Allahabad High Court
Central Bank Of India vs State Of U.P.Through Collector Gonda ... on 27 April, 2022
Author: Sangeeta Chandra
Bench: Sangeeta Chandra
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH ?Court No. - 5 Case :- WRIT - C No. - 1000283 of 2003 Petitioner :- Central Bank Of India Respondent :- State Of U.P.Through Collector Gonda And Others 2 Counsel for Petitioner :- N.K.Seth,Ashish Chaturvedi Counsel for Respondent :- C.S.C. Hon'ble Mrs. Sangeeta Chandra,J.
1. Heard Shri N.K. Seth, learned Senior Advocate assisted by Shri Sachin Garg, Advocate for the petitioner and learned Standing Counsel appearing on behalf of the State- respondent.
2. This petition has been filed by the Bank challenging the orders dated 25.10.2002 passed by the Collector (Stamp) imposing deficiency in stamp duty and five times the deficiency so found as penalty along with interest at the rate of 1.5% per month and the order dated 31.12.2002 by which the Commissioner Stamp has partly allowed the appeal filed by the petitioner.
3. It is the case of the bank that it had taken on lease a building situated at Station Road, near police chowki, Gonda from one Shri Bal Krishan Das on a monthly rent of Rs.12838.80 for a period of five years commencing from 01.9.1997 on terms and conditions as mentioned in the said lease- deed dated 09.12.1998.
4. Under the terms so agreed upon by the parties the lease was initially for a period of five years but the petitioner had option of renewal of lease for a period of five years each subject to enhancement of rent by 15% on each such renewal, i.e., such renewal was to be effected from 01.9.2002 and then again with effect from 01.9.2007 only if the bank retain the premises and the landlord wished to continue to give on rent such premises to the bank.
5. In such a matter where the lease deed was for a period not exceeding 5 years stamp duty was payable as per Article 35 (a) (ii) of the Schedule attached to the Stamp Act for such conveyance three times the annual rent was to be determined and stamp duty paid @ 14.5% thereon, consequently, stamp duty was calculated and stamp paper of Rs.67,200/- was bought. Registration fees was paid accordingly and the lease deed registered in the office of the Sub- Registrar, Gonda on 09.12.1998 in Book No.2 Vol. 1620 at page 177 to 204.
6. The DIG Registration Devi Patan Mandal, Gonda made an inspection of the bank branch on 23.7.2002 and after going through the lease deed submitted his report to the effect that the lease was for a periof of 15 years and should have been executed in accordance with stamp duty payable under Article 35(a) (iv) of the Schedule attached to the Act. The annual average lease rent was to be multiplied 5 times and then stamp duty was to be calculated which would amount to Rs.1,29,340/-. A deficiency was determined @ Rs.62,140/- along with deficiency in registration fee of Rs.5,000/-.
7. The petitioner bank had on 01.8.2002 written to Shri Deepak Agarwal son of Late Shri Bal Krishna Das to retain the premises for another period of five years with effect from 01.9.2002 and to renew the lease on the stamp paper. A true copy of the said letter has been filed as Annexure- 3 to the petition.
8. In the meanwhile, on the basis of the said report of DIG Registration case no.980/2002 [State vs. Central Bank of India] was registered in the Court of Collector (Stamps), Gonda and notice was issued to the bank.
9. Learned counsel for the petitiner took time to file objections after seeking instructions but before instructions could be made available or objections could be filed, the Collector (Stamp) by his order dated 25.10.2002 held that the lease was for a period of 15 years, i.e., with effect from 01.9.1997 to 01.9.2012 and further alleged that stamp duty of Rs.1,29,340/- five times the years' average annual rent was payable and determined deficiency in stamp duty of Rs.62,140/-. Deficiency in registration fee of Rs.5,000/- and also imposed penalty @ 5 times of the deficit stamp duty to the tune of Rs.3,10,700/-.
10. Against order of the Collector, Gonda the petitioner preferred an appeal no.12/2002 under Section - 56 of the Stamp Act before the Commissioner Devi Patan Mandal, Gonda.
11. Before any order could be passed on the application for the Stay, the Tehsildar Gonda along with several Tehsil officials visited the petitioner's branch with the intention to attach the premises. Consequently, under threat of attachment petitioner made a payment of Rs.1,25,947/- through banker's cheque on 10.12.2002 before the Tehsildar, Gonda.
12. In the appeal learned counsel for the petitioner besides making oral submission also submitted written argument on 17.12.2002, a copy of such written argument has been filed as Annexure - 8 to the petition. Initially the Commissioner was pleased to stay the recovery against the petitioner but eventually only partly allowed the appeal on 31.12.2002 upholding the determination of deficiency and modifying the penalty and reduced it to two times of the deficiency as determined by the Collector, i.e, Rs.1,24,280/- instead of Rs.3,10,700/-. This penalty was imposed of only Rs.1,24,280/-.
13. The learned Senior Counsel has led this Court to the terms of lease deed signed between the parties and duly registered in the office of Sub- Registrar, Gonda. He has referred to internal page 7 of the said lease where it has been stated that the lessee shall have two options of renewal of the lease five years each with effect from 01.9.2002 and 01.9.2007 respectively upon the same terms and conditions except for a 15% increase in rent on each period of five years.
