Allahabad High Court
Badri Vishal Tiwari vs State Of U.P. Thru. Prin. Secy. Tax And ... on 10 November, 2022
Author: Abdul Moin
Bench: Abdul Moin
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH A.F.R. Court No. - 6 Case :- WRIT - C No. - 23474 of 2016 Petitioner :- Badri Vishal Tiwari Respondent :- State Of U.P. Thru. Prin. Secy. Tax And Registration And Ors. Counsel for Petitioner :- Gaurav Mehrotra,Kunal Chandra Agrawal Counsel for Respondent :- C.S.C Hon'ble Abdul Moin,J.
1. Heard learned counsel for the petitioner and learned Standing Counsel for the respondents no. 1 to 4.
2. The instant petition has been filed praying for the following main reliefs:
"(i) issue a writ, order or direction in the nature of Certiorari quashing the impugned order dated 15.04.2005 passed by Respondent No. 3 and annexed as Annexure No.1 to the instant Writ Petition.
(ii) issue a writ, order or direction in the nature of Certiorari quashing the impugned order dated 26.02.2014 passed by the Respondent No. 2 and annexed as Annexure No. 2 to the instant Writ Petition.
(iii) Issue a writ, order or direction in the nature of mandamus commanding the respondents to refund the amount of Rs 1,64,675/- deposited by the petitioiner on 27.07.2005 through Treasury Challan-209(1) along with 12% compound interest from 27.04.2005 till the date of actual payment.
(iv) Issue a writ, order or direction in the nature of mandamus commanding the respondents not to proceed with recovery in pursuance of the aforesaid impugned order dated 26.02.2014 (as contained in Annexure-2 to this Writ Petition) or the impugned Order dated 15.04.2005 (as contained in Annexure-1 to this Writ Petition) and not to issue any consequential recovery notice/citation/certificate with respect to the land bearing Gata No. 81, Area:0.240 ½ Hectare, situated at Village Sohramau, Pargana Gausinda Parsanad, Tehsil Hasanganj, District Unnao."
3. The case set forth by the petitioner is that a plot of land was purchased by him through a registered sale deed on 10.09.2004. The land was registered as agricultural land in the revenue records and consequently stamp duty at agricultural rates was paid. The petitioner claims to have received a show cause notice from the respondent no. 3 alleging evasion of stamp duty under the provisions of Section 47A of the Indian Stamp Act, 1899 (hereinafter referred to as the Act, 1899). It is contended that the proceedings were initiated against the petitioner on the basis of a report dated 04.10.2004 submitted by the Sub-Registrar, Hasanganj District Unnao, a copy of which is annexure 3 to the petition. The petitioner claims to have filed his reply to the show cause notice on 15.03.2005, a copy of which is annexure 7 to the petition, and the respondents no. 3 passed an order dated 15.04.2005, a copy of which is annexure 1 to the petition, whereby the petitioner had been required to pay a stamp duty of Rs 3,29,350/- alongwith penalty and interest. The penalty imposed upon the petitioner is Rs 1,64,675/-.
4. Being aggrieved the petitioner filed an appeal which has been rejected vide the order dated 26.02.2014, a copy of which is annexure 2 to the petition. Being aggrieved with both the orders, the instant petition has been filed.
5. Learned counsel for the petitioner contends that a perusal of the impugned order dated 15.04.2005 would indicate that the basis of the impugned order is the ex-parte report dated 04.10.2004 which had been submitted by the Sub-Registrar Hasanganj, District Unnao. It is contented that although the petitioner while filing his reply has indicated in paragraph 7 that on legal advice the trees standing on the plot in question could not be valued yet by no stretch of imagination can the same be said to be acceptance of the ex-parte report dated 04.10.2004.
6. He contends that the authority concerned while passing the impugned order dated 04.10.2004 has placed reliance on the said report and has not given any finding with respect to his own assessment while passing the order impugned by which the petitioner has been found to have paid less stamp duty and requiring the petitioner to pay stamp duty at the rates as indicated in the impugned order. He also contends that this aspect of the matter has not been considered by the appellate authority while rejecting the appeal filed by the petitioner.
