Punjab-Haryana High Court
A.P.Solvex Ltd. Dhuri vs State Of Punjab And Others on 18 February, 2014
Equivalent citations: AIR 2014 PUNJAB AND HARYANA 62, (2014) 3 PUN LR 59
Author: Augustine George Masih
Bench: Sanjay Kishan Kaul, Augustine George Masih
CWP No. 25108 of 2012 (O&M) 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
CWP No. 25108 of 2012 (O&M)
Reserved on 06.11.2013
Date of Decision: February 18, 2014
A.P.Solvex Ltd. Dhuri, District Sangrur
..PETITIONER
VERSUS
State of Punjab and others
..RESPONDENTS
CORAM: HON'BLE MR. JUSTICE SANJAY KISHAN KAUL, CHIEF JUSTICE
HON'BLE MR. JUSTICE AUGUSTINE GEORGE MASIH, JUDGE
PRESENT:Mr.Karan Nehra, Advocate,
for the petitioner.
Mr. J.S.Puri, Additional Advocate General, Punjab.
AUGUSTINE GEORGE MASIH, J.
Petitioner has challenged the amendment carried out by the State of Punjab in the Indian Stamp Act, 1899 in the Indian Stamp (Punjab Amendment) Act, 2005 (hereinafter referred to as 'Amendment Act, 2005') notified on 16.05.2005 by which Section 3-C was inserted after Section 3-B in the principal Act imposing and charging additional stamp duty as specified in Schedule 1-B known as the 'Social Security Fund' on the instruments mentioned in entry 23 of Schedule 1-A on the conveyance deeds, which are executed within the area of 5 Kms. outside the Municipal Corporation or Class- 1 Municipalities in the State of Punjab.
Prerna datta2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 2
Petitioner-A.P.Solvex Ltd. (hereinafter referred to as 'Company') purchased land and building on 02.06.2008 and paid all the stamp duties as applicable and assessed by the respondents. On 23.02.2010, the Auditor General, Punjab raised objections with regard to undervaluation of the property and indicated that the recovery should be effected from the petitioner-Company on account of undervaluation of the stamp duty in view of Section 47-A of the Indian Stamp Act. It was pointed out that the property being an industry including machinery and building would be covered under the commercial category instead of agriculture chahi category and, therefore, the stamp duty should have been charged accordingly and affixed.
Notice to the petitioner was issued under Section 47-A to appear on 15.04.2010 by the District Collector, Sangrur vide summons (Annexure P-7). Petitioner appeared and submitted his reply on 07.06.2010. An objection was taken by the petitioner- Company that the report was without any basis as the valuation of the property was done by the bank and on that basis, the purchase was got effected. The enquiry, which proceeded, thereafter led to the passing of the order dated 29.08.2011 (Annexure P-10) by the District Collector agreeing with the valuation of the property. However, it was pointed out that the Government of Punjab had upgraded the Municipal Council, Sunam to Class-I on 12.03.2008, which is prior to the date of execution of the sale deed dated Prerna datta 02.06.2008 and, therefore, additional tax @ 3% as Social Security 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 3 Fund was leviable as the said property fell within the radius of 5 Kms. of the municipal limit. The amount was assessed at ` 6,75,000/- on the value of the sale deed i.e. ` 2,25,00,000/- and the demand was raised.
Petitioner-Company preferred an appeal under Section 47-A (2) of the Indian Stamp Act before the Commissioner, Patiala Division, Patiala, which was dismissed vide order dated 28.03.2012 (Annexure P-12). It is, at this stage, that the petitioner has approached this Court challenging these two orders as well as the vires of the Indian Stamp (Punjab Amendment) Act, 2005.
Counsel for the petitioner has asserted that the amendment Act of the State of Punjab to the extent it applies to the property falling within the municipal limits is not disputed but the same is discriminatory, arbitrary and irrational thus, violative of Article 14 of the Constitution viz-a-viz the properties which fall within the periphery of 5 Kms. of the municipalities and those properties, which are beyond that. This amounts to splitting up of homogeneous group of citizens residing outside the municipal limits, which is not a permissible classification and thus, liable to be struck down. All equals and similarly placed should be treated alike but by this, classification has been given effect to where equals have been treated as unequals, which would violate Article 14 of the Constitution of India. The Indian Stamp Act does not provide for any provision or power to the Government to determine the stamp duty on the basis of the territorial location of the property and execution of the Prerna datta agreements and mere place of execution of the agreement because 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 4 of its location cannot be the sole factor to impose an additional stamp duty. The Indian Stamp Act does not empower the State to create different funds under the Stamp Act and, therefore, creating a Social Security Fund by imposing any additional stamp duty under the Indian Stamp Act is patently illegal and violative of the provisions of the Constitution as also the Indian Stamp Act. There is no nexus with the objects sought to be achieved by imposition of the additional stamp duty and, therefore, the imposition of the same cannot sustain. The provision is discriminatory and affects the right to residence free movement and livelihood within the territory of the State treating all equals unequally and is thus violative of Articles 14, 19 and 21 of the Constitution of India. In support of these submissions, counsel for the petitioner has placed reliance upon the judgments of the Supreme Court in the case of Aashirwad Films vs. Union of India and others, Appeal (Civil) N. 709 of 2004, decided on 18.05.2007, State of Andhra Pradesh and another vs. Nalla Raja Reddy and others, AIR 1967 SC 1458, State of Kerala vs. Haji K. Haji K. Kutty Naha and others, 1969 AIR 378 and D.S.Nakara and others vs. Union of India, (1983) 1 Supreme Court Cases 305.
