Allahabad High Court
Manya Kohli Stamp Duty vs Commissioner Lucknow Division Lucknow ... on 3 August, 2023
Author: Alok Mathur
Bench: Alok Mathur
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH ?Neutral Citation No. - 2023:AHC-LKO:51283 Court No. - 17 Case :- WRIT - C No. - 1006295 of 2011 Petitioner :- Manya Kohli Respondent :- Commissioner Lucknow Division Lucknow And 2 Ors. Counsel for Petitioner :- Arun Kumar Shukla,Utsav Mishra Counsel for Respondent :- C.S.C. Hon'ble Alok Mathur,J.
1. Heard Sri Utsav Mishra, learned counsel for petitioner as well as learned Standing Counsel for respondents.
2. By means of the present writ petition, the petitioner has challenged the legality and validity of the order dated 13.04.2011 passed by Collector, Stamps/Additional District Magistrate, (Finance & Revenue) Kheri whereby deficiency in the stamps affixed on the sale deed executed by the petitioner have been determined. The petitioner has also assailed the appellate order dated 22.09.2011 passed by the Commissioner, Lucknow Division, Lucknow.
3. It has been submitted by learned counsel for petitioner that petitioner had purchased land at Gata No. 2967Min. area 0.387 hectare situated in Village - Gola Bahar, Pargana - Haiderabad, Tehsil - Gola, District - Kheri from one Birju Singh and Dharmendra Singh for a consideration of Rs. 8,07,000/-. The sale deed was executed on 07.08.2009. After a period of more than two years, a notice under Section 47(A) of the India Stamps Act 1899 was received by the petitioner stating that he had wrongly shown the said land to be agricultural rather than residential for which stamp duty at the higher rate was required to be paid and consequently he was asked to show cause as to why the deficiency in the stamp duty be not imposed against the petitioner.
4. The petitioner objected to the notice and submitted that agricultural work is being done on the said land and even the land use has not been changed as per the provisions of Section 143 of U.P. Z.A. & L.R. Act. He during the hearing had submitted that in case the spot inspection is done as per provision contained in Rule 7(3) (c) of U.P. Stamp (Valuation of Property) Rules, 1997 the correct and actual determination of issue can be taken into account.
5. Additional District Magistrate, (Finance & Revenue) Kheri has considered the objections raised by the petitioner and rejected the same and relied only upon the inquiry report of the Tehsildar, Gola which was submitted prior to issuance of notice by which it was stated that the said land is residential. The report was relied on to a finding that the said land is situated at Lakhimpur Road Punjabi colony and is close proximity to residential areas.
6. Aggrieved by the said order, the petitioner has preferred an appeal before the Commissioner, Lucknow Division, Lucknow who also affirmed the findings recorded by the Additional District Magistrate (Stamps), Khiri. While assailing both the orders, it has been vehemently submitted by learned counsel for petitioner that it was incumbent upon the authorities to make a spot inspection in terms of Rule 7(3) (c) of U.P. Stamp (Valuation of Property) Rules, 1997 after giving due notice to the petitioner. In the present case, no spot inspect was conducted and accordingly there were clear violation of Rule 7(3) (c) of U.P. Stamp (Valuation of Property) Rules, 1997 while making the said assessment.
7. Learned counsel for petitioner has vehemently urged that both the orders are illegal and arbitrary inasmuch as the mandatory provisions containing in Rule 7(3) (c) of U.P. Stamp (Valuation of Property) Rules, 1997 had not been followed. He submits that once the inspection report on the basis of which the notice has been issued is questioned by the noticee then it is incumbent upon the authority concerned to make a spot inspection after giving due notice to the parties and only thereafter proceed in the said matter.
8. I have heard learned counsel for parties and perused the record.
9. 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.
........"
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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."
16. 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."
17. It is also noteworthy that while determining the market value of a property the revenue authorities shall take into consideration the note of spot inspection and report of Tehsildar as being objective material before coming to a conclusion regarding market value of a property. The valuation of a property shall not be determined on the basis of future prospects or mere presumption. In the present case there is no compliance of mandatory provision of Section 7(3)(c) of the U.P. Stamp Act, and no spot inspection has been conducted after giving notice to the petitioner and hence the assessment made by the revenue authorities is illegal and arbitrary.
18. In the light of aforesaid discussion, it is clear that the parties have proceeded without conducting spot inspection as provided under Rule 7(3) (c) of U.P. Stamp (Valuation of Property) Rules, 1997, impugned orders are illegal, arbitrary and based on presumption, cannot be sustained and deserve to be set aside.
20. Accordingly, impugned order dated 13.04.2011 passed by Collector, Stamps/Additional District Magistrate, (Finance & Revenue) Kheri and appellate order dated 22.09.2011 passed by the Commissioner, Lucknow Division, Lucknow are hereby set aside.
21. The matter is remitted to the District Magistrate, Kheri to proceed afresh in the matter after complying with the provisions contained in Section 7(3)(c) of the Rules and pass an appropriate order expeditiously, say, within a period of two months from the date a certified copy of this order is produced before him.
22. Learned counsel for petitioner undertakes that petitioner shall cooperate in the proceedings and also will be available on the convenient date fixed by the District Magistrate for spot inspection.
23. With the above observations and directions, the writ petition is allowed.
(Alok Mathur, J.) Order Date :- 3.8.2023/Ravi/