Karnataka High Court
Prestige Estates Projects Limited vs Chief Controlling Revenue Authority on 25 January, 2025
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 25TH DAY OF JANUARY, 2025
BEFORE R
THE HON'BLE MR. JUSTICE K. V. ARAVIND
WRIT PETITION No.48165/2011 (GM-ST/RN)
C/W
WRIT PETITION No.48133/2011 (GM-ST/RN)
IN WP No.48165/2011
BETWEEN:
1. PRESTIGE ESTATES PROJECTS LIMITED.,
(FORMERLY PRESTIGE ESTATES PROJECTS
PRIVATE LIMITED),
THE FALCON HOUSE,
NO.1, MAIN GUARD CROSS ROAD,
BANGALORE - 560001.
REPRESENTED BY ITS
AUTHORISED SIGNATORY,
MR. T. ARVIND PAI.
2. UNITED BREWERIES (HOLDINGS) LIMITED,
UB TOWER, NO.24,
VITTAL MALLYA ROAD,
BANGALORE 1.
REPRESENTED BY ITS
COMPANY SECRETARY,
SRI KAUSHIK MAJUMDER.
...PETITIONERS
(BY SRI UDAY HOLLA, SENIOR ADVOCATE FOR
SRI M.S. RAJENDRA, ADVOCATE)
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AND:
1. CHIEF CONTROLLING REVENUE AUTHORITY,
& INSPECTOR GENERAL OF REGISTRATION &
COMMISSIONER OF STAMPS,
NO.720, SHIMSHA BHAVAN,
NEAR SANGAM CIRCLE,
46TH CROSS ROAD,
8TH BLOCK, JAYANAGAR,
BANGALORE.
2. DISTRICT REGISTRAR/DEPUTY COMMISSIONER
OF STAMPS, SHIVAJINAGAR REGISTRATION
DISTRICT, SHIVAJINAGAR,
BANGALORE.
...RESPONDENTS
(BY SRI KIRAN V. RON, AAG FOR R1)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE ORDER DATED 31.10.2011 VIDE ANNEXURE-L,
PASSED BY THE CHIEF CONTROLLING REVENUE AUTHORITY
AND THE INSPECTOR GENERAL OF REGISTRATION &
COMMISSIONER OF STAMPS IN KARNATAKA, BANGALORE.
IN WP No.48133/2011
BETWEEN:
1. PRESTIGE ESTATES PROJECTS LIMITED.,
(FORMERLY PRESTIGE ESTATES PROJECTS
PRIVATE LIMITED),
THE FALCON HOUSE,
No.1, MAIN GUARD CROSS ROAD,
BANGALORE - 560001.
REPRESENTED BY ITS AUTHORISED SIGNATORY,
MR. T. ARVIND.
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2. UNITED BREWERIES (HOLDINGS) LIMITED,
UB TOWER, No.24,
VITTAL MALLYA ROAD,
BANGALORE 1.
REPRESENTED BY ITS COMPANY SECRETARY,
SRI KAUSHIK MAJUMDER.
...PETITIONERS
(BY SRI UDAY HOLLA, SENIOR ADVOCATE FOR
SRI M.S. RAJENDRA, ADVOCATE)
AND:
1. CHIEF CONTROLLING REVENUE AUTHORITY,
& INSPECTOR GENERAL OF REGISTRATION &
COMMISSIONER OF STAMPS,
No.720, SHIMSHA BHAVAN,
NEAR SANGAM CIRCLE,
46TH CROSS ROAD, 8TH BLOCK,
JAYANAGAR, BANGALORE.
2. DISTRICT REGISTRAR/DEPUTY COMMISSIONER
OF STAMPS, SHIVAJINAGAR REGISTRATION
DISTRICT, SHIVAJINAGAR, BANGALORE.
...RESPONDENTS
(BY SRI KIRAN V. RON, AAG FOR R1 & R2)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE ORDER DATED 17.8.2010 VIDE ANNEXURE-K, AND
THE ORDER DATED 31.10.2011 VIDE ANNEXURE-M, PASSED
BY THE CHIEF CONTROLLING REVENUE AUTHORITY & THE
INSPECTOR GENERAL OF REGISTRATION & COMMISSIONER OF
STAMPS, IN KARNATAKA, BANGALORE.
THESE WRIT PETITIONS HAVING BEEN HEARD AND
RESERVED FOR ORDERS, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:
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CORAM: HON'BLE MR. JUSTICE K. V. ARAVIND
C.A.V. ORDER
Heard Sri Uday Holla, learned Senior Counsel for
Sri M.S.Rajendra, learned counsel for the petitioners and
Sri Kiran V. Ron, learned Additional Advocate General for
respondent No.1 in Writ Petition No.48165/2011 and for
respondent No.1 and 2 in Writ Petition No.48133/2011.
2. Writ Petition Nos.48165/2011 and 48133/2011 raise
common issues involving the same set of facts. The
common arguments are addressed by learned counsel for
the parties. Hence, both petitions are disposed of by
common judgment.
3. Writ petition No.48165/2011 is seeking to quash the
order bearing No. Nil dated 31.10.2011 passed by
respondent No.1. Writ petition No.48133 seeks to quash
the order bearing No.SAP/01/2010-11 dated 17.08.2010
at Annexure-K and order bearing No.Nil dated 31.10.2011
at Annexure-M passed by respondent No.1.
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3.1 Brief facts leading to these petitions are that
petitioner No.1 and petitioner No.2 entered into the Joint
Development Agreement dated 25.04.2003 (for short
'JDA'). Petitioner No.2 - United Breweries (Holdings)
Limited (for short 'UBHL') was the owner and petitioner
No.1 is the Prestige Estates Projects Limited (for short
'Prestige/Developer'). The land subject matter of JDA was
property bearing No.24, Vittal Mallya Road, Municipal
Ward No.76, Bengaluru (for short 'schedule property').
