Allahabad High Court
Anil Kumar And Anr. vs State Of U.P. And Ors. on 22 February, 2008
Author: Sudhir Agarwal
Bench: Sudhir Agarwal
JUDGMENT Sudhir Agarwal, J.
1. Aggrieved by the order dated 18.10.2004 passed by Additional District Magistrate (Finance and Revenue), Jhansi (respondent No. 3) and 06.01.2005 passed by Commissioner, Jhansi Division (respondent No. 2), the petitioners have filed this writ petition under Article 226 of the Constitution of India seeking a writ of certiorari for quashing the said orders whereby the respondents have determined the marked value of the property in question purchased by the petitioners to be Rs. 17,74,000/- on which the deficiency of stamp to the tune of Rs. 1,11,900- has also been determined and the petitioners have been required to pay the same alongwith a penalty of Rs. 10,000/- and 1.5% monthly interest on the entire amount from the date of execution of the sale deed.
2. The petitioners, Anil Kumar Jain and Satish Chandra Kohli have purchased land at plots No. 1650, 1651, 1652, 1653, 1654, 1655, 1656, 1657, 1658, 1659, 1660, 1661, 1662, 1663 and 1664 measuring, in total area, 0.887 hectare situated at Village Raksa, Tahsil and District Jhansi vide sale deed dated 12.04.2004 for consideration of Rs. 1,00,000/- though paid stamp duty at thrice the circle rate determined by the Collector. The Sub-Registrar before whom the document was executed referred it under Section 47-A of the Indian Stamp Act, 1899 (hereinafter referred to as the "Act") observing that the correct market value has not been shown in the document. A notice was issued by respondent No. 3 on 10.05.2004 which was replied by the petitioners on 29.05.2004. The respondent No. 3 passed order on 18.10.2004 observing that the land is appurtenant to Abadi and has immediate potential for residential user and, therefore, is liable to be stamped at the rate prescribed for residential land in the area and, therefore, required the petitioners to deposit a sum of Rs. 1,11,900/- towards deficiency of stamp duty alongwith penalty of Rs. 10,000/- and interest at the rate of 1.5% monthly from the date of execution of the document. The petitioners preferred revision under Section 56 but the same has been rejected by the respondent No. 2 vide order dated 06.01.2005.
3. Learned Counsel for the petitioners vehemently contended that the market value of the land in question has been increased and the demand of alleged deficiency in stamp duty has been raised only on the ground that the land has immediate potential of residential user though it is not in dispute that the land in question presently is being used for agricultural purposes and has not been declared as Abadi under Section 143 of U.P. Z.A. & L.R. Act, 1951 (hereinafter referred to as the "1951 Act"). He further contended that at the time of the execution of the land as well as even thereafter it is continuously being used for agricultural purposes and, therefore, the stamp duty imposed upon the petitioners is wholly illegal, based on conjectures and surmises, and even otherwise contrary to law. Reliance has been placed on the judgements of this Court in Hajari Lal Sahu v. State of U.P. and Ors. 2004 (96) RD 368, Ram Khelawan v. State of U.P. and Anr. 2005 (98) RD 511 and Aniruddha Kumar and Anr. v. C.C.R.A. U.P. and Anr. 2000 (91) 566.
4. Learned Standing Counsel on the contrary submitted that it was mentioned in the sale deed also that the land is situated near Abadi and this fact was not in dispute, therefore, it has rightly been found by the authorities concerned that the land has higher market value and stamp duty was payable at the rate applicable to Abadi land and not to agricultural land. He, thus, submitted that there is no error apparent on the face of record committed by the respondents and the writ petition, therefore, is liable to be dismissed.
5. I have heard Sri Narendra Mohan assisted by Sri Harish Chandra Mishra, Advocates for the petitioners, learned Standing Counsel for the respondents and have perused the record as well as the various authorities cited at the Bar in support of rival submissions.
6. The facts which are not in dispute are that the land in question is an agricultural land, registered as such in the revenue records and there was no declaration under Section 143 of 1951 Act, of the said land as Abadi either on the date of execution of sale deed or even thereafter and even till the date of filing of writ petition. The land is situated near Jhansi-Shivpuri road and it is about 60 meters away from the said road but adjacent to Abadi. The site map is appended to the sale deed (Annexure-1 to the writ petition) showing that a number of agricultural plots around plots in question are also agricultural land. In these circumstances it has to be seen as to whether a person can be required to pay additional stamp duty on the ground that the valuation on which he has paid stamp duty is not correct. From both the orders passed by the respondents No. 3 and 2 respectively it is evident that the sole reason assigned by them for determining market value of the land in question as 'residential land' is that it is adjacent to Abadi and has immediate potential of user as residential land. Another aspect which has been referred in both the orders are that the land in question has been purchased by two persons belong to different families, therefore, it appears to have been purchased for residential user though the sale deed has been registered showing it as an agricultural land.
7. In these facts, this Court has to adjudicate as to whether the Collector has rightly determined market value as required under Section 47-A of the Act of the land in question and whether demand for additional stamp duty, penalty etc. is valid or not.