7. Elaborating his argument learned counsel for the petitioner argues that though it is not mandatory for the competent authority to call for any information or record from any public office or for that matter any report while passing the order under the provisions of the Act, 1899 yet Rule 7(5) of the U.P. Stamp (Valuation of Property) Rules, 1997 (hereinafter referred to as the Rules 1997) specifically provides that an order is to be passed on the basis of an ''inquiry' by the competent authority.
8. He contends that a perusal of the impugned order dated 15.04.2005 would indicate that no ''inquiry' has been held as provided under the provisions of Rule 7(5) of the Rules 1997 and the sole basis of the order is the ex-parte report dated 04.10.2004 with which the petitioner was never confronted at any stage nor the said inspection was made in the presence of the petitioner.
9. Placing reliance on the judgement of this Court in the case of Surendra Singh and another vs State of U.P. and others reported in 2009 (27) LCD 442 wherein this Court had placed reliance on an earlier judgement of this Court in the case of Ram Khelawan @ Bachcha vs State of U.P. and another reported in 2005 All CJ 1899 U.P. to hold that though the report may be a relevant factor for initiation of proceedings under Section 47A of the Act, but it cannot be relied upon to pass an order under the aforesaid section in as much as the said report cannot form itself the basis of the order passed under Section 47A of the Act. He thus contends that keeping in view the law laid down by this Court in the case of Surendra Singh (supra) the impugned order merits to be quashed on this ground alone.
10. So far as the penalty imposed by means of the impugned order dated 15.04.2005 is concerned, reliance has been placed on the judgement of this Court in the case of Gyan Prakash vs State of U.P. and others reported in 2019 (143) RD 185 to contend that this Court has held that the sine qua non for imposition of penalty is the finding of the authority concerned of a deliberate attempt on the part of the purchaser or the person liable for payment of stamp duty, to have concealed the relevant facts in execution of the sale deed and the intention to evade payment of stamp duty. He contends that a perusal of the impugned order would indicate that no such findings have been arrived at by the competent authority while imposing the penalty and as such on this ground alone the imposition of penalty imposed upon the petitioner merits to be set aside.
11. On the other hand, learned Standing Counsel on the basis of the averments contained in the counter affidavit argues that a perusal of the reply that had been filed by the petitioner to the show cause notice would itself indicate that the petitioner had admitted the report and as such the authority concerned had no option but to place reliance on the report dated 04.10.2004 while passing the impugned order. He thus contends that as no objections were filed to the said report as such it cannot be said that the report was wrong and that the order impugned reflects non-application of mind and has not considered other material that might have been on record and as such there was no requirement of holding of any further ''inquiry' as specified in Rule 7(5) of the Rules 1997.
12. Heard learned counsel for the parties and perused the record.
13. From the arguments raised by learned counsel for the parties and from perusal of record it emerges that the land was purchased by the petitioner by means of a registered sale deed dated 10.09.2004. Proceedings were initiated against the petitioners under the provisions of the Act 1899 on the basis of a report dated 04.10.2004 which had been submitted by the authority which occasioned issuance of a show cause notice by the authority competent calling upon the petitioner to file his reply. The petitioner filed his reply in which he admitted that on account of legal advice the trees which were existing over the land could not be indicated. The authority concerned proceeded to pass the impugned order dated 15.04.2005 solely placing reliance over the report dated 04.10.2004 which was the basis of the initiation of the proceedings under the provisions of the Act 1899.
14. Perusal of the impugned order would indicate that no other material has been considered by the authority while passing the impugned order finding the petitioner to have paid less stamp duty and requiring the petitioner to pay the Stamp Duty at a particular amount and also imposing penalty thereupon.
15. This Court in the case of Surendra Singh (supra) has held that a report on the basis of which proceedings was initiated against the provisions of the Act 1899 may be relevant for initiation of proceedings but it cannot be relied upon to pass an order under the said Section in as much as the said report cannot itself form basis of the order passed under Section 47A of the Act. For the sake of convenience, the relevant observation of this Court in the case of Surendra Singh (supra) are reproduced below:
"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 47A 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 47A 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 47A 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 47A(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."
16. Accordingly, when the impugned order dated 15.04.2005 is seen in the context of the law laid down by this Court in the case of Surendra Singh (Supra) what the Court finds is that the impugned order does not indicate about any other material having been considered by the authority concerned rather the very basis of the order impugned is the report dated 04.10.2004 which obviously cannot be relied upon while passing the impugned order.