3.2 As per the terms of the JDA, UBHL is entitled to 55%
of the built-up space and Prestige is entitled to 45% of the
built-up space with proportionate undivided share in the
land. UBHL executed power of attorney dated 25.04.2003
in favour of Prestige. The Stamp Duty on the JDA was
paid as per Article 5(f) to the Schedule of the Karnataka
Stamp Act, 1957 (for short 'the Act'). Stamp Duty on
power of attorney was paid as per Article 41(ea) to the
Schedule of the Act. Both UBHL and Prestige entered into
a Sharing Agreement on 24.06.2003, wherein the specific
built-up area was identified to their respective share,
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which was modified by an Addendum dated 06.07.2007.
Prestige obtained a sanctioned plan and modified plan on
19.08.2003 and 06.02.2006, respectively, as well as a
building license from Bruhat Bengaluru Mahanagara Palike
(for short 'BBMP'). As per the sanctioned plan, several
buildings were to be constructed and the entire project
was named as UB City.
4. The Prestige was the absolute owner of building to
the extent of 45% along with right, title and interest in the
land to the same extent. UBHL executed two registered
sale deeds dated 28.02.2008 conveying 45% undivided
share in the land in compliance with JDA. The said sale
deeds were stamped for Stamp Duty of Rs.2,00,92,550/-
and Rs.1,04,60,310/-. The Stamp Duty paid was found to
be insufficient by the Sub-Registrar and referred to the
District Registrar and Deputy Commissioner for stamps.
The District Registrar passed two orders, both dated
30.04.2008, holding the petitioners liable to pay Stamp
Duty of Rs.2,34,58,460/- and Rs.59,83,390/-
respectively. The District Registrar held that the Market
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Value of the land is higher than the value set out in the
Sale deeds and made to be paid the higher Stamp Duty.
In the same order, it is held that sale deeds conveyed only
an undivided share of the land, not the built-up area. The
Stamp Duty determined by the District Registrar was paid
and is evident from the sale deeds.
4.1 The office of the Accountant General opined that the
value fixed by the District Registrar is less than the Market
Value of the sale of the Commercial flats and Stamp Duty
is to be levied on the built-up area falling to the share of
the Prestige. The respondent No.1 based on the audit
objection initiated suo-motu proceedings under Section
53A of the Act. Show cause notices dated 21.09.2010 and
28.10.2010 were issued to review the orders dated
30.04.2008. The petitioners submitted reply to the show
cause notice. As pleaded, no other issues were show
caused to the petitioners. It is the case of the petitioners
that respondent No.1 exceeding the show cause notice has
decided the issues outside the show cause notice without
opportunity to defend by suitable reply.
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5. Respondent No.1 in the impugned order held that in
lieu of the transfer of 45% of the undivided share in the
land, the UBHL had received 55% of the built-up area,
which shall be the consideration towards the transfer of
45% of the undivided share in the land. Respondent No.1
further held that the Market Value determined at
Rs.12,45,25,800/- by respondent No.2 is incorrect when
the apparent value mentioned in the sale deed was at
Rs.56 Crores. Consequently, respondent No.1 set aside
the order dated 30.04.2008 passed by respondent No.2
and remitted for fresh consideration. Respondent No.1
further directed the examination of the stamp duty paid on
the power of attorneys. Respondent No.1 directed the
determination of the Market Value of 45% of the undivided
share in the land and 55% of the built-up area. After
determining the Market Value, directed levy of stamp duty
either on 45% of the undivided share or 55% of the built-
up area, whichever is higher. The exercise as directed is
to be completed within 90 days from the date of receipt of
that order.
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6. This order was subject matter of these petitions.
This Court by order dated 23.12.2011 has granted stay of
operation of the order dated 31.10.2011 and is in
operation till date.
Submissions of the petitioners:
7. Sri Uday Holla, learned Senior Counsel for the
petitioners submits that the UBHL and Prestige entered
into JDA to develop property bearing No.24, Vittal Mallya
Road, Municipal Ward No.76, Bengaluru. As per the JDA,
UBHL is entitled to 55% of the built-up area and Prestige
to 45%. UBHL has executed two power of attorney in
favour of the Prestige. The JDA is sufficiently stamped as
per Article 5(f) to the Schedule to the Act. The Power of
Attorneys are also subjected to stamp duty as per Article
41(ea) to Schedule to the Act. It is submitted that UBHL
executed two registered sale deeds by conveying 45% of
undivided share right, title and interest in the land on
which the Prestige has constructed a building as per the
terms of the JDA. It is submitted that the proportionate
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undivided share in the land was the subject matter of the
sale deed. The stamp duty is paid on the value of land.
7.1 The stamp duty was paid as per the parties'
understanding. However, the District Registrar
determined the stamp duty, which is paid.
7.2 The District Registrar has examined the JDA and has
determined the Stamp Duty payable. The Deputy
Commissioner has examined the issue regarding the
Schedule B property undivided share in the land or
Schedule C property 55% built-up area is to be subjected
to Stamp Duty. The Deputy Commissioner, after
analysing the various provisions and also the subject
matter and extent of transfer under the sale deed,
concluded that the subject matter of transfer was only
Schedule B property (undivided share in the land) and
Schedule C property (55% built-up area) is not the subject
matter of transfer.
7.3 The Deputy Commissioner disputed the total
valuation made by the petitioners and re-determined the
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Market Value. The difference of stamp duty as determined
by respondent No.2 was paid.
7.4 Respondent No.1 issued show cause notice under
Section 53A of the Act on the Accountant General Report.
The exercise of jurisdiction under Section 45A of the Act is
without application of mind, however, a borrowed opinion
of the Accountant General. The impugned order has
exceeded the show cause notice. Hence, the impugned
order is in violation of the principles of natural justice. In
view of the new issues dealt with by respondent No.1 in
the impugned order, which is not part of the show cause
notice, the petitioners have been deprived of the defense.
