Allahabad High Court
Yashwant Singh And Others vs State Of U.P. And Others on 26 April, 2023
Author: Alok Mathur
Bench: Alok Mathur
HIGH COURT OF JUDICATURE AT ALLAHABAD ?Court No. - 9 Case :- WRIT - C No. - 61602 of 2010 Petitioner :- Yashwant Singh And Others Respondent :- State of U.P. and Others Counsel for Petitioner :- S.D. Yadav,S.N. Yadav Counsel for Respondent :- C.S.C. Hon'ble Alok Mathur,J.
1. Heard Sri S.D. Yadav, learned counsel for the petitioners as well as learned Standing Counsel for the respondents.
2. By means of present writ petition the petitioners have challenged the validity and correctness of order dated 31.03.2010, passed by the Additional District Magistrate (Finance and Revenue), Kanpur Dehat (respondent no. 3) and order dated 04.09.2010, passed by the Additional Commissioner, Kanpur Division, Kanpur thereby appeal of the petitioner has been dismissed.
3. It is submitted by learned counsel for the petitioners the petitioners had purchased a plot measuring 700 sq. meters being Arazi No. 25 situated in Village - Mati Kishunpur, Kanpur Dehat on a consideration of Rs.5,00,000/-. While registration of sale deed petitioners paid stamp duty of Rs.49,000/- as per circle rate on the total valuation of land being Rs.9,80,000/- on 29.05.2009. The Lekhpal submitted an ex-parte report dated 24.10.2009, stating that the plots purchased by the petitioner is residential plot and stamp duty has been paid as per circle rate while the plot in question is adjacent to the National Highway which attracts higher stamp duty. On the basis of report submitted by the Lekhpal, the Additional District Magistrate (Finance & Revenue), Kanpur Dehat initiated proceedings for deficiency of stamp duty against the petitioner amounting to Rs.28000/-. Objections were filed by the petitioner in the said proceedings on 28.01.2010, stating that land in question is more then 70 meters away from the National Highway and hence correct stamp duty has been paid by him. The Additional District Magistrate (F & R) without considering the objections filed by petitioner passed an order dated 31.03.2010 for payment of Rs.28000/- as deficiency of stamp duty with 105% interest per month alongwith penalty of Rs.28000/-.
4. Aggrieved by the order dated 31.03.2010, petitioner preferred appeal under Section 56 of the Indian Stamp Act before the Commissioner, Kanpur Division, Kanpur being Appeal No. 19 of 2010, the said appeal was also rejected by the Commission by means of order dated 04.09.2010.The petitioner has assailed both the orders in the present writ petition.
5. It is next submitted by learned counsel for the petitioner that determination of market value of an instrument and the duty payable thereupon is provided under Rule 7 (3)(c) of the U.P. Stamp (Valuation of Property) Rules, 1997 (hereinafter referred to as the Rules, 1997), which provides that the Collector may inspect the property after due notice to the parties, but in the present case no notice was ever served upon the petitioner before conducting inspection, hence the impugned orders have been passed in violation of Rule 7 (3)(c) of the Rules, 1997.
6. Learned Standing Counsel on the other hand has opposed the writ petition and defended the impugned orders by stating that petitioner had filed objections in the proceedings thus he had full knowledge of the proceedings being drawn against him.
7. Heard learned counsel for the parties and perused the record.
8. From perusal of record it is evident that petitioner had purchased a plot by means of registered sale deed for consideration for consideration. At the time of registration of sale deed stamp duty was paid by the petitioner on the circle rate. It seems that an ex-parte inspection was done by the area Lekhpal and submitted his report to the Additional District Magistrate (Finance and Revenue), who directed to draw proceedings against the petitioner for deficiency in stamp duty in respect to the instrument in question. Petitioner filed his objections in the said proceedings, but same were not considered by the competent authority and order was passed against the petitioner imposing deficiency of stamp duty as well as penalty was also imposed upon him. The petitioner assailed the order of Additional District Magistrate (F&R) in appeal before the Commissioner in appeal but the same was also rejected.
9. It appears that proceedings were drawn against the petitioner without giving him any notice, which amounts to violation of Rule 7 (3)(c) of the Rules, 1997.