14. Learned counsel for the petitiner has submitted that from a perusal of the lease deed itself it is evident that it was executed only for a certain period of five years. The option of renewal did not mean that the lease deed would actually be renewed and was subject to the option exercised by the bank and also the landlord. As and when option for renewal would have been exericsed for the next five years at the rate of rent agreed upon between the parties, a fresh lease deed would have been signed on stamp paper duly purchased and it would have been duly registered thereafter.
15. Learned counsel for the petitioner has pointed out from the Schedule 1 (B) attached to the Act that Article 35 governs Stamp Duty payable in respect of leases. Clause (a) thereof talks of leases where rent is fixed and no premium is paid or delivered, which is the case of the lease deed executed between the bank and the lessor. As per sub para (ii) thereof where the lease is proposed to be for a term of not less than one year but not exceeded five years, Stamp Duty shall be payable as a Conveyance [23 Clause (a)] for a consideration equal to three times the amount or value of the average annual rent.
16. He has also pointed out the language of sub-para (iv) of Clause (a) where the lease is purported to be for a term exceeding 10 years but not exceeding 20 years, and he has argued that the duty for such Conveyance would be for a consideration equal to five times of the amount or value of average annual rent determined.
17. It has been argued since the lease deed executed on 09.12.1998 was only for a period of five years, Stamp duty as per Article 35 (a) Sub Para 2, was payable and was paid. There was no intention to evade the Stamp Duty at all by the bank and even during the course of the argument before the Commissioner, this fact was pointed out that the bank was ready and willing to pay the Stamp Duty if any deficiency had been pointed out by the Sub-Registrar at the time of its registration.
18. It has been submitted by the leanred counsel for the petitioner that the bank has already paid the alleged deficit in stamp duty and registration fee and has already made part payment of penalty before their application for interim relief was considered in appeal.
19. The learned counsel for the petitioner has argued on the basis of judgments rendered by the Hon'ble Supreme Court and this Court that penalty can be imposed only by a reasoned order passed by the administrative authority exercising quasi-judicial function. A reference has been made to Kalpnath Chaubey v. Information Commissioner [2010 SCC On Line All 102].
20. Learned counsel for the petitioner has placed reliance upon a co-ordinate bench decision in Ashok Kumar vs. State of U.P. and Others [2011 (5) ADJ 186] and has referred to para 18, 19 and 20 thereof to say that the order of penalty cannot stand unless some reason is assigned and a finding of intentional evasion of stamp duty is recorded. In the absence of any reasoning and a finding with regard to the intentional evasion, the order of penalty is unsustainable in law.
21. Learned counsel for the petitioner has also placed reliance upon a division bench judgment of this Court in Special Appeal Defective No.598 of 2015 [Smt. Vijaya Jain vs. State of U.P. & 2 Others] rendered on 01.9.2015 and has referred to the observation made by the Division Bench that :-
"While it is true that sub-section (iv) of Section 47 (A) empowers the Collector to impose the penalty not exceeding four times the proper stamp duty, the same stands attracted in a case where it is found that the market value of the property was not truly set forth. There must, therefore, necessarily be an intention to evade payment of duty which entails the levy of penalty. Secondly, the words "not exceeding......" confer on the Collector a discretion to levy penalty dependent upon the facts of each individual case. The mere prescription of maximum does not necessarily mean that in each case of penalty equivalent to four times the proper duty is liable to be paid. In any view of the matter, the imposition of penalty has serious civil consequences and, therefore, must be preceded by due application of mind and a consideration of all relevant factors including whether there was an intention to evade payment of duty. We find that the Collector has failed to advert to this aspect also while passing the impugned orders."
22. Learned Standing Counsel appearing on behalf of the State- respondents has placed reliance upon Counter Affidavit filed in July, 2003 and para 5, 11 and 15 thereof. In the said paragraphs it has only been stated that since in the lease deed itself there was a clause mentioning the option of renewal which made the lease-deed applicable for a maximum period of 15 years, therefore Article 35 (a) (iv) was applied and not Article 35 (a) (ii) by the Collector.
23. This Court having heard the learned counsel for the petitioner and also the learned Standing Counsel finds from a perusal of the orders impugned that there is no consideration of the specific clause of the lease deed which had only referred to an option for renewal. Had such lease-deed been actually renewed at increased rate of rent at 15% for a period of 5 years and then again for a period of 5 years, then a fresh lease-deed would have been signed for each such renewal period, therefore, it can not be said that the lease-deed that was executed on 09.12.1998 was for a period of 15 years. The period of 15 years was uncertain. Only a period of 5 years was certain. Hence, Article 35 (a) (ii) would apply of Schedule 1 (B) of the Act and not Article 35 (a) (iv). Although before the Collector (Stamps) the petitioner could not appear, it did appear before the Commissioner in appeal and also filed written arguments to the effect that lease if and when it would have been renewed would have entailed stamp duty payable for that particular period of 5 years. It had also been argued that penalty has wrongly been imposed. There was no intention of evasion on the part of the bank and if the Sub-Registrar had found deficiency during the time of registration he would have pointed it out and the bank was ready and willing to pay deficient stamp duty.
24. The Commissioner in the order dated 31.12.2002 has failed to appreciate the true position in law. Order dated 31.12.2002 and 25.10.2002 are, hence, liable to be set-aside and are set aside. Any amount paid in pursuance of such orders by the bank shall be refunded to the petitioner within three months from the date a copy of this order is produced before the Collector (Stamp), Gonda.
Writ petition stands allowed to this extent.
Order Date :- 27.4.2022 mks