7.5 Learned counsel by referring to Section 53A of the
Act submits that suo-motu revision can be exercised only
when the reviewing authority has a reason to believe that
the order made is erroneous or not in accordance with the
provisions of this Act or prejudicial to the interest of the
revenue. The order of respondent No.2 under Section 45A
of the Act was examined on the issue of liability to pay
stamp duty on the value of the built-up area and held that
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stamp duty is to be paid only on the undivided share in the
land. While exercising the power of review under Section
53A of the Act, review is not permissible; merely another
view is possible. As long as the view taken in the order
under the review is one of the possible views, the exercise
of jurisdiction under Section 53A of the Act is not
permissible. The attempt made by respondent No.1 is
merely on change of opinion which is not permitted under
Section 53A of the Act. What was sold and conveyed
under the sale deed dated 28.02.2008 was only an
undivided share of the land and not the built-up area. The
building on the undivided share is constructed by the
Prestige on its cost and the same was not conveyed under
the sale deed by UBHL.
7.6 Though the UBHL owned the undivided share in the
land during construction, the ownership in the construction
remained with the Prestige. Applying the concept of dual
ownership, the built-up area was never subject matter of
transfer by UBHL to Prestige.
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7.7 The Registering authority should determine the
stamp duty on reading of the instrument presented for
Registration and not beyond that.
7.8 The similar issue raised by respondent No.2 in SAP
3/2010-11 in case of Sri. B. Subramanya Rao and
Others Vs. District Registrar and Another, the very
authority has accepted that stamp duty is to be paid on
the value of undivided share in the land. The decision in
the present case is by respondent No.1 is selective.
7.9 Respondent No.1 in proceedings bearing No.AP-
08/2005-06 in the case of Sri. A. Moyiddin Vs. District
Registrar and Another has taken a stand that Audit
party has no right to question the order passed by the
District Registrar and the same can be corrected in the
manner known to law. Whereas, contrary stand is
canvassed in the present case.
7.10 The JDA and power of attorneys were sufficiently
stamped in terms of Article 5(f) and 41(ea) of the
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Schedule to the Stamp Act as existed during the execution
of the said documents.
7.11 Sri Uday Holla, learned Senior Counsel for the
petitioners relied on the following judgments;
i) [AIR 1965 SC 1092] Board of Revenue, Uttar
Pradesh vs. Rai Saheb Sidhnath Mehrotra for
the proposition that, if two views are possible one
favoring the subject must be chosen.
ii) [AIR 1957 SC 657] A.V. Fernandez vs. State
of Kerala for the proposition that, no tax can be
imposed without such power being conferred by
the statute.
iii) [1989 SCC OnLine Mad 273] Pork View
Enterprises vs. State Government of Tamil
Nadu and [AIR 1961 SC 1570] Bishan Das
and Others vs. State of Punjab and Others in
support of the proposition that ownership of land
and ownership of the structure could be with
different persons provided there exits a legal
relationship under a contract.
iv) [ILR 1999 KAR 2630] Smt. Mohini Devi vs.
The Sub-Registrar and [AIR 2004 KAR 308] L.
& T. Komatsu Ltd., vs. Senior Sub-Registrar,
Yelahanka and Others in support of the
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contention that the instrument subjected to stamp
duty should be read on the express recitals
without any substitution.
Submissions of the Respondents;
8. Sri. Kiran V. Ron, learned AAG appearing for
respondents submitted that as per JDA, the UBHL was
entitled to 55% of the built-up area and the Prestige was
entitled to 45% of the undivided share in the land. Under
the sale deeds, along with a 45% undivided share in the
land, the corresponding built-up area is also conveyed.
The consideration towards 45% of the land is the Market
Value of 55% of the built-up area. The valuation made by
the petitioners was disputed by respondent No.2 and
referred to under-valuation. The stamp duty liability has
been re-determined and accepted. This fact is evident
from the incorrect stamp duty paid by the petitioners on
the sale deeds.
8.1 The review exercise under Section 53A of the Act is
justified and the ingredients of the said Section are
attracted and completed.
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8.2 The competent authority examined the Audit
objection raised by the Accountant General. Being prima
facie satisfied, the matter was examined and proceedings
have been initiated under Section 53A of the Act. The
Audit objection was the source of information, which was
independently examined on the application of mind, and
thereafter, the impugned notice under Section 53A of the
Act was issued.
8.3 The concept of dual ownership is not applicable and
attracted to the facts of the present case. Respondent
No.1 was directed to consider the value of 55% of the
built-up area as consideration for the transfer of 45% of
the undivided share. Hence, the ownership of 45% of the
built-up area was never a subject matter of the review to
apply the principles of dual ownership.
8.4 The direction by respondent No.1 in the impugned
order is to independently determine the Market Value of
45% of the undivided share and 55% of the built-up area
and to determine the stamp duty on the property,
whichever is higher. The petitioners have an opportunity
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before respondent No.2 in the remand proceedings to
canvass the contention.
8.5 With the above submissions, learned AAG prays to
dismiss the writ petition.
8.6 Learned Additional Advocate General has relied on
the judgment in the case of Bangalore Grain Merchants
Association vs. The District Registrar for Societies
and Another [ILR 2001 KAR 766] to contend that the
invocation of revisional power even of information with an
external source from accountant general is sufficient for its
justification and the judgment in the case of Gowri
Enterprises vs. State of Karnataka and Others [1999
SCC OnLine KAR 122]
ANALYSIS:
9. Having considered the submissions of learned
counsels for the parties, the points that arise for
consideration are;
a. Whether the exercise of jurisdiction under Section
53A of the Act by the competent authority to
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revise the order by respondent No.2 under Section
45A of the Act is justifiable ?
b. Whether the conclusion reached by respondent
No.1 that stamp duty is to be paid on the market
value of 55% of built-up area towards transfer of
45% of the undivided share in the land is
justifiable ?
9.1 The dispute requiring adjudication by this Court
centers on the interpretation and application of the
provisions contained within the Karnataka Stamp Act,
1957.
