Allahabad High Court
Chhotey Lal vs State Of U.P. And Others on 8 July, 2020
Author: Pankaj Bhatia
Bench: Pankaj Bhatia
HIGH COURT OF JUDICATURE AT ALLAHABAD Reserved on 8.1.2020 Delivered on 8.7.2020 Court No. - 91 Case :- WRIT - C No. - 42628 of 2010 Petitioner :- Chhotey Lal Respondent :- State of U.P. and Others Counsel for Petitioner :- Pradeep Upadhyay Counsel for Respondent :- C.S.C. Hon'ble Pankaj Bhatia,J.
The present petition has been filed challenging the order dated 4.1.2010 passed by A.D.M. (Finance & Revenue), Aligarh as well as the order dated 18.12.2004 passed by respondent no. 2.
The brief facts necessary for adjudication are that the petitioner purchased an agricultural land situate at Village Pala Sahibabad, Pargana & Tehsil Koil, District Aligarh bearing Khasra No. 121 and Khata No. 90 measuring 0.371 hectare, vide sale deed dated 27.11.2001 and paid the stamp duty which was payable on agricultural land. On 31.7.2004, after about two and a half years, the respondent no. 3 issued notices under Section 33/47-A proposing to levy the deficient stamp duty simply stating that the market value appears to be improperly stated in the document executed. The petitioner and the vendees filed their response. During the pendency of the said case, a report was called from the Tehsildar, Aligarh, who gave his report that the land in question was an agricultural land and was irrigated through a private tubewell and was situate at a distance of half a kilometre away from the National Highway and the Abadi. The petitioner also adduced evidence to the effect that the land in question continued to be an agricultural land, as referred in the Khasra entries, however, the respondent no. 3 passed an order dated 18.12.2004 recording that on the personal inspection carried out by the Adjudicating Authority himself it was clear that on the spot, no crops were standing and on account of pits on the land in question, it appears that for the last 2-3 years, no agricultural activity has been carried out over the property in question. He further rejected the report of the Tehsildar on the same grounds that he did not find the crops standing over the property in question. He further held that near the property in question, a colony was being constructed in the name of Bihari Dham as it appeared to him that the property should be valued for the purposes of stamp duty on the rates which are applicable to residential properties.
Aggrieved against the said order, the petitioner preferred a Revision No. 148 of 2005 and also filed his written submissions. The Revisional Authority dismissed the revision and affirmed the order passed by the A.D.M. (Finance & Revenue) without even resorting to the written submission filed by the petitioner as well as the grounds taken in the memo of revision.
Counsel for the applicant submits that it is well settled that the nature of the property and its categorization on the date of the sale is the relevant criteria for determining the stamp duty to be levied while execution of the instrument of sale. He further submits that it is well settled that future use of the property or its potential to be used for a different purpose cannot be the criteria for determining the stamp duty that too after a gap of more than two and a half years. He further submits that there was no material on record for disbelieving the report of the Tehsildar, which categorically recorded that the land in question was being used as an agricultural land except the ocular testimony of the adjudicating authority himself, which too was done ex-parte without giving any notices to the petitioner. He thus submits that the petition deserves to be allowed as the orders passed are arbitrary and illegal.
Counsel for the petitioner has relied upon the judgment of this Court passed in Writ-C No. 58859 of 2010 (Archana Gupta and Others v. State of U.P. and Others). He has further placed reliance on the judgment in the case of M/s Prosperous Buildcon Pvt. Ltd. v. State of U.P. and others.
Learned Standing Counsel on the other hand opposed the writ petition on the ground that once the Adjudicating Authority has himself visited the property in question and found that no agricultural activity was being carried out over the property in question, the orders passed are legal and call for no interference in exercise of powers under Section 226 of the Constitution of India.
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."
On the basis of the submissions made, the short question that arises are as to whether levy of stamp duty can be justified on the basis of land not being used for the purposes for which it was purchased and whether stamp duty can be levied on the ground that in the vicinity, lands are being used for residential purposes, the above two referred judgments give a clear answer to the questions raised in the present writ petition. These aspects have been duly considered by this Court. Even otherwise in the Rules provided for valuation of the property, it is clear that the valuation has to be done on the date of execution of the sale deed and not on the grounds of its potential use subsequently for a different purpose. There is nothing on record to demonstrate that on the date of the execution of the sale deed, the land was not agricultural property referred in the revenue records. There is further nothing on record to demonstrate that the land in question was declared fit for residential use under Section 143 of the U.P. Z.A. & L.R. Act. That being the case, it is a simple case of improper exercise of jurisdiction vested in the A.D.M. and an improper exercise of jurisdiction vested in the Revisional Court.
Considering the facts that the law applicable thereto, both the said orders cannot be sustained and as such the orders dated 18.12.2004 and 4.1.2010 are set aside. The writ petition is allowed. The amounts deposited by the petitioner in pursuance to the orders passed by this Court on 23.7.2010 shall be refunded to the petitioner by the respondent no. 3 on his moving an application before the said authority. The refund shall be made within a period of three months from the date of production of certified copy of this order.
The writ petition is allowed in terms of the said order.
Order Date :- 8.7.2020 SR