Allahabad High Court
Ajay Agarwal And Ors. Objection Filed vs Commissioner Lko.And 2 Ors. on 10 January, 2023
Author: Manish Mathur
Bench: Manish Mathur
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH ?AFR Court No. - 19 Case :- WRIT - C No. - 1000019 of 2008 Petitioner :- Ajay Agarwal And Ors. Objection Filed Respondent :- Commissioner Lko.And 2 Ors. Counsel for Petitioner :- Sudeep Kumar,A.K.Pandey Counsel for Respondent :- C.S.C. Hon'ble Manish Mathur,J.
1. Heard learned counsel for petitioners and Mr. Devendra Mohan Shukla, learned State counsel appearing for opposite parties.
2. Petition has been filed assailing order dated 29.03.2006 passed under Section 47A(3) of the U.P. Stamp Act, 1899 as well as order dated 04.10.2007 passed in appeal under Section 56 of the said Act.
3. Learned counsel for petitioners has submitted that petitioners purchased a flat having area of 1473 sq. feet situated on third floor of a building constructed on plot no.B-3/122, Vivek Khand, Gomti Nagar by means of sale deed executed on 06.11.2003.
4. It is submitted that upon presentation of the deed of transfer, the same was registered but referred in terms of Section 47A(3) of the Act after spot inspection was conducted and report dated 18.11.2003 submitted indicating the property in question to have commercial value though Stamp Duty was paid in terms of the property having residential value. The proceedings under Section 47A(3) of the Act culminated in imposition of additional stamp duty along with penalty, which was challenged by the petitioners in Appeal No.552 of 2005-2006 under section 56 of the Act which has also been rejected by means of order dated 04.10.2007.
5. Learned counsel for petitioners submits that a perusal of the impugned order dated 29.03.2006 passed under Section 47 of the Act makes it apparent that the proceedings have been decided ex parte against petitioners and is based only on the spot inspection report indicating the property in question to have commercial value. It is submitted that against the order, petitioners filed appeal specifically taking the plea that order passed under Section 47 of the Act was ex parte in which reasonable opportunity of being heard was never provided to him. Further ground which was taken in appeal was that spot inspection was conducted without giving prior notice to the petitioners as is required to be done in terms of Rule 7 (iii)(c) of the U.P. Stamp (Valuation of Property) Rules, 1997 and since it was mandatory on the part of authorities to have given prior notice before spot inspection of property in question, the impugned orders are liable to be set aside on that very ground. Learned counsel has also submitted that even otherwise the authorities are required to record their subjective satisfaction in terms of Section 47(3) of the Act with regard to correctness of the market value of the property which is subject matter of the instrument of transfer. It is submitted that no such subjective satisfaction having been recorded either under section 47 or even other Section 56 of the Act, the orders suffer from the vice of non-application of mind and are also against the mandatory statutory provision of Section 47(3) of the Act. Learned counsel has adverted to judgment of Coordinate Bench in the case of Ram Khelawan @ Bachcha versus State of U.P. Ors. reported in 2005(2) JCLR 610 (Allahabad) to buttress his submission.
6. Learned State counsel appearing on behalf of opposite party has refuted submissions advanced by learned counsel for petitioners with the submission that there is no error in the orders challenged in present writ petition since the authorities were correct in relying on the spot inspection report for which purpose prior notice as envisaged under Rule 7(3)(c) of the Act was not required to be given to petitioner since the aforesaid provision was inapplicable in present case. It is submitted that there is material difference in provisions pertaining to under valuation of instrument sought to be registered under section 47A(i)(a) and the provisions of Section 47 A(3) of the Act. It is submitted that while under valuation of an instrument under section 47 A(i) of the Act pertains to inquiry required to be done by the Collector prior to registration of instrument of transfer, Section 47 A (3) of the Act pertains to examination of the instrument of transfer in order to ascertain under valuation after its registration. It is submitted that in terms of procedure provided, reference is made to the Collector upon an initial spot inspection for which purpose no prior notice was required to be given to the petitioners.
7. Learned State counsel has further submitted that provisions of Rule 7(3)(c) would be applicable only in case the petitioners would have submitted their objections to initial spot inspection report and since in the present case no objection by the petitioners was filed to initial spot inspection report, there was no question of Collector inspecting the property under Rule 7(3)(c) of the Rules of 1997. It is further submitted that even otherwise, in terms of Section 47(A)(3) of the Act, under valuation of the instrument of transfer is required to be seen only upon examination of the instrument of transfer and is distinct from an inquiry required to be held by the Collector in terms of Section 47A (1) of the Act. As such, it is submitted that in cases where the Collector embarks upon examination of the instrument of transfer for the purposes of determining under valuation of the instrument, no spot inspection is required to be made and therefore provisions of Rule 7(3)(c) would be inapplicable as in the present case where the instrument was merely examined in terms of Section 47A(3) of the Act. It is also submitted that even under section 47A (3) of the Act, if spot inspection is conducted, the same not being under rule 7(3)(c) of 1997 Rules, any infringement thereof would be immaterial.