17. At this stage the Court may also consider the provisions of Section 7(5) of the Rules 1997 which requires the competent authority to pass an order after making of an ''inquiry' as specified under Rule 7 of the Rules 1997. For the sake of convenience Rule 7 of the Rules 1997 is quoted below:
"Rule 7. Procedure on receipt of a reference or when suo motu action is proposed under Section 47-A--
(1) On receipt of a reference or where action is proposed to be taken suo motu under Section 47-A, the Collector shall issue notice to parties to the instrument to show cause within thirty days of the receipt of such notice as to why the market value of the property set forth in the instrument and the duty payable thereon be not determined by him.
(2) The Collector may admit oral or documentary evidence, if any, produced by the parties to the instrument and call for and examine the original instrument to satisfy himself as to the correctness of the market value of the subject-matter of the instrument and for determining the duty payable thereon.
(3) The Collector may:
(a) call for any information or record from any public office, officer or authority under the government or local authority;
(b) examine and record the statement of any public officer or authority under the Government or local authority;
(c) inspect the property after due notice to the parties to the instrument.
(4) After considering the representation of the parties, if any, and examining the records and other evidence, the Collector shall determine the market value of the subject matter of the instrument and the duty payable thereon.
(5) If, as a result of such inquiry, the market value is found to be fully and truly set forth and the instrument duly stamped according to such value, it shall be returned to the person who made the reference with a certificate to that effect. A copy of such certificate shall also be sent to the Registering officer concerned.
(6) If, as a result of such inquiry, the market value is found to be undervalued and not duly stamped, necessary action shall be taken in respect of it according to relevant provisions of the Act."
18. From a perusal of Rule 7 of the Rules 1997 it emerges that on receipt of reference or where action is proposed to be taken suo motu under Section 47A, the Collector shall issue a notice to the parties requiring them to show cause as to why the market value of the property set forth in the instrument and the duty payable thereon be not determined by him. The Collector may admit oral or documentary evidence, if any, produced by the parties to the instrument and may also call for and examine the original instrument to satisfy himself regarding the correctness of the market value of the subject matter of the instrument for determining the duty payable. The Collector may also call for information or records from any public office, officer or authority or examine and record the statement of any public officer or authority and inspect the property. It is after considering the representations of the parties and examining the records and other evidences that the Collector is to determine the value of the subject matter of the instrument and the duty payable.
19. Subsequently, if as a result of such ''inquiry' as aforesaid, the market value is found to be correct then no action is required but if the instrument is found to be undervalued then necessary action has to be taken under the relevant provisions of the Act.
20. The word ''inquiry' has been defined in Blacks Law Dictionary as under:
"A request for information, either procedural or substantive."
From a perusal of the definition clause as given in the Blacks Law Dictionary it emerges that an ''inquiry' is a request for information either procedural or substantive.
21. In the instant case the entire action under the provisions of the Act 1899 has been initiated on the basis of the report dated 04.10.2004. The perusal of the impugned order dated 15.04.2005 would indicate that the Collector has not called for any information from any public office, has not examined and recorded the statement of any public officer and inspected the property after due notice to the parties. No other records or evidence have been examined by the competent authority as would be apparent from the perusal of the impugned order. Thus, it is apparent that no ''inquiry' as stipulated in Sub Rule (5) of the Rule (7) of the Rules 1997 has been held by the competent authority prior to passing the impugned order dated 15.04.2005 rather, as already indicated above, the basis of the impugned order is simply the ex-parte report dated 04.10.2004 which, as per the law laid down by this Court in the case of Surendra Singh (supra), could not have been considered. Thus, this Court is constrained to hold that no inquiry having been conducted by the competent authority prior to passing the impugned order dated 15.04.2005, the order would be vitiated on this ground also.
22. So far as the imposition of penalty by means of the impugned order dated 15.04.2005 is concerned, this Court in the case of Gyan Prakash (supra) has held that the sine qua non for imposition of penalty is a finding to be recorded by the competent authority based on relevant materials that the purchaser or the person liable to pay stamp duty had concealed relevant facts in execution of the sale deed and had the intention to evade payment of stamp duty. For the sake of convenience, the relevant paragraphs of the judgement in the case of Gyan Prakash (supra) are reproduced below.
