Karnataka High Court
M/S Gopalan Enterprises vs The Deputy Commissioner Of Stamps, on 26 September, 2018
Equivalent citations: 2019 (1) AKR 856, (2019) 01 KANT LJ 170, (2019) 1 KCCR 335, (2019) 2 ICC 486
Author: R Devdas
Bench: R.Devdas
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R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 26TH DAY OF SEPTEMBER, 2018
BEFORE
THE HON'BLE MR.JUSTICE R.DEVDAS
WRIT PETITION NO.17510 OF 2010 (GM-ST/RN)
BETWEEN
M/S. GOPALAN ENTERPRISES
A REGD. FIRM OF PARTNERS,
NO.5, RICHMOND ROAD, BANGALORE,
REP BY ITS MANAGING PARTNER
SRI C. GOPALAN
... PETITIONER
(BY SRI S.V. SRINIVAS, ADVOCATE FOR
M/S CHALAPATHY & SRINIVAS, ADVOCATES)
AND
1. THE DEPUTY COMMISSIONER OF
STAMPS, BANGALORE DISTRICT,
BANGALORE
2. THE INSPECTOR GENERAL OF
REGISTRATION & STAMPS
NO.720, SIMSHA BHAVAN,
8TH BLOCK, JAYANAGAR,
BANGALORE -82
3. THE SECRETARY TO GOVERNMENT,
REVENUE DEPARTMENT (REGN. &
STAMPS) M.S.BUILDING,
BANGALORE -1
... RESPONDENTS
(BY SRI T.S. MAHANTESH, AGA FOR R1 TO R3)
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THIS WRIT PETITION IS FILED UNDER ARTICLE
226 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE ENDORSEMENT NO.RFD/58/09-10, DATED
02.12.2009 ISSUED BY THE SECOND RESPONDENT
AND PRODUCED AT ANNEXURE-E AND THE
ENDORSEMENT DATED 20.04.2010 ISSUED BY THE 1ST
RESPONDENT PRODUCED AT ANNEXURE F.
THIS PETITION COMING ON FOR FINAL HEARING
THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
R. DEVDAS J., (ORAL):
The petitioner entered into a transaction of lease with respect to a portion of the commercial complex constructed on site Nos.23 and 24 situated at III Phase, J.P.Nagar, Bannerghatta Road, Bengaluru. A lease deed dated 24.09.2008 was executed and registered on the same date i.e., 24.09.2008, in the office of the Sub-Registrar, J.P.Nagar, Bengaluru. Subsequently, a Deed of Surrender was executed between the same parties on 26.09.2009 and the said deed was registered on 29.09.2009 in the same Sub-Registrar's Office. In the Deed of Surrender, the parties confirmed that the right and obligations created in the lease deed dated -3- 24.09.2008 was thereby surrendered and the parties will not claim any right under the lease deed.
Thereafter another lease deed dated 29.09.2009 was entered into between the petitioner herein and the lessors therein.
2. It is pertinent to note that in the second lease deed there are three lessors, while in the first lease deed Sri A.Krishnappa was the sole lessor. On 22.10.2009, the petitioner herein addressed a letter to the Secretary to Revenue Department, Government of Karnataka seeking refund of stamp duty of Rs.1,13,48,805/- that was paid under the first lease deed dated 24.09.2008. The Secretary of the Revenue Department seems to have forwarded the request of the petitioner to the Inspector General of Registration and Commissioner of Stamps. The Commissioner vide letter dated 02.12.2009, informed the Secretary of the Revenue Department that there is no provision under the Karnataka Stamp Act, 1957, (for short 'Act') for refund of stamp duty, -4- applicable to the facts of the case. The letter dated 02.12.2009 was also communicated to the petitioner herein. It is seen from Annexure-F, which is an endorsement dated 20.04.2010, that the District Registrar has also issued an endorsement to the petitioner herein reiterating the position that there is no provision under the Stamp Act for refund of stamp duty on a document that was already executed and registered. Aggrieved by the same, the petitioner is before this Court seeking a writ in the nature of certiorari or any other appropriate writ or direction quashing the endorsements dated 02.12.2009 and 20.04.2010, which are at Annexures-E & F respectively. The petitioner also seeks a direction to the respondent to refund a sum of Rs.1,13,48,805/- being the stamp duty paid under the first lease deed dated 24.09.2008.
3. Sri S.V.Srinivas, learned counsel appearing for the petitioner submits that Section 47 of the Stamp Act provides for refund of stamp duty -5- and the said provision is applicable to the facts and circumstances of the instant case. The learned counsel further submits that Section 47(c)(6) of the Act is the provision under which the petitioner is empowered to claim refund of stamp duty and therefore the respondent-authorities should have considered the claim made by the petitioner and consequently refunded the stamp duty paid by the petitioner on the lease dated 24.09.2008.