8. Upon consideration of submissions advanced by learned counsel for parties and perusal of material available on record, it is evident that proceedings in the present case have been drawn in terms of Section 47A(3) of the Act of 1899 after registration of the instrument of transfer and not under section 47A (1) of the Act. It also appears that proceedings have been drawn in pursuance of the spot inspection report dated 18.11.2003 which does not indicate the presence of or any prior notice being given to the petitioners. While filing appeal under section 56 of the Act, specific plea has been taken by petitioners that the spot inspection report has been relied upon by the prescribed authority but the same being ex parte in nature, was liable to be ignored. Despite the specific pleadings having been taken in the memorandum of appeal, the same does not appear to have been adverted to by the appellate authority.
9. Nonetheless, in view of submissions advanced by learned State counsel, the question arising for determination would be whether compliance of Rule 7(3)(c) is required in proceedings under Section 47(A)(1) as well as under section 47 A(3) of the Act? Here it is also relevant to indicate that both the orders impugned in present writ petition are based only on the aforesaid spot inspection report, which admittedly was ex parte in nature.
10. The provision of Section 47 A of the Act have two distinct components with sub section (1) pertaining to inquiry being held for determination of valuation of an instrument of transfer prior to its registration and upon its presentation for registration while provisions of sub-section 3 of the said section pertains to examination of an instrument of transfer for the purposes of determination of stamp duty chargeable on the market value of property. In the present case, the proceedings have been held in terms of section 47 A(3) of the Act of 1899 after its registration and upon reference being made.
11. The procedure required to be followed for determination of market value of the property and stamp duty required to be paid on the instrument of transfer have been indicated in sub section (4) of Section 47 A which clearly states that if on inquiry under sub-section (2) and examination under sub-section (3) the Collector finds the market value of the property to be set forth or not truly set forth, he is required to pass appropriate orders pertaining to same. Thus, it is evident that the Collector is required to embark upon an inquiry under sub-section (2) and an examination of instrument of transfer under sub-section 3 in order to find the correct market value of the property and for determination of stamp duty required to be paid.
12. Learned State counsel in his submission has adverted to the fact that under sub-section (3) of Section 47(A) of the Act, the Collector upon a reference being made or suo motu is required to examine the instrument for the purpose of satisfying himself as to the correctness of the market value. It has been submitted that since the examination is only with regard to examination of the instrument of transfer, it would thus not require any spot inspection to be made by the Collector particularly when no objection to the ex parte spot inspection initially has been made by the petitioner. It is thus submitted that since the Collector was not required to make spot inspection of the property in question, the provisions of Rule 7(3)(c) would be inapplicable.
13. For the purposes of determination of aforesaid question, it is the provisions of Section 47 and Rule 7 which are pertinent and required to be seen, which are as follows:-
47. Power of payer to stamp bills and promissory notes received by him unstamped.?When any bill of exchange or promissory note chargeable 1[with the duty not exceeding ten paise] is presented for payment unstamped, the person to whom it is so presented, may affix thereto the necessary adhesive stamp, and, upon cancelling the same in manner hereinbefore provided, may pay the sum payable upon such bill or note, and may charge the duty against the person, who ought to have paid the same, or deduct it from the sum payable as aforesaid, and such bill or note shall, so far as respects the duty, be deemed good and valid:
Provided that nothing herein contained shall relieve any person from any penalty or proceeding to which he may be liable in relation to such bill or note.
(3) The Collector may, suo motu, or on 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 Commissioner of Stamps or any officer authorised by the State Government in that behalf, within four years from the date of registration of any instrument on which duty is chargeable on the market value of the property, not already referred to him under sub-section (1), call for and examine the instrument for the purpose of satisfying himself as to the correctness of the market value, of the property which is the subject for such instrument, and the duty payable thereon, and if after 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 determine the market value of such property and the duty payable thereon :
Provided that, with the prior permission of the State Government, an action under this sub-section may be taken after a period of four years but before a period of eight years from the date of registration of the instrument on which duty is chargeable on the market value of the property.
"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 a local authority;
(b) examine and record the statement of any public officer or authority under the Government or the local authority; and
(c) inspect the property after due notice to 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 to 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 inquiry, the instrument 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."
14. It is quite discernible that the starting provision of Rule 7 itself indicates the applicability of the Rule to the extent that 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. A reading of the aforesaid provision makes it evident that no distinction whatsoever has been carved out under Rule 7 of the Rules of 1997 with regard to procedure being required to be followed under section 47 A. On the contrary, it specifically indicates that the aforesaid Rule is required to be followed even in case suo motu action is taken under section 47 A of the Act, which in effect pertains to Section 47 A(3) of the Act of 1899 with regard to determination of stamp duty after registration of a document of instrument of transfer. As such no such distinction having been carved out under Rule 7, it is not feasible to accede to the submissions of learned State counsel that Rule 7 (3)(c) of the Rules would not be applicable in case of proceeding under section 47 A( 3) of the Act.