Another argument, which has been raised by the counsel for the petitioner, is that the notice issued to the petitioner-Company by the District Collector, Sunam-respondent No. 4 is beyond the limitation prescribed under the provisions, as contained in Section 47-A. He contends that the demand of 3% additional stamp duty under Section 3-C is beyond the period of three years from the date Prerna dattaof execution of the sale deed. He contends that the sale deed is 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 5 dated 02.06.2008 whereas the order passed by the District Collector finally holding the petitioner liable to pay 3% additional stamp duty as the Social Security Fund is dated 29.08.2011. He, thus, contends that the impugned orders dated 29.08.2011 and 28.03.2012 passed by the District Collector, Sangrur and the Commissioner, Patiala Division, Patiala respectively deserve to be set aside.
On the other hand, counsel for the respondents submits that the legislative competence of the State of Punjab is not in dispute. He contends that the challenge is to the Amendment Act, 2005 being violative of the provisions of the Indian Stamp Act and the Constitution of India. He places reliance upon the judgment of the Supreme Court in the case of State of M.P. vs. Rakesh Kohli and others, 2012 (6) SCC 312, to contend that the Statute enacted by the State Legislature cannot be declared unconstitutional lightly. The same can be done only if the Court holds beyond any iota of doubt that there is a violation of the constitutional provisions so glaring that the legislative provision under challenge cannot stand. There is always a presumption in favour of the constitutionality of an enactment and, therefore, the onus and burden is on the person who alleges such violation of the constitutional provision and has to show that there is a clear violation of the constitutional principles. In the field of taxation, the Legislature enjoys a greater latitude for classification and, therefore, a strict interpretation has to be given effect to specially if it is a tax where hardship is not relevant in construing taxing Statutes and the equity is out of place in tax law. Prerna datta The consideration has to be seen whether it is exigible to tax under 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 6 the taxing statute or it is not. Relying upon the judgment of the Supreme Court in the case of Mohd. Hanif Quareshi and others vs. State of Bihar, AIR 1958 SC 731, he contends that the classification can be well founded on different basis, namely, geographical, objects or occupations and other factors can also be taken into consideration. No enactment can be struck down by just saying that it is arbitrary or unreasonable or irrational but some constitutional infirmity has to be found.
He contends that the basic reason for inclusion for the sale deeds executed within the periphery of 5 Kms. from the Municipal Corporation or Class-1 Municipalities is the geographical consideration. Petitioner concedes that the additional stamp duty can be levied within the municipal limits and a close proximity of the property to the Municipal Corporation or Class-1 Municipalities itself is a good ground for specifying the said area within which the said additional stamp duty would be leviable. He contends that the stamp duty is a tax and, therefore, the hardship, equity, mala-fide has no relevance. The competence is provided in entry 63 of the State List which is exclusively within the domain of the State Legislature. The additional duty of 3% is to be utilized for the Social Security Fund, which is a social purpose and it is specifically mentioned in the statement of objects and reasons set out for the amendment in question that the State Government has created this fund to finance the social security measures including old age pension, financial assistance to widows and destitute women, dependent children, Prerna datta disabled persons, Aashirwad to SC/Christian girls and daughters of 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 7 widows at the time of marriage, education for Backward Class, Scholarship for Post-Matric Scheduled Caste students, Attendance scholarship of Scheduled Caste primary girl students, Pre-Matric Scholarship to children of parents engaged in unclean occupation and free books to Scheduled Caste students of 1 to 10 Classes. He, on this basis, contends that the challenge to the vires of the Amendment Act, 2005 deserves to be rejected.
As regards the plea of limitation, which has been raised by the petitioner, he has placed reliance upon the judgment of the Supreme Court in the case of State of Punjab and others vs. M/s Mahajan Sabha, Gurdaspur and others, 1996 (1) SCC 538, where it is held that the limitation to take action under sub-sections (1), (2) and (3) of Section 47-A of the Indian Stamp Act is separate. In case, action is taken on the basis of the reference by the registering authority, then there is no limitation. In any case, he contends that the limitation under Section 47-A (3) pertains to under value of the property whereas the present case relates to non-payment of stamp duty, which is statutorily leviable as additional stamp duty over the value of the property. He, therefore, prays for dismissal of the writ petition.