10. Where it is found that an instrument is undervalued, the procedure has been set forth under Section 47-A of the Act for assessing the correct stamp duty on the instrument. Section 47-A of the Act reads as under:-
"47-A. Under-valuation of the instrument.--- "(1) (a) If the market value of any property which is the subject of any instrument, on which duty is chargeable on the market value of the property as set forth in such instrument, is less than even the minimum value determined in accordance with the rules made under this Act, the registering officer appointed under the Registration Act, 1908 shall, notwithstanding anything contained in the said Act, immediately after presentation of such instrument and before accepting it for registration and taking any action under section 52 of the said Act, require the person liable to pay stamp duty under section 29, to pay the deficit stamp duty as computed on the basis of the minimum value determined in accordance with the said rules and return the instrument for presenting again in accordance with section 23 of the Registration Act, 1908.
(b) When the deficit stamp duty required to be paid under clause (a), is paid in respect of any instrument and the instrument is presented again for registration, the registering officer shall certify by endorsement thereon, that the deficit stamp duty has been paid in respect thereof and the name and the residence of the person paying them and register the same.
(c) Notwithstanding anything contained in any other provisions of this Act, the deficit stamp duty may be paid under clause (a) in the form of impressed stamps containing such declaration as may be prescribed.
(d) If any person does not make the payment of deficit stamp duty after receiving the order referred to in clause (a) and presents the instrument again for registration, the registering officer shall, before registering the instrument, refer the same to the Collector, for determination of the market value of the property and the proper duty payable thereon."
(2) On receipt of a reference under sub-section (1) the Collector shall, after giving the parties a reasonable opportunity of being heard and after holding an inquiry in such manner as many be prescribed by rules made under this Act, determine the market value of the property which is the subject of such instrument and the proper duty payable thereon.
(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 authorized 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 of such instrument, and the duty payable thereon and if after such examination he has reason to believe that 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 properly.
........"
11. From the reading of Section 47-A of the Act, it is evident that what has to be seen is the market value of the property and, if it is found that value of the property mentioned in the instrument is less than even the minimum value determined in accordance with the rules made under this Act, the registering officer is empowered to impound the instrument when it is presented for registration and require the person liable to pay stamp duty with deficit stamp duty as computed on the basis of the minimum value determined in accordance with the rules and return the instrument for presenting again for registration.
12. The Collector (Stamp) is empowered to determine the correct stamp duty on receipt of reference or by suo motu. If on inquiry and examination, the Collector finds that the market value of the property has not been truly set forth and the instrument is not properly stamped, he is empowered to order for payment of proper duty and also for making the deficiency good together with a penalty on an amount not exceeding four times the amount of deficit duty besides statutory interest 1.8% per month.
13. The State Government in exercise of powers under Sections 27, 47-A and 75 of the Act has framed Rules, 1997. Rule 3 of the aforesaid Rules prescribes the facts to be set forth in an instrument relating to immovable property chargeable with an ad valorem duty.
14. Under Rule 4 of the Rules, 1997, the Collector is empowered to fix minimum rate for value of land, construction value of non-commercial building and minimum rate of rent of commercial building. This minimum value is to be fixed biennially after taking into consideration the facts as mentioned in the Rules.
15. Rule 5 of the Rules, 1997 provides for calculation of minimum value of land, grove, garden and building for the purposes of payment of the stamp duty as may be prescribed under the said Rule.
16. A Full Bench of this Court in the case of Smt. Pushpa Sareen Vs. State of U.P. and others, 2015 (2) ESC 819 (All) (FB) has held that the power of Collector to determine the market value either on a reference under Sub-section (1) or (2) of Section 47-A or acting suo motu under sub-section (4) was to determine the correct market value of the property. The market value of the property has to be determined with reference to the use to which the land is capable reasonably of being put to immediately or in the proximate future. The Collector would be within jurisdiction in referring to exemplars which have a bearing on the true market value of property which is required to be assessed. The Full Bench considered the following questions in the said judgement:-
"(1) Whether the registering officer can refer a document even if he does not find that the market value of the property as set forth in the instrument is less than even the market value determined in accordance with the rules made under this Act;
(2) Whether the Collector Stamps has power to fix the valuation of a plot on the assumption that the same is likely to be used for commercial purposes, and whether the presumed future prospective use of the land can be a criterion for valuation by the Collector;
(3) What should be the norms for fixing the valuation of a free-hold land viz-a-vis lease land;
(4) Whether the Collector can demand stamp duty under Section 47-A of the Stamp Act without a finding of fact that the market value as stated in the document is less than that which was actually agreed upon between the parties;
(5) Whether the orders passed by the Chief Controlling Revenue Authority can be reviewed if it is shown that the known norms of valuation have not been followed in the case."