15. A reading of the aforesaid provision also does not indicate any such procedure requiring the petitioner to file objection against the initial spot inspection report whereafter only the Collector is required to inspect the property in terms of Rule 7(3)(c) of the Rules. Although it has been submitted that the aforesaid provision is not mandatory in nature but coordinate benches of this Court particularly in the case of Ganga Ram versus State of U.P. and others reported in 2020(38) LCD 1991 has clearly held the provision of Rule 7(3) (c) to be mandatory in nature.
16.The aspect as to whether the Collector is required mandatory to inspect the property in terms of Rule 7(3)(c) upon proceedings being drawn up under section 47(3) of the Act is not required to be considered in the present case particularly when it is admitted that no such inspection whatsoever was undertaken by the Collector which would have required prior and due notice to the parties to the instrument.
17. However upon perusal of Section 47A (3) of the Act, it is evident that the Collector either suo motu or on a reference is required to determine the market value of property for the purposes of satisfying himself as to correctness of the market value of property which is subject of such instrument and the duty payable thereon. The provisions of Section 47A(3) of the Act clearly indicates that while determining market value of the property on the basis of instrument of transfer, the Collector has to satisfy himself with regard to correctness of a market value and if after such examination, he has reason to believe that market value of such property has not been truly set forth in the instrument, he may determine the market value of such property and the duty payable thereon.
18. The provisions of section 47A (3) of the Act clearly prescribed that prior to passing an order in terms of the aforesaid provision, the Collector has to satisfy himself, which in fact would mean that he has to record his subjective satisfaction with regard to the correctness of market value of the property. Furthermore he is also required to record reasons to believe that market value of such property has not been truly set forth in the instrument, whereafter he is also required to determine the market value of his property and duty payable thereon. Clearly the Collector in exercise of power under section 47 A(3) of the Act as such is required not to rely only on the spot inspection report but also to record his subjective satisfaction with regard to under valuation of the instrument of transfer. As such while passing orders under section 47 of the Act, Collector cannot rely only on the post inspection report.
19. A coordinate bench of this Court in the case of Ram Khelawan (supra) has also adverted to the aforesaid provisions and has enunciated the law that the method of determining market value and factors to be taken into consideration for the said purpose particularly with regard to determining the quantum of compensation under land acquisition laws are also applicable for determining market value while deciding a case by Collector under section 47 A of the Act. The three standard principles of determining market value in land acquisition cases have also been indicated in paragraphs 9 and 11 of the aforesaid judgement which are as follows;
"9. Entire basis of report of Tahsildar and judgment of A.D.M. is that the land is of residential use/ potential (Awasiya prayojan). Even if it is assumed for the sake of argument that the land in dispute is having Abadi potential, still no basis of determining its valuation has been given. Once sale deed is registered then for determining market value of the land under Section 47-A Stamp Act no reliance can be placed upon Rules of 1997. If a case is instituted under Section 47-A of the Stamp Act after registration of the deed particularly sale-deed then valuation has to be determined on the general principles applicable for determining market value of immovable property. The method of determining market value and the factors to be taken into consideration for the said purpose have been discussed in detail and laid down with precision by the Courts white determining quantum of compensation under Land Acquisition laws. Exactly same principles shall apply for determining market value while deciding a case by Collector under Section 47-A Stamp Act.
11. The three standard principles of determining market value in Land Acquisition cases are; comparable sale method i.e. value of similar adjoining property sold in near past, multiplication by a suitable multiplier of monthly or yearly rent, income or yield; and adding the cost of construction to the value of the land."
20. In view of aforesaid, it is evident that the power to be exercised by Collector under section 47A (3) of the Act is not pedantic in nature but is required to be made on the basis of observations made hereinabove particularly with regard to the fact that he is required to apply his mind and record subjective satisfaction not only with regard to under valuation of the instrument of transfer but also to record a separate satisfaction regarding market value of the property and the duty payable thereupon and cannot place reliance only on the spot inspection report.
21. It is also evident that there being no distinction indicated under provisions of the Act, Rule 7 of Rules of 1997 would be applicable on proceedings under section 47A (1) as well as under Section 47A (3) and are mandatory in nature.
22. Upon applicability of aforesaid in the present case, it is evident from a reading of the impugned orders that the same are based only on the spot inspection report and no subjective satisfaction at all has been recorded by the authority either under section 47 A or under section 56 of the Act as required to be done as per observation is made hereinabove.
23. Considering the aforesaid facts, impugned orders dated 29.03.2006 passed under Section 47A(3) of the U.P. Stamp Act, 1989 and order dated 04.10.2007 passed in appeal under Section 56 of the said Act not being in consonance with the law laid down are set aside.
24. Consequently, the writ petition is allowed. Consequences to follow. Parties to bear their own costs.
Order Date :- 10.1.2023 Subodh/-