4. Section 47 of the Act reads as follows:
"47. Allowances for spoiled stamps:- Subject to such rules as may be made by the State Government as to evidence to be required, or the enquiry to be made, the [Deputy Commissioner] may, on application made within the period prescribed in Section 48, and if he is satisfied as to the facts, make allowance for impressed stamps spoiled in the cases hereinafter mentioned, namely:-
(a) the stamps on any paper inadvertently and undesignedly spoiled, obliterated or by error in writing or any other means rendered unfit for the purpose intended before any instrument written thereon is executed by any person;-6-
(b) the stamp on any document which is written out wholly or in part, but which is not signed or executed by any party thereto;
(c) the stamp used for an instrument executed by any party thereto which --
(1) has been afterwards found to be absolutely void in law from the beginning;
(2) has been afterwards found unfit, by reason of any error or mistake therein, for the purpose originally intended;
(3) by reason of the death of any person by whom it is necessary that it should be executed, without having executed the same, or of the refusal of any such person to execute the same, cannot be completed so as to effect the intended transaction in the form proposed;
(4) for want of the execution thereof by some material party, and his inability or refusal to sign the same, is in fact incomplete and insufficient for the purpose for which it was intended;
(5) by reason of the refusal of any person to act under the same, or to advance any money intended to be thereby secured, or by the refusal or non-acceptance of any office thereby granted, totally fails of the intended purpose;-7-
(6) becomes useless in consequence of the transaction intended to be thereby effected, being effected by some other instrument between the parties and bearing a stamp of not less value;
(7) is deficient in value and the transaction intended to be thereby effected has been effected by some other instrument between the same parties and bearing a stamp of not less value;
(8) is inadvertently and undesignedly spoiled, and in lieu whereof another instrument made between the same parties and for the same purpose is executed and duly stamped:"
4. Learned counsel further submits that Section 47(c)(6) should be read along with Section 2(h) of the Stamp Act, wherein the term impressed stamp is defined. Section 2(h) reads as under:
2(h) "Impressed Stamp" means;
(i) impression made with franking
machine;
(ii) a certificate or endorsement made
and attested as may be prescribed by
the Deputy Commissioner or the
authorized officer or the proper
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officer, as the case may be in the
territories of the State of Karnataka.
5. The learned counsel for the petitioner relies upon a judgment of the High Court of Delhi in the case of Poornima Advani and Ors. /vs./ Govt. of NCT of Delhi and Ors., reported in 2018 SCC OnLine Del 10698 or MANU/DE/2964/2018. Learned counsel submits that the High Court of Delhi has held that if the scheme of Chapter V of the Act is kept in mind, the respondents ought to refund stamp duty even in cases where an applicant claims refund of stamp duty on account of loss of e-stamp paper. Emphasis is placed on the requirement of holding an enquiry to establish the factum of loss and adequate safeguards being put in. It was also emphasized that if a contrary view is taken, it would result in the State retaining money without authority of law, as admittedly, the taxing event had not occurred in the facts and circumstances of that case. It was also pointed out that in the case mentioned supra, it was held that in any event the stand of the respondents is -9- that the stamp duty is in the nature of tax. If that be the position, no tax shall be levied or collected except by authority of law. Therefore, emphasis is not only on no tax being levied without authority of law, but is also on collection of tax without authority of law.
6. In the background of the judgment cited, the learned counsel for the petitioner submits that in the present case, the parties have made it very clear in the Deed of Surrender that earlier lease deed executed between the parties was surrendered un- conditionally and therefore the parties have not acted upon the earlier lease deed. It is therefore contended that since the parties have not acted upon the earlier lease deed, Section 47(c)(6) of the Act can be invoked and the parties are entitled to claim refund of stamp duty even though the document is executed and registered. Learned counsel further points out to the endorsement issued by the authorities whereby, on the one hand, it is stated that a copy of the subsequent lease deed was not placed before the -10- authorities and on the other hand, it is said that the parties have acted upon the document and therefore the claim made by the petitioner is rejected. Learned counsel therefore contends that the respondent authorities have not applied their mind to the facts of the case. While concluding the argument, the learned counsel also makes an alternative submission that since the authorities had stated that the relevant documents were not produced by the petitioner, it is clear that no inquiry was held and therefore this Court should direct the respondents to hold fresh inquiry and decide the matter afresh.
7. Per contra, learned Additional Government Advocate submits that the entire Chapter V of the Stamp Act is dedicated to allowances for "spoiled stamps" only. Learned Additional Government Advocate further submits that Section 47(c)(6) also makes it clear that allowance for impressed stamps is permissible only when the transaction was not completed. In other words, the -11- learned Additional Government Advocate submits that once the parties to the instrument affix their signature to the document, the transaction is complete and therefore the claim made by the petitioner that the transaction is not completed, cannot be accepted.
8. This Court has given anxious consideration to the submissions made by the learned counsel appearing for the petitioner and the learned Additional Government Advocate appearing for the respondents and perused the pleadings and records placed before the Court.
9. On a plain reading of Section 47 of the Act, what emerges is that allowances for spoiled stamps, before it is executed by the parties, may be made, on an inquiry conducted by the Deputy Commissioner. What is provided is that allowances is permissible where impressed stamps are inadvertently and undesignedly spoiled, obliterated or by error in writing or any other means rendered unfit -12- for the purpose intended before any instrument written thereon is executed by any person. It was contended that since the parties have surrendered the earlier lease deed and paid the requisite stamp duty on the second lease deed, the earlier lease deed was rendered useless and therefore the stamp duty paid on the earlier lease deed should be refunded, in terms of Section 47(c)(6) of the Act.