"38. The next aspect of the matter is the legality of the penalty which has been imposed upon the petitioner of Rs.50,000/-. In this regard, suffice would be to refer the judgment of this Court in the case of Varun Gopal vs State of U.P. and others 2015 (2) ADJ 311, wherein this Court has held as under:-
"29. Penalty can be imposed, if there is an attempt to evade stamp duty. Penalty presupposes culpability and an intention to conceal or to play fraud with authorities. Before imposing penalty, authorities must record finding based on relevant material that the purchaser or the person liable to pay stamp duty had concealed relevant facts in execution of sale deed and had intention to evade payment of stamp duty. (Asha Kapoor (Smt.) v. Additional Collector (Finance and Revenue), Ghaziabad16)."
39. Likewise this Court in the case of Smt. Sonia Jindal vs State of U.P. and others, in Writ C No.20357 of 2011 decided on 07.04.2011 has held as under:-
"There is no dispute with regard to power of the authorities under the Stamp Act to impose penalty to the extent of four times the deficiency in stamp duty. However, the question is as to what is the criteria for imposing penalty.
The purpose for imposing penalty in exercise of power under Section 47-A (4) of the Act is to dissuade persons from deliberately under valuing the instrument and from payment of insufficient stamp duty. The purpose is not to make good the loss caused due to non-payment/delay in payment of proper court fees, as the loss so caused to the exchequer has been taken ample care under Section 47-A (4-A) by requiring the person concern to pay simple interest @ 1.5% per month on the deficient stamp duty.
In the instant case, the petitioner is one time petty purchaser of immovable property and is not in business of real estate. She is not a property dealer and is not regularly purchasing or selling immovable properties. Thus, imposition of penalty upon her may not act as a deterrent to her as she is not likely to enter into any such transaction in future.
The authorities below have not recorded any finding that the petitioner has deliberately not set-forth the market value of the property in the instrument and knowingly under valued the instrument to avoid payment of proper stamp duty. Merely for the reason that the stamp duty paid by her is found to be deficient can not by itself be a ground for imposing penalty, particularly, in the absence of any finding that there was intention to evade proper stamp duty.
Moreover, the power to impose penalty of an amount not exceeding four time the amount of the proper duty or the deficiency portion thereof is dependent upon the judicial discretion and can not be exercised in an arbitrary fashion. The authorities below have not assigned any reason for imposing penalty equivalent to the deficiency portion of the stamp duty. Therefore it can not be said to have been acted judicially.
In view of the above, the imposition of penalty can not be sustained."
40. From the aforesaid judgments, it clearly comes out that the sine qua non for imposition of the penalty is a finding to be recorded by the Collector based on the relevant material that the purchaser or the person liable to pay stamp duty had concealed the relevant facts in execution of the sale deed and had the intention to evade payment of the stamp duty.
41. In the instant case, a perusal of the impugned order dated 02.01.2015 indicates that no facts have been concealed by the petitioner while executing the sale deed. The fact of land being situated adjacent to national highway and a running petrol pump have duly been disclosed in the sale deed. Admittedly, the stamp duty has been affixed/paid at the agricultural rate for the said piece of land. In the entire order, there is no finding by the Collector as to how the petitioner concealed the relevant facts in execution of the sale deed and consequently in the absence of any such finding the imposition of penalty could not validly have been imposed and as such the imposition of penalty of Rs.50,000/- through the order dated 02.01.2015 is liable to be set-aside and accordingly is set-aside."
23. From a perusal of the impugned order dated 15.04.2005 it clearly emerges that the impugned order does not indicate nor records any finding by the competent authority that the purchaser had concealed relevant facts in execution of the sale deed and had the intention to evade the payment of stamp duty. As such on this ground alone the imposition of penalty on the petitioner cannot be said to be legally sustainable in the eyes of law and as such the impugned order merits to be set aside.
24. The aforesaid aspects of the matter have also not been considered by the appellate authority while dismissing the appeal of the petitioner vide the impugned order dated 26.02.2014.
25. Keeping in view the aforesaid discussions the petition deserves to be allowed and is allowed. The impugned orders dated 15.04.2005 and 26.02.14, copies of which are annexures 1 and 2 to the petition, are set aside.
26. The matter is remitted to the competent authority for passing of a fresh order in accordance with law after hearing all the parties concerned within a period of 6 months from the date of receipt of certified copy of this order.
27. Consequences to follow.
Order Date :- 10.11.2022 J.K. Dinkar