Regarding Point No.1-
10. The sale deed dated 28.02.2008 was subjected to
undervaluation, and a determination was made under
Section 45A of the Karnataka Stamp Act. The resulting
order dated 30.04.2008 was subsequently reviewed under
Section 53A of the Act. The petitioners have challenged
the jurisdiction of Respondent No.1 in invoking Section
53A of the Act, as well as the determination on its merits.
Section 53A of the Act reads as under;
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"53A. Revision of order passed by
Deputy Commissioner or Authorised
officers.- (1) The Chief Controlling
Revenue Authority may except where the
matter is pending before an appellate
authority under this Act, suo-motu, within a
period of five years from the date of the
order passed under this Act by the Deputy
Commissioner or such other officer
authorised by the State Government in this
behalf, call for and examine the records
relating to such order or proceedings taken
under this Act by the Deputy Commissioner
or the authorised officer, and if after such
examination it has reason to believe that
the order so made or proceedings so taken
is erroneous or are not in accordance with
the provisions of this Act or prejudicial to
the interest of the revenue, it may after
giving the parties interested an opportunity
of being heard, pass an order in writing
confirming, modifying or setting aside such
order and direct the Deputy Commissioner
or the authorised officer, as the case may
be to collect the difference of duty, if any
payable in accordance with the provisions
of section 46:
Provided that in appropriate cases, the
Chief Controlling Revenue Authority may
order stay of operation of the order under
revision, pending hearing of the case.
(2) The Chief Controlling Revenue Authority
may for the purpose of sub-section (1),
require the concerned person to produce
before it, the instrument and examine such
instrument to determine whether any duty
is chargeable or the duty is short levied or
improperly levied on account of any wilful
mis-statement or suppression of facts made
or of contravention of any of the provisions
of this Act or rules made there under by
such person with intent to evade payment
of duty."
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11. Before examining the facts of the case, it is essential
to analyze the scope of Section 53A of the Karnataka
Stamp Act. Section 53A empowers the Chief Controlling
Revenue Authority, within a period of five years from the
date of an order passed by the Deputy Commissioner or
any other authorized officer, to examine the records
related to such order or proceedings taken under the Act.
Upon such examination, if the Authority has reason to
believe that the order is erroneous, not in accordance with
the provisions of the Act, or prejudicial to the interests of
the revenue, it may, after providing an opportunity of
hearing to the affected parties, either modify or set aside
the order. Furthermore, the Authority can direct the
Deputy Commissioner to collect any difference in stamp
duty arising from such modification or revision.
11.1 Section 53A mandates the satisfaction of specific
conditions or the existence of certain ingredients for its
lawful invocation. To comprehensively analyze the scope
of Section 53A, its essential components must be
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delineated. The following prerequisites must be satisfied
for invoking Section 53A:
(A) The Chief Controlling Revenue Authority must,
suo-motu, call for and examine the records
pertaining to the orders or proceedings passed
by the Deputy Commissioner or other
authorized officer.
(B) Upon such examination, the reviewing authority
must have reason to believe that:
(a) The order is erroneous, or
(b) The order is not in compliance with the
provisions of the Act, or
(c) The order is prejudicial to the interests
of the revenue.
11.2 The invocation of Section 53A is contingent upon the
fulfillment of these statutory conditions.
11.3 The fulfillment of the aforementioned conditions
must be clearly stated in the notice issued under Section
53A. The existence or compliance with these conditions
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should be explicitly mentioned in the show-cause notice,
as the invocation of jurisdiction begins with the issuance of
such notice. The show-cause notice, found in the records
at Annexures-H and J, merely refers to the direction of the
Accountant General to provide certain clarifications. Upon
reviewing the order dated 30.04.2008, it was noted that
the provisions of the Karnataka Stamp Act were not
adhered to, resulting in a loss of revenue. Consequently,
proceedings under Section 53A were initiated.
11.4 Section 53A mandates opportunity of hearing. The
record would not indicate the issues addressed by the
respondent No.1 other than mentioned in the show-cause
notice were made available to the petitioners for rebuttal.
In the absence of such opportunity, the show-cause notice
would be merely an empty formality. That apart, if the
grounds on which proceedings are initiated is not made
available for defense, the opportunity of hearing cannot be
held to be complied.
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11.5 The examination of the show-cause notice with
reference to Section 53A for its compliance, the following
aspects can be noticed.
12. Firstly, the proceedings under Section 53A were not
initiated suo-motu by the review authority upon
examination of the records. Instead, the exercise under
Section 53A was undertaken at the instance of the
Accountant General, which cannot be considered
suo-motu. The exercise of jurisdiction under Section 53A,
based on objections raised by the Accountant General, can
only be viewed as relying on a borrowed opinion rather
than an independent application of mind by the authority.
12.1 The second condition that must be met is the
existence of reason to believe that the order is erroneous,
not in accordance with the provisions of the Act, or
prejudicial to the interests of the revenue. While the show-
cause notice mentions that the order under Section 45A is
not in accordance with the provisions of the Act, it fails to
provide any reasoning or explanation as to why or how the
order is inconsistent with the Act. The notice does not
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clarify how the order is erroneous or prejudicial to the
revenue's interest. In fact, the show-cause notice is
conspicuously silent regarding these aspects.
13. Upon examining the show-cause notice in light of the
provisions of Section 53A, it is evident that the exercise of
jurisdiction under Section 53A does not fulfill the
conditions or ingredients prescribed therein. Consequently,
the proceedings initiated under Section 53A cannot be
considered in compliance with the statutory requirements.
14. Another aspect that requires consideration by this
Court is the binding nature of the opinion expressed by the
Accountant General. It is well-established that the audit
objections raised by the accountant general do not have
binding force and cannot serve as the sole basis for
invoking Section 53A, a point that does not require
extensive discussion. It is a settled legal principle that
suo-moto revision cannot be exercised solely based on
audit objections. However, the objections may be used as
a source of information, provided the authority
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independently applies its mind before invoking Section
53A.