10. This argument of the learned counsel cannot be accepted for the reason that what is provided under Section 47(c)(6) is that where an impressed stamp paper on which a transaction is intended to be made has been rendered useless, either because the stamp paper is spoiled or obliterated or by error in writing or any other means rendered unfit for the purpose intended and before the instrument is written thereon and executed by the parties. Section 47 of the Act does not provide for refund of the stamp duty paid on an earlier transaction. In the present case, the parties have -13- not only executed the lease deed, but they have also got the lease deed registered before the competent authority. Once the execution is complete, there is no provision under the Stamp Act for claiming refund of the stamp duty that is paid on the transaction.
11. While referring to the words "for the purpose intended", "cannot be completed", "totally fails of the intended purpose" found in the sub- clauses of Section 47 of the Act, the learned counsel for the petitioner had submitted that the earlier transaction was not completed and totally failed of the intended purpose, and therefore, Section 47 of the Act is invoked. Such an interpretation would be alien to the intention of legislature. The words 'incomplete' refers to non-execution, either wholly or partly, by any of the party to the document. In fact, clause (b) of Section 47 of the Act makes it clear that allowances for spoiled stamps is made when the stamp on any document which is written out wholly or in part, but which is not signed or executed by any -14- party. Sub-clauses (1) to (8) of Clause (c) of Section 47 of the Act, enumerates situations under which allowances are made for stamps when even after the instrument is executed by any party thereto, but it is afterwards found to be absolutely void in law from the beginning; found unfit by reason of any error or mistake therein; death of any of the parties to the instrument or refusal of any party to execute the document; refusal of any party to pay or accept the consideration, etc. The case on hand does not fall under any of these exigencies.
12. Section 47(c)(6) of the Act makes provision for allowances of duty when the instrument becomes useless as a consequence of execution of another instrument between the same parties and bearing a stamp of no lesser value. This provision cannot be stretched to contend that if the same parties were to execute a second instrument and paid stamp duty of no lesser value, stamp duty paid on the previous instrument should be refunded. A plain reading -15- makes it amply clear that where stamp papers are purchased for a transaction intended between the parties has 'not been executed' and another instrument has been executed between the same parties, the duty paid for the stamp papers purchased earlier could be refunded. In any case, where an instrument is executed and registered before the registering authority, the Act does not provide for refund except as provided under Section 16 of the Act.
13. What is to be noticed is, Section 16 of the Act provides for 'denoting of stamp duty'. A provision is made under the Act, where the duty with which an instrument is chargeable or its exemption from duty, depends in any manner upon the duty actually paid in respect of another instrument, the payment of such last mentioned duty shall, if application is made in writing to the Deputy Commissioner for that purpose, and on production of both the instruments, be denoted upon such first mentioned instrument, by -16- endorsement under the hand of the Deputy Commissioner or in such other manner, if any, as the State Government may by rules prescribe. This provision enunciates the rule against double jeopardy. But the petitioner seems to have shied away from making an application under Section 16 of the Act because the nature of transaction, properties involved in both the transactions, the extent and the parties thereto are different from one another. It is more than obvious that the two instruments refer to two different and separate transactions.
14. What is noticeable is that in the first lease deed the transaction is restricted to a commercial complex consisting of ground plus five floors put up on site Nos.23 and 24, while in the second lease deed the schedule comprises of sites bearing Nos.21, 22, 23 and 24 and noticeably the transaction is not restricted to a portion of the building alone. It is also seen that in the first lease deed the lessor is one Sri A.Krishnappa, while in the second lease deed the -17- lessors comprise of Sri A.Krishnappa and two others. It is therefore evident that the two transactions are different. Even otherwise, there is no provision under the Act for claiming refund of stamp duty on the ground that the earlier transaction was cancelled or that the rights accrued under the instrument is surrendered by such cancellation. Section 16 of the Act provides for 'denoting duty' or adjustment of the duty paid in certain cases such as Agreement for sale under Article 5(e) or instrument of sale or transfer as the case may be, or duty payable on such Power of Attorney under Article 41(e), executed between the same parties and in respect of the same property. The case on hand does not fall under the said category.
15. In the case of Poornima Advani (supra), refund of stamp duty was ordered since the stamp paper was lost even before it was executed. In such a situation, it was held that the instrument was not executed and retention of stamp duty by the State -18- would amount to levy or collection without authority of law. That is not the scenario obtained in this case.
16. In the light of the discussions made above, it is clear that the claim made by the petitioner seeking refund of stamp duty is not permissible under the Stamp Act and therefore the endorsement issued by the respondent-authorities stating that there is no provision under the Stamp Act for refund of stamp duty, in the facts and circumstances of this case, is perfectly justified. No fault can be found in the impugned orders passed by the respondent- authorities. The petition is bereft of any merit and deserves to be dismissed.
Accordingly, the petition is dismissed. No order as to costs.
SD/-
JUDGE KLY/JT/-