8. Article 23 Schedule 1-B of the Act provides for stamp duty payable on 'conveyance' as defined under Section 2(10) of the Act. The duty has to be paid on the market value of the property or the consideration set forth in the conveyance whichever is higher. Therefore, if the consideration set forth in the instrument is less than the market value the duty is payable on the market value otherwise it is the consideration which would attract the amount of duty payable under the Act. The consideration of the land in question was declared as Rs. 1,00,000/- but for the purpose of payment of duty the petitioners mentioned consideration as 6,21,000/-. Unless it is found that this amount of Rs. 6,21,000/- was less than the market value of the property in question it could not have been said that the duty paid by the petitioners was less than that which they were required to pay under the Act.
9. Wherever it appears to a registering authority that the consideration set forth in the instrument is less than the correct market value, he may refer the matter to Collector under Sub-section 3 of Section 47-A of the Act and then it is the duty of a Collector to examine the instrument and satisfy himself as to the correctness of the market value of the property and only when he has reason to believe that the market value of the property has not been truly set forth in the instrument, he may determine the market value of such property and duty payable thereafter. Therefore, the obligation cast by Section 47-A of the Act of the Collector is first to find out that the correct market value of the property has not been mentioned in the instrument and thereafter himself he has to determine the market value of such property and then to proceed to decide the duty payable thereon and also as to whether the person concerned is liable to pay penalty or not. For the purpose of determining market value there is no machinery or statutory provisions laying down specifically as to what shall be a market value but laying guidelines, a procedure has been provided under Rule 7 of U.P. Stamp (Valuation of Property) Rules, 1997 (hereinafter referred to as the "1997 Rules") in accordance whereto the Collector would determine market value. Rule 7 reads as under:
7. Procedure on receipt of a reference or when suo motu action is proposed under Section 47-A.--(1) On receipt of a reference or where action is proposed to be taken suo motu under Section 47-A, the Collector shall issue notice to parties to the instrument to show cause within thirty days of the receipt of such notice as to why the market value of the property set forth in the instrument and the duty payable thereon be not determined by him.
(2) The Collector may admit oral or documentary evidence, if any, produced by the parties to the instrument and call for and examine the original instrument to satisfy himself as to the correctness of the market value of the subject-matter of the instrument and for determining the duty payable thereon.
(3) The Collector may:
(a) call for any information or record from any public office, officer or authority under the government or local authority;
(b) examine and record the statement of any public officer or authority under the Government or local authority;
(c) inspect the property after due notice to the parties to the instrument.
(4) After considering the representation of the parties, if any, and examining the records and other evidence, the Collector shall determine the market value of the subject matter of the instrument and the duty payable thereon.
(5) If, as a result of such inquiry, the market value is found to be fully and truly set forth and the instrument duly stamped according to such value, it shall be returned to the person who made the reference with a certificate to that effect. A copy of such certificate shall also be sent to the Registering officer concerned.
(6) If as a result of such inquiry, the market value is found to be undervalued and not duly stamped, necessary action shall be taken in respect of it according to relevant provisions of the Act.
10. The term "market value" has not been defined under the Act. However there are some precedents laying down certain guidelines as to how and what manner a market value would be determined. The consensus opinion is that the market value of any property is the price which the property would fetch or would have fetched if sold in the open market, if sold by a willing seller, unaffected by the special need of a particular purchaser. It is interesting to note that the Act provides first for determination of minimum value of the property and further says that if the market value of the property set forth in the instrument is less than the minimum value determined under the Act, in such case before registering the instrument the registering authority shall refer the instrument to Collector for determination of market value of the property and the proper duty payable thereon and when the Collector determines market value of the property thereafter the parties shall proceed accordingly. Therefore, a market value of the property in all cases cannot be said to be higher than the alleged minimum value determined under the rules by the concerned authority, inasmuch as, it is only a kind of guideline provided to the authorities for the purpose of considering as to whether the proper stamp duty is being paid by setting forth true market value of the property in question in the instrument. The entire object of legislature in the various provisions of the Act is to require the parties concerned to set forth correct market value of the property at which the transaction has taken place so that appropriate duty in accordance with the Act is paid by them. The various provisions with respect to minimum value etc. are only in aid and assistance of the authorities to find out the true amount of consideration on which the parties have entered into transaction so that the correct duty is collected therefrom.
11. A Division Bench of this Court, considering the provisions of the Act, in Kaka Singh v. Additional Collector & District Magistrate (F & R) held:
We are inclined to think that the object of the Amending Act being to avoid large scale evasion of stamp duty, it is not meant to be applied in a matter of fact fashion and in a haphazard way. Market value itself as we already mentioned, as a changing factor and will depend on various circumstances and matters relevant to the consideration. No exactitude is in the nature of things possible. In working the Act, great caution should be taken in order that it may not work as an engine of oppression. Having regard to the object of the Act, we are inclined to think that normally the consideration stated as the market value in a given instrument brought for registration should be taken to be correct unless circumstances exist which suggest fraudulent evasion.