15. A careful examination of the show-cause notice
reveals that it merely cites the audit objections raised by
the accountant general, without any evidence of
independent consideration or application of mind by the
authority before invoking Section 53A. Therefore, it can be
concluded that the exercise of jurisdiction under Section
53A was founded on borrowed information at the instance
of the accountant general and, as such, is not sustainable
in law.
16. It is a settled principle of law that once the liability to
tax or stamp duty has attained finality, such finality can
only be altered in exceptional circumstances, and these
circumstances require strict compliance with the
prescribed conditions. The jurisdiction of review cannot be
exercised for the purpose of a fresh inquiry or
re-adjudication, merely because an alternative view might
be possible from the one taken in the original order.
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16.1 The exercise of jurisdiction under Section 53A is not
sustainable for an additional reason. In the order passed
under Section 45A, the District Registrar has framed
specific issues, which are as follows:
"4. In view of the rival contentions of both
the parties, the following issues arise for
consideration:-
1) What is the subject matter involved in
the Instrument, i.e., whether the
subject matter is schedule 'B'
property only, or it consists of
Schedule "C" property also?
2) Whether the market value of the
subject matter is properly assessed, if
not?
3) What is the correct market value, and
stamp duty payable on the subject
matter?"
16.2 These issues were addressed, with the conclusion
that the subject matter of the sale deed pertains solely to
the undivided share in the land, and the built-up area was
not part of the transaction. Furthermore, it was
determined that the stamp duty is applicable only on the
undivided share in the land.
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17. The conclusion reached by the District Registrar
represents one of the possible views on the issue, which
the revision authority is disputing. However, mere
disagreement with the view taken is insufficient to invoke
Section 53A, unless it is shown that the view is erroneous,
contrary to the provisions of the Act, or prejudicial to the
interests of the revenue. No such ground is made out by
the revision authority. As such, the proceedings under
Section 53A are without jurisdiction and cannot be
sustained.
18. The Hon'ble Supreme Court in Board of Revenue,
Uttar Pradesh vs. Rai Saheb Sidhnath Mehrotra [AIR
1965 SC 1092] has held that;
"We need hardly say that the Stamp Act
is a taxing statute and must be construed
strictly, and if two meanings are equally
possible, the meaning is favour of the subject
must be given effect to".
19. Another aspect for examination is the conclusion
reached by the revision authority. The revision authority,
in its determination, held that stamp duty on the transfer
of 45% of the land should be calculated based on the
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market value of 55% of the built-up area. While this view
may seem reasonable from a commonsense perspective,
in the absence of any statutory provision imposing liability
in the manner suggested by the revision authority, it
cannot be justified or accepted. This issue will be
addressed in detail while considering Point No. 2.
Regarding Point No.2-
20. Before proceeding to consider the various
contentions urged by the respective counsels, it is relevant
to examine legislative history imposing stamp duty of the
nature in the present case.
20.1 It is necessary to examine the legislative history of
the provisions imposing stamp duty and the extent of
imposition. The relevant provisions would be Article 5(f)
of the Act, 1957. The Article 5 has undergone amendment
on multiple occasions. The relevant Article as existed at
different times is tabulated below for convenience;
• Section 5 (f) of the Karnataka Stamp Act, 1957 & Rules,
1958 (2006 Revised Edition);
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5(f) If relating to giving authority or Same duty as in sub-
power to a promoter or developer by clause (e) of this
whatever name called, for article]
construction or, development of, or
sale or transfer (in any manner
whatsoever) of any immovable
property, [situated in Karnataka
State]
• Section 5 (f) of the Karnataka Stamp Act, 1957 (2010-
Nineteenth Edition);
5(f) If relating to construction or One rupee for everyone
development or sale of an immovable hundred rupees or part
property, including a multi-unit house thereof on the market
or building or unit of apartment or flat value of the property
or portion of a multi-storied building which is the subject-
by a person having a stipulation that matter of such
after construction or development, agreement or on the
such property shall be held jointly or consideration for such
severally by that person and the agreement, whichever
owner or lessee, as the case may be, is higher, subject to a
of such property, or that it shall be maximum of rupees one
sold jointly or severally by them or lakh fifty thousand:
that a part of it shall be held jointly or
severally by them and the remaining
part thereof shall be sold jointly or
severally by them.
• Section 5 (f) of the Karnataka Stamp Act, 1957 (Thirty-
Fourth Edition);
5(f) If relating to construction or Two Rupees for every
development of immovable property, one hundred rupees
including a multi unit or multi storied or part thereof, on
the Market Value of
house or building or apartment or flat, or
such undivided share
portion of it, executed by and between or portion of land or
owner or lessee, as the case may be, immovable property,
and developer, having a stipulation, consideration and
whether express or implied, that, in advanced, if any; or
consideration of the owner or lessee
- 30 -
conveying or transferring or disposing
off, in any way, the undivided share or
portion of land or immovable property;
the developer agrees to convey or
transfer or dispose off, in any way, the
proportionate or agreed share or portion
of the constructed or developed building
or immovable property to the owner or
lessee, as the case may be.
• Section 5 (f) of the Karnataka Stamp Act, 1957, (2012-
Twenty-Third Edition);
5(f) If relating to construction or One Rupee for every
development of an immovable property, one hundred rupees
including a multi-unit house or building or part thereof... on
or unit of apartment or flat or portion of
the market value of
a multi-storied building by a developer or
builder or promoter or by whatever the property which is
name called having a stipulation that. for the subject matter of
such construction or development, the development in the
property shall be held jointly by the agreement or on
developer or builder or promoter or by consideration,
whatever name called and the owner or whichever is higher,
lessee, as the case may be, of such
subject to a
property, or that it shall be sold jointly
by them or that a part of it shall be held maximum of rupees
jointly by them and the remaining part fifteen lakhs.
thereof shall be sold jointly by them.
