liability gets fastened immediately upon execution it must necessarily be quantified on the date of execution. The levy of tax or its quantum cannot be left to depend upon hypothetical or imponderable facets or factors. The value of the property comprised in an instrument has to be adjudged bearing in mind its character and potentiality as on the date of execution of the instrument. For all the aforesaid reasons we fail to find the existence of the essential jurisdictional facts which may have warranted the invocation of the powers conferred by section 47A (3). We are therefore of the firm opinion that the initiation of proceedings as well as the impugned order based upon a presumed future use of the property for residential purposes was wholly without jurisdiction and clearly unsustainable. Dealing with this aspect of the matter and after noticing the consistent line of precedent on the subject the Division Bench in Smt Vijaya Jain observed: -
"This Court on more than one occasion has held that the market value of the land is not liable to be determined with reference to the use to which a buyer intends to put it in future. The market value of the property is to be determined with reference to its character on the date of execution of the instrument and its potentiality as on that date.
xxx xxx xxx The above principles of law enunciated in the aforementioned judgments have been consistently followed by this Court. We however find that the order of the Collector relies upon no evidence which would support imposition of residential rates on a property which was stated to be agricultural on the date of execution of the instrument."
The line of the judgments, as referred to above, make it clear that the consistent view of this Court has been that the future potential of the land in question cannot form the basis for determining the valuation of the property for the purposes of levy of stamp duty. The State Government has framed specific Rules known as Uttar Pradesh Stamp (Valuation of Property) Rules 1997 in exercise of powers under Sections 27, 47-A and Section 75 of the Indian Stamp Act, which provide for the manner in which the valuation of a property is to be determined. Rule 3 of the said Rules describes lands of following four natures, being agricultural land, non-agricultural land, grove and garden and buildings and the manner of valuation of each of the category of land is clearly specified in the said Rules.
A perusal of Rule 3 makes it clear that in respect of an agricultural land, the necessary disclosures that are required to be made are specified in Clause-A of Rule 3 (1), which was admittedly done by the petitioner in the present case. It is also admitted and also established by the observations made in the impugned order that at the time of inspection also that the property was being used for agricultural purposes and thus the only manner in which the property could be valued was as specified in Rule 3 (1) (A) of the Stamp Valuation Rules. There is no Rule, which authorises the Collector to determine the valuation beyond the mandate of Rule 3 (1) (A) solely on the ground that in future the same may be used for non-agricultural purposes.
The other relevant aspect of the present case is the interpretation of Section 47-A (3) of the Indian Stamp Act. Section 47-A (3) confers the power on the Collector to take steps for examining the instruments for the purpose of satisfying himself as to correctness of the market value of the property, which is subject matter of the instrument and if after such examination he has "reasons to believe" that the market value of such property has not been truly set forth, in such instrument, he may determine the market value and the duty payable thereon. The procedure for determining the duty is under Section 47-A (4), thus in terms of the plain reading of Section 47-A (3), the Collector can take steps only in the following circumstances:-
(a). Sou Motu
(b). A reference from any Court or from the Commissioner of Stamps or an Additional Commissioner of Stamps or a Deputy Commissioner of Stamps or an Assistant Collector of Stamps or any other authorised Officer by the State Government.
and; he should have "reasons to believe" that the market value has not been truly set forth in such instrument.
Thus, the power can be exercised only when the Collector on the basis of material before him either sou motu or in a reference comes to a conclusion that he has "reasons to believe".
In the present case, the instrument of the land disclosed that the land was being used for agriculture purposes only, no declaration under Section 143 converting the land use from agricultural to non-agricultural land had been passed, in a similar case, he had himself held in respect of an agricultural land that there was no deficiency in the stamp duty and thus in the present case, there was no material before the Collector to form a "reason to believe" and thus the entire initiation of proceedings was without the authority of law.
The said principle was also elaborately dealt by this Court in the case of Smt. Vijay Kumar and Another v. Commissioner, Meerut Division, Meerut and Another; 2008(3) AWC 2997, wherein this Court while interpreting the words "reason to believe" relying upon the judgments of the Supreme Court and similar words used in different Acts had held that although the power conferred under Section 47-A (3) are wide but are not plenary and cannot be exercised without there being material before the Collector to form a "reason to believe". A reason to suspect cannot be equated as "reason to believe", the belief which the Collector has to have prior to exercise of power under Section 47-A (3) should be in good faith and not merely a pretence and there should be some material which can lead to formation of such belief.
Thus, on the basis of the judgments of this Court, and placing reliance on Rule 3 (1) (A) of Stamp Valuation Rules, the only conclusion which can be drawn is that the orders passed and impugned in the present writ petition are wholly against the provisions of law and in the teeth of the judgments of this Court as well as in the teeth of the Stamp Valuation Rules. The orders impugned are further bad in law, as they do not even take into consideration the exemplar cited in the form of order dated 14.8.2000 passed in respect of a similarly situated property in the same village, in which a conveyance was executed on 3.11.1999. Thus, the orders impugned are perverse on that count also.
In view of the findings recorded above, the impugned order dated 12.1.2007 and order dated 28.1.2003 are set aside. The amount deposited by the petitioner as a mandatory deposit for preferring an appeal and in terms of the order dated 16.5.2007 shall be refunded to the petitioner along with interest thereupon at the rate 8% per annum within a period of three months from the date of filing an application by the petitioner before the respondent no. 2.
The writ petition is allowed in terms of the said order.
Order Date :- 18.2.2020 SR