12. The minimum value determined by the authorities under Rule 4 or 5 of 1997 Rules is only indicative of the fact that if the value set forth in the sale deed is less than such minimum value then Registering Officer before registering the instrument shall make a reference to the Collector and get the market value determined therefrom. It is not necessary that when such a reference is made, necessarily and in all cases, the value set forth in the instrument would not be a market value of the property in question. The Collector being under an obligation to determine market value under Section 47-A(3) of the Act read with Rule 7 of 1997 Rules thereafter would make inquiry in accordance with procedure prescribed thereunder and find out the correct market value which may be the same which is stated in the instrument or may be higher or lesser as the case may be. But there is no rule of thumb that it will always be higher than the value determined by the competent authority under Rule 4 or 5 of 1997 Rules. After considering 1997 Rules this Court in Ram Khelawan (Supra) has also taken the same view and has said:
15. It is quite possible that even in the first instance the instrument/deed may show the valuation of the property to be less than the minimum value determined in accordance with Rules of 1997 (popularly known as circle rate) still purchaser or seller may not be required to pay more stamp duty. The only purpose of the minimum market value fixed and circulated under Rule 4 of the Rules of 1997 is that in case on the face of it the market value of the property set-forth in the sale deed is less than minimum market value fixed under the said Rules than Registering Officer cannot register the deed and it will have to refer the same to the Collector unless on being asked by him to make good the deficiency in stamp duty, parties to the sale deed make good the requisite deficiency. In case deficiency is not made good then matter will have to be referred by Registering Officer to the Collector. However, thereafter it is quite possible that Collector may hold that even though market value of the property set-forth in the deed is less than minimum market value fixed under the Rules of 1997 still the market value set forth in the sale deed is correct and proper stamp has been paid. It is quite clear from Section 47-A(4)(i) and Rule 7(5).
13. Rule 7 of 1997 Rules while providing for determination of market value nowhere refers to either minimum value fixed under Rule 4 or 5 of 1997 Rules or provides that the market value shall be determined by the Collector which must be in all cases higher than the value set forth in the instrument by the parties concerned. The question as to how and what manner market value would have to be determined by the Collector has been discussed in detail and various aspects have been considered by this Court in Ram Khelawan (Supra) with which I entirely agree and, therefore, is of the view that the Collector is under a statutory obligation before holding that an instrument does not set forth correct market value, to determine as to what is the market value of the property in question. This is what has been said in Hajari Lal Sahu (Supra) and Aniruddha Kumar (Supra) with which also this Court is in entire agreement. The decision of the Apex Court referred to by the respondents No. 2 and 3 in the orders, impugned in this writ petition, that immediate potential user of the land is relevant for the purpose of determining market value, cannot be disputed but that is one of the relevant consideration and can not be the sole basis for holding that the value of the property as set forth in the instrument is not correct and it must be higher than that.
14. This Court enquired from the learned Standing Counsel to tell as to which kind of land has no potential at all for user as residential purposes in future to which he could not reply at all and admits that even in deep forest area where nobody is residing a land can always be used in presenti or future for residential purposes. Therefore, a future potential of the land for residential user by itself would not be a sole determinative factor for determining market value though, of course, it may be one of the relevant consideration for the same. The Collector however has to examine all relevant aspects in the matter and thereafter to find out what is the correct market value of the property in question. He cannot proceed merely by saying that since the land is adjacent to Abadi, therefore, it must be valued at the rate of residential land and duty must be charged accordingly. In none of the orders impugned in this petition I find that the respondents No. 2 and 3 have proceeded in accordance with Rule 7 of 1997 Rules read with Section 47-A(3) of the Act to find out as to what is the true market value of the property in question and on the contrary by only observing that the land is adjacent to Abadi, has immediate potential of user as residential land and has been purchased by the persons of two different families and, therefore, has valued it at par with residential land. The said determination, in my view, is not at all in accordance with the aforesaid provisions and the determination by the respondents is more based on conjectures and surmises ignoring the relevant factors as set out in the various judgments of the Apex Court, as discussed in Ram Khelawan (Supra) and others as also the procedure prescribed under the 1997 Rules.
15. In view thereof, the impugned orders cannot be sustained. The writ petition is allowed. The impugned orders dated 18.10.2004 (Annexure-5 to the writ petition) passed by Additional District Magistrate (Finance and Revenue), Jhansi (respondent No. 3) and 06.01.2005 (Annexure-6 to the writ petition) passed by Commissioner, Jhansi Division (respondent No. 2) are set aside. The matter is remitted back to the Additional District Magistrate (Finance and Revenue), Jhansi (respondent No. 3) for redetermining market value of the property in question in accordance with Rule 7 of U.P. Stamp (Valuation of Property) Rules, 1997 read with Section 47-A(3) of the Indian Stamp Act, 1899 and also in view of the law laid down by this Court as well as by the Apex Court as discussed above and to pass a fresh order in accordance with law after giving due opportunity to the parties concerned.
16. The petitioners shall also be entitled to cost which is quantified to Rs. 5,000/-.