• Section 5 (f) of the Karnataka Stamp Act, 1957 and
Rules, 1958 (Revised Edition 2008);
[5(f) If relating to giving authority or power to a
developer by whatever name called, for
construction or, development of, or sale or transfer
(in any manner whatsoever) any immovable
property,
where the market value property
(1) Does not exceed Rupees one crore 10,000/-
(2) Exceeds one crores and does not exceed two
crores 20,000/-
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(3) Exceeds two crores and does not exceed five
crores 50,000/-
(4) Exceeds five crores and does not exceed ten
crores 1,00,000/-
(5) Exceeds Ten crores 1,50,000/-]
21. The subject transactions between the petitioners
arise from a Joint Development Agreement (JDA)
concerning the development of immovable property.
Under the terms of the agreement, petitioner No.1 has
undertaken the development of the property owned by
petitioner No.2, with the parties agreeing to share the
undivided interest in the land and the built-up area. As
per the JDA, petitioner No.1 is entitled to 45% of the built-
up area, while petitioner No.2 is entitled to 55%.
Additionally, petitioner No.2 has agreed to transfer the
right, title, and interest in the land corresponding to 45%
of the built-up area to petitioner No.1, with such interest
remaining as an undivided share.
22. Pursuant to the terms of the Joint Development
Agreement (JDA), a sale deed dated 28.02.2008 was
executed, whereby petitioner No.2 conveyed a
proportionate undivided share in the land to petitioner
- 32 -
No.1. The determination of the stamp duty payable on
this transfer constitutes the subject matter of the dispute
in the present writ petition.
23. The Joint Development Agreement (JDA) stipulates
that the built-up area shall be shared in a ratio of 55% to
UBHL and 45% to Prestige. Construction, as per the JDA,
has been completed. The sale deed dated 28.02.2008 was
executed in compliance with the JDA, conveying 45% of
the undivided share in the land. The nature of the transfer
is covered under Article 5(f) of the Act. It was only in
2011, with effect from 01.03.2014, that stamp duty was
levied on the market value of the undivided share or the
market value of the developed building corresponding to
the share. Prior to this amendment, stamp duty on the
joint development agreement was 1% of the market value
of the property subject to development. At the time when
the JDA and the agreement in question were executed, the
stamp duty payable on the JDA was Rs.1,000/-.
24. In light of the above provisions, two key aspects
require consideration by this Court. Firstly, whether the
- 33 -
sale deed of 2008 can be subjected to stamp duty as per
the 2014 amendment. Secondly, whether the transfer of
45% undivided share in the land can be subjected to
stamp duty based on the market value of the 55% built-up
area.
25. The sale deed in question pertains to the year 2008,
and therefore, the stamp duty applicable at the time of its
execution should apply. Under Article 5(f) as it stood
then, the stamp duty was Rs.1,000/- on the entire
document. The 2014 amendment, however, subjected the
Joint Development Agreement (JDA) to stamp duty at 2%
of the market value of the undivided share or the market
value of the constructed portion of the building, whichever
is higher. Although the respondent-authorities have not
referred to the 2014 amendment, they are attempting to
impose stamp duty based on this amendment on
documents registered in the year 2008. Article 265
mandates that no levy can be imposed without the
authority of law. Consequently, any attempt to levy stamp
- 34 -
duty on the 2008 sale deed in accordance with the 2014
amendment is impermissible.
26. It is a settled principle of law that the charging
section must be clear and unambiguous. In the event of
any ambiguity in the charging section, the benefit should
be given in favor of the taxpayer. This principle has been
held by the Hon'ble Supreme Court in Commissioner of
Customs (Import), Mumbai vs. Dilip Kumar and
Company and Others [(2018) 9 SCC 1]. Relevant are;
21. The well-settled principle is that when the
words in a statute are clear, plain and
unambiguous and only one meaning can be
inferred, the courts are bound to give effect to
the said meaning irrespective of consequences.
If the words in the statute are plain and
unambiguous, it becomes necessary to
expound those words in their natural and
ordinary sense. The words used declare the
intention of the legislature.
22. In Kanai Lal Sur v. Paramnidhi
Sadhukhan [Kanai Lal Sur v. Paramnidhi
Sadhukhan, AIR 1957 SC 907] , it was held
that if the words used are capable of one
construction only then it would not be open to
the courts to adopt any other hypothetical
construction on the ground that such
construction is more consistent with the
alleged object and policy of the Act.
23. In applying rule of plain meaning any
hardship and inconvenience cannot be the
- 35 -
basis to alter the meaning to the language
employed by the legislation. This is especially
so in fiscal statutes and penal statutes.
Nevertheless, if the plain language results in
absurdity, the court is entitled to determine
the meaning of the word in the context in
which it is used keeping in view the legislative
purpose.[Commr.v Mathapathi Basavannewwa,
(1995) 6 SCC 355] Not only that, if the plain
construction leads to anomaly and absurdity,
the court having regard to the hardship and
consequences that flow from such a provision
can even explain the true intention of the
legislation. Having observed general principles
applicable to statutory interpretation, it is now
time to consider rules of interpretation with
respect to taxation.
24. In construing penal statutes and taxation
statutes, the Court has to apply strict rule of
interpretation. The penal statute which tends
to deprive a person of right to life and liberty
has to be given strict interpretation or else
many innocents might become victims of
discretionary decision-making. Insofar as
taxation statutes are concerned, Article 265 of
the Constitution "265. Taxes not to be imposed
save by authority of law.--No tax shall be
levied or collected except by authority of law."
prohibits the State from extracting tax from
the citizens without authority of law. It is
axiomatic that taxation statute has to be
interpreted strictly because the State cannot at
their whims and fancies burden the citizens
without authority of law. In other words, when
the competent Legislature mandates taxing
certain persons/certain objects in certain
circumstances, it cannot be
expanded/interpreted to include those, which
were not intended by the legislature.