17. The Full Bench in Smt. Pushpa Sareen (supra) while answering Question No.2 has held that power and jurisdiction of the Collector under Section 47-A of the Act is to determine the actual market value of the property. The Collector in making that determination is not bound either by the value as described in the instrument or for that matter, the value as discernible on the basis of the Rules. It has been further held that the market value of the property has to be determined with reference to the use to which the land is capable reasonably of being put to immediately or in the proximate future. The possibility of the land becoming available in the immediate or near future for better use and enjoyment reflects upon the potentiality of the land. Paragraphs 26, 27 and 28 of the said judgement which are relevant, are extracted herein below:-
"26.The true test for determination by the Collector is the market value of the property on the date of the instrument because, under the provisions of the Act, every instrument is required to be stamped before or at the time of execution. In making that determination, the Collector has to be mindful of the fact that the market value of the property may vary from location to location and is dependent upon a large number of circumstances having a bearing on the comparative advantages or disadvantages of the land as well as the use to which the land can be put on the date of the execution of the instrument.
27. Undoubtedly, the Collector is not permitted to launch upon a speculative inquiry about the prospective use to which a land may be put to use at an uncertain future date. The market value of the property has to be determined with reference to the use to which the land is capable reasonably of being put to immediately or in the proximate future. The possibility of the land becoming available in the immediate or near future for better use and enjoyment reflects upon the potentiality of the land. This potential has to be assessed with reference to the date of the execution of the instrument. In other words, the power of the Collector cannot be unduly circumscribed by ruling out the potential to which the land can be advantageously deployed at the time of the execution of the instrument or a period reasonably proximate thereto. Again the use to which land in the area had been put is a material consideration. If the land surrounding the property in question has been put to commercial use, it would be improper to hold that this is a circumstance which should not weigh with the Collector as a factor which influences the market value of the land.
28. The fact that the land was put to a particular use, say for instance a commercial purpose at a later point in time, may not be a relevant criterion for deciding the value for the purpose of stamp duty, as held by the Supreme Court in State of U.P. and others Vs. Ambrish Tandon and another, (2012) 5 SCC 566. This is because the nature of the user is relateable to the date of purchase which is relevant for the purpose of computing the stamp duty. Where, however, the potential of the land can be assessed on the date of the execution of the instrument itself, that is clearly a circumstance which is relevant and germane to the determination of the true market value. At the same time, the exercise before the Collector has to be based on adequate material and cannot be a matter of hypothesis or surmise. The Collector must have material on the record to the effect that there has been a change of use or other contemporaneous sale deeds in respect of the adjacent areas that would have a bearing on the market value of the property which is under consideration. The Collector, therefore, would be within jurisdiction in referring to exemplars or comparable sale instances which have a bearing on the true market value of the property which is required to be assessed. If the sale instances are comparable, they would also reflect the potentiality of the land which would be taken into consideration in a price agreed upon between a vendor and a purchaser."
18. From perusal of the impugned orders it is clear that the authorities did not undertake the exercise of making spot inspection in the light of mandate as provided in the Rules, 1997. Though the petitioner had requested for such an inspection which fact is duly recorded in para 10 of the memo of appeal, still no such inspection was conducted and the authorities proceeded to assess the deficiency in stamp duty merely on the basis of report submitted by the authority prior to issuing notices to the petitioner in this regard. Since the respondents have proceeded without conducting spot inspection as provided under Rule 7(3)(c) of the Rules, 1997, and hence the impugned orders require interference by this Court under Article 226 of the Constitution of India.
19. From the discussion made above, this Court is of the considered view that impugned orders are illegal and arbitrary and cannot be sustained in law and deserve to be set aside.
20. Accordingly, impugned orders dated 31.03.2010, passed by the Additional District Magistrate (Finance and Revenue), Kanpur Dehat as well as order dated 04.09.1010, passed by the Commissioner, Kanpur Division, Kanpur are hereby set aside.
21. The writ petition is allowed.
22. Matter is remitted to the competent authority who shall consider and decide the matter in accordance with law and as per observations made herein above, expeditiously, say within a period of three months from the date of production of certified copy of this order.
Order Date :- 26.4.2023 A. Verma (Alok Mathur, J.)