25. At the outset, we must clarify the position
of "plain meaning rule or clear and
unambiguous rule" with respect to tax law.
"The plain meaning rule" suggests that when
- 36 -
the language in the statute is plain and
unambiguous, the court has to read and
understand the plain language as such, and
there is no scope for any interpretation. This
salutary maxim flows from the phrase "cum
inverbis nulla ambiguitas est, non debet
admitti voluntatis quaestio". Following such
maxim, the courts sometimes have made strict
interpretation subordinate to the plain meaning
rule [Mangalore Chemicals and Fertilisers
Ltd. v. CCT, 1992 Supp (1) SCC 21] , though
strict interpretation is used in the precise
sense. To say that strict interpretation involves
plain reading of the statute and to say that one
has to utilise strict interpretation in the event
of ambiguity is self-contradictory.
29. We are not suggesting that literal
rule dehors the strict interpretation nor one
should ignore to ascertain the interplay
between "strict interpretation" and "literal
interpretation". We may reiterate at the cost of
repetition that strict interpretation of a statute
certainly involves literal or plain meaning test.
The other tools of interpretation, namely,
contextual or purposive interpretation cannot
be applied nor any resort be made to look to
other supporting material, especially in
taxation statutes. Indeed, it is well settled that
in a taxation statute, there is no room for any
intendment; that regard must be had to the
clear meaning of the words and that the
matter should be governed wholly by the
language of the notification. Equity has no
place in interpretation of a tax statute. Strictly
one has to look to the language used; there is
no room for searching intendment nor drawing
any presumption. Furthermore, nothing has to
be read into nor should anything be implied
other than essential inferences while
considering a taxation statute.
- 37 -
27. In the case A.V. Fernandez vs. State of Kerala
[AIR 1957 SC 657] it is held;
29. It is no doubt true that in construing fiscal
statutes and in determining the liability of a
subject to tax one must have regard to the
strict letter of the law and not merely to the
spirit of the statute or the substance of the
law. If the Revenue satisfies the Court that the
case falls strictly within the provisions of the
law, the subject can be taxed. If, on the other
hand, the case is not covered within the four
corners of the provisions of the taxing statute,
no tax can be imposed by inference or by
analogy or by trying to probe into the
intentions of the legislature and by considering
what was the substance of the matter. We
must of necessity, therefore, have regard to
the actual provisions of the Act and the rules
made thereunder before we can come to the
conclusion that the appellant was liable to
assessment as contended by the Sales Tax
Authorities.
28. It is a well-established principle that when
interpreting fiscal statute, any levy is presumed to be
prospective unless a clear provision is made for its
retrospective application. A bare perusal of the 2014
amendment does not indicate any intent for retrospective
application. In this regard, it must be held that the 2014
amendment, effective from 01.03.2014, applies only to
contracts, agreements, or JDAs entered into after that
- 38 -
date. Accordingly, the 2014 amendment is not applicable
to the transfer that took place in the year 2008.
29. It is useful to refer to the Constitutional Bench
Judgment of the Hon'ble Supreme Court in
Commissioner of Income Tax (Central)-I, New Delhi
vs. Vatika Township Private Limited [(2015) 1 SCC
1] while dealing with the scope of retrospective legislation
has held as under;
"28. Of the various rules guiding how a
legislation has to be interpreted, one
established rule is that unless a contrary
intention appears, a legislation is presumed not
to be intended to have a retrospective
operation. The idea behind the rule is that a
current law should govern current activities.
Law passed today cannot apply to the events
of the past. If we do something today, we do it
keeping in view the law of today and in force
and not tomorrow's backward adjustment of it.
Our belief in the nature of the law is founded
on the bedrock that every human being is
entitled to arrange his affairs by relying on the
existing law and should not find that his plans
have been retrospectively upset. This principle
of law is known as lex prospicit non respicit :
law looks forward not backward. As was
observed in Phillips v. Eyre [(1870) LR 6 QB 1]
, a retrospective legislation is contrary to the
general principle that legislation by which the
conduct of mankind is to be regulated when
introduced for the first time to deal with future
acts ought not to change the character of past
transactions carried on upon the faith of the
then existing law."
- 39 -
30. Having considered the scope of the charging
provision, it is clear that the law governing the year of the
transaction must be applied. Therefore, Article 5(f) as it
was applicable in 2008 should be applied to the present
case. As per the provisions in force in the year 2008, the
maximum stamp duty on the JDA was Rs.1,000/-.
31. Upon a careful examination of the legislative history
and the scope of the stamp duty levy on agreements
governed by Article 5(f), this Court finds it difficult to
uphold the conclusion reached by Respondent No. 1, which
seeks to impose stamp duty on the transfer of the
undivided share based on the market value of the built-up
area attributable to UBHL's share. Such an imposition is
not supported by any legal authority. As has been
observed, in the absence of an express statutory provision
authorizing such a levy, the same cannot be sustained.
The conclusion of respondent No.1 is not guarded by any
applicable statutory provision that imposes such
liability.
- 40 -
32. In the exercise of judicial review, the approach taken
by respondent No.1 may appear to be logical and
reasonable, it cannot be upheld if it conflicts with the
statutory provisions governing the issue. It is well-
established that judicial review is concerned with the
legality, rationality, and procedural propriety of decisions.
Even though commonsense reasoning might support the
respondent's stance, the statute must be interpreted
strictly as per its language and legislative intent. The
2014 amendment has rectified the approach taken by
respondent No.1. In the absence of a statutory provision
to justify the levy, the decision cannot stand.
Consequently, the impugned order passed by respondent
No.1 is found to be legally unsustainable and is hereby set
aside.
33. A perusal of the sale deed reveals that the schedule-
B property refers to the undivided share allotted to
Prestige, which is part of the schedule-A property. The
schedule-C property consists of the built-up area
constructed by Prestige using its own funds. The schedule-
- 41 -
B property is proportionate to the schedule-C property.
The transfer, as outlined in the sale deed, pertains to the
schedule-B property; however, it is contended that such
transfer was made to enable the enjoyment of the
schedule-C property by Prestige. The respondent-
authorities do not dispute that schedule-C property was
constructed by Prestige using its own funds. In this case,
the concept of dual ownership applies. Until the transfer,
schedule-B property was owned by UBHL, while schedule-
C property was owned by Prestige under the Joint
Development Agreement (JDA).
34. The schedule-C property was never the subject
matter of the sale, and therefore its value cannot be
considered in determining the stamp duty, especially in
the absence of any statutory provision to that effect. The
respondent-authorities have not cited any legal provision
that mandates the imposition of stamp duty on schedule-B
property based on the market value of schedule-C
property at the time of the transfer.
- 42 -
35. In the case of Pork View Enterprises vs. State
Government of Tamil Nadu [1989 SCC OnLine Mad
273] it is held;
"97. Therefore, the conclusions arrived at are
as follows:
1. The impugned provisions of the Stamp Act
and the Registration Act are valid, though
badly drafted.
2. When a sale deed with a clear intention that
only a share in the land is conveyed, and that
there is no transfer of interest between the
parties in relation to the building, if any, found
thereon; then the chargeability to stamp duty
could be confined only to the market value of
the share of the land and no other. Art. 23
alone will apply."
35.1 In Smt. Mohini Devi vs. The Sub-Registrar [ILR
1999 KAR 2630] it is held;
"20. The principles as to how a document should
be examined to determine the chargeability of stamp
duty are now well settled. They are.
(a): xxxxxxx
(e): The contents of the instrument as it stand,
and not any extraneous factors or in
circumstances, should be considered to
decide whether the document is duly
stamped, except where the stamp duty for
instrument is prescribed with reference to a
factor dehors the instrument.
- 43 -
35.2 In L. & T. Komatsu Ltd., vs. Senior Sub-
Registrar, Yelahanka and Others [AIR 2004 KAR
308] it is held;
"26. What is to be looked into in the instrument
for the purpose of enquiry under Section 33 of
the Act is as to whether the stamp duty payable
on the instrument and on the valuation of the
subject matter has been paid or not. If the
instrument is accepted at its face value, the
stamp duty paid even according to the
respondents, is the correct stamp duty and it is
an instrument which is duly stamped. But what
the respondents have done is that the version of
the instrument itself is disbelieved and the
instrument is interpreted and understood as an
instrument conveying properties of the value of
Rs. 210,64,00,000/-. No doubt respondents have
sought to place reliance on the recitals in the
agreement dated 30-7-1997 for transfer, for
such conclusion. But it is not open to the
authorities acting under Section 33 of the Act to
interpret a document or understand a document
in such a manner as to discard the express
recitals therein and substitute their own
understanding of the recitals and arrive at a
conclusion that the value mentioned is not the
proper value of the property conveyed and as
such it is not duly stamped. This is not the
function of an officer exercising power or
jurisdiction under Section 33 of the Act or under
Section 39 of the Act. The power under Section
33 of the Act is not one for interpretation of a
document, but one for inferring as to whether
proper stamp duty on the nature of the
transaction has been paid. May be a transaction
in the nature of conveyance being wrongly
described as a transaction in the nature of a
mere lease or a mortgage and stamp duty paid
on such an instrument becomes subject matter
of Section 33 of the Act, but not on the
understanding that the value of the subject
- 44 -
matter and the very subject matter has not been
properly described. The clear intention under the
instrument being one to convey the property
comprising land, building and structures, stamp
duty payable is only on the value of these
properties and nothing more. The interpretation
sought to be placed on the instrument for
exercise of power under Section 33 of the Act
was not one which is either tenable or acceptable
on the face of the recitals in the instrument itself
or and said to constitute a justifiable fact
situation for exercise of power under Section 33
of the Act and for pursuing further action."
36. The judgment in the case of Bangalore Grain
Merchants Association vs. The District Registrar for
Societies and Another [ILR 2001 KAR 766] relied on
by the respondents authorities does not apply to the facts
of the present case. While it is not disputed that
information can be obtained from external sources, the
key requirement is that the concerned authority must take
its own initiative and applying its mind to determine
whether an inquiry should be initiated. The authority
cannot act mechanically based on the directions or actions
of another person or authority without independently
assessing the necessity and appropriateness of conducting
an inquiry. In the present case, when examined in light of
this principle, it becomes evident that the information was
- 45 -
received through objections raised by the accountant
general. The proceedings were initiated without any
independent application of mind by the authority.
Therefore, the principle established in the Full Bench
judgment of this Court renders the impugned order
unsustainable due to the failure of the authority to apply
its mind independently.
37. So also the judgment in the case of Gowri
Enterprises vs. State of Karnataka and Others [1999
SCC OnLine KAR 122] is not applicable to the present
case. This Court held that the authority, while exercising
jurisdiction under Section 53A of the Act, may consider
evidence or material outside the instrument. However, in
the present case, the authority has not referred to any
such material, other than interpreting the market value of
the property, which cannot be done without legal
authority. Furthermore, no omissions are identified in the
sale deed that would justify the examination of external
evidence or material. Therefore, the reliance placed on
these judgments by the respondents is misplaced.
- 46 -
38. In view of the above reason, the finding of
respondent No.1 that the market value of the undivided
share in the land or market value of built-up area fallen to
the share of UBHL, whichever is higher is to be considered
for imposing stamp duty for transfer of 45% undivided
share is without authority of law and unjustifiable.
39. In the light of the above, the following;
ORDER
(i) Both writ petitions are allowed.
(ii) The impugned order dated 31.10.2011 passed by first respondent in both the petitions at Annexures-L and M respectively, are quashed.
(iii) Consequently, the notice dated 17.08.2010 at Annexure-K challenged in Writ Petition No.48133/2011 is also quashed.
(iv) No order as to cost.
Sd/-
(K. V. ARAVIND) JUDGE VBS/DDU