We have heard counsel for the parties and with their assistance, have gone through the records of the case.
It is not in dispute that vide the Indian Stamp (Punjab Amendment) Act, 2005, Section 3-C has been inserted after Section 3-B of the Principal Act i.e. the Indian Stamp Act, 1899, the same Prerna datta 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 8 reads as follows:-
"3-C. Instrument chargeable with additional duty.-
(1) Every instrument mentioned in entry 23 of Schedule 1-A chargeable with duty under section 3, shall, in addition to that duty, be also chargeable with such duty, as specified in schedule 1-B, if such an instrument is executed in the area falling within the jurisdiction of a Municipality or a Corporation or within the area of five kilometers from the outer limit of the Municipality or Corporation as the case may be as may be specified by the Collector. This shall be applicable only to Municipal Corporation and Class-I Municipalities. (2) The additional duty with which any instrument is chargeable under sub-section (1), shall be paid and such payment shall be indicated on such instrument by means of stamp or stamp paper bearing the inscription "Social Security Fund" whether with or without any other design, picture or inscription.
(3) Except as otherwise provided in sub-section (2), the provisions of this Act shall, so far as may be, apply in relation to the additional duty chargeable under sub-
section (1), in respect of the instruments referred to therein as they apply in relation to the duty chargeable Prerna datta under section 3 in respect of those instruments.
2014.02.19 11:22I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 9 Explanation.- (For the purpose of this section,-
(1) The expression "municipality" and "the Corporation"
shall have the same meaning as assigned to them respectively, under the Punjab Municipal Act, 1911 and the Punjab Municipal Corporation Act, 1976. (2) The expression "Social Security Fund" means a fund constituted under the Punjab Social Security Fund Regulations, 2005 for providing financial assistance to the needy, deserving and weaker sections of the society in the State of Punjab through the Welfare Schemes."
4. Insertion of new Schedule I-B in Central Act 2 of 1899.- In the Principal Act after Schedule 1-A, the following Schedule shall be added, namely:-
"Schedule 1-B (See section 3-C) Conveyance as defined in section 2 (10), Where conveyance amounts to sale of not being a transfer charged or exempted immovable property. under entry No. 62 1 2 Where the value or amount of the One rupee fifty paise consideration for such conveyance as set forth therein does not exceed Rs. 50;
Where it exceeds Rs. 50, but does not exceed Rs. 100; Three rupees Conveyance as defined in Section (2) (10), Where conveyance amounts to sale of not being a transfer charged or exempted immovable property under entry No. 62 1 2 Prerna datta 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 10 Conveyance as defined in section 2 (10), Where conveyance amounts to sale of not being a transfer charged or exempted immovable property. under entry No. 62 Where it exceeds Rs. 100, but does not Six rupees exceed Rs. 200; Nine rupees Where it exceeds Rs. 200, but does not Twelve rupees exceed Rs. 300;
Fifteen rupees
Where it exceeds Rs. 300, but does not
exceed Rs. 400; Eighteen rupees
Where it exceeds Rs. 400, but does not Twenty-one rupees exceed Rs. 500; Twenty-four rupees Where it exceeds Rs. 500, but does not Twenty-seven rupees exceed Rs. 600;
Thirty rupees Where it exceeds Rs. 600, but does not exceed Rs. 700; Fifteen rupees Where it exceeds Rs. 700, but does not exceed Rs. 800;
Where it exceeds Rs. 800, but does not exceed Rs. 900;
Where it exceeds Rs. 900, but does not exceed Rs. 1000; or every 500 or part thereof in excess of Rs. 1000;
It is not in dispute that the additional stamp duty, which has been imposed vide the impugned Act, is a tax. The power to legislate has also been conceded. However, the challenge, which is posed, is to the provision, as has been enacted, whereby new Section 3-C and corresponding Schedule 1-B has been inserted for charging additional stamp duty for instrument contained in entry 23 of Schedule 1-A (conveyance deeds), which are executed within the Municipal Corporation or Class-1 Municipalities or within the area of
5 Kms. from the outer limits of the municipalities or Corporation, which is so specified by the Collector. The challenge to the amendment is basically relatable to violation of the Article 14 of the Constitution of India on the ground of discrimination. This discrimination, in turn, is stated to affect the right to residence and movement within the territory of the State and to practice any Prerna datta 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 11 profession or to carry on any occupation, trade or business, which would violate Articles 14, 19 and 21 of the Constitution. This violation is asserted to be because of the location of the property. According to the petitioner, all properties within the limits of the Corporations and the municipalities form a homogenous class and similarly those beyond the limits would form a different homogenous class. By including the property falling within the radius of 5 Kms. from the outer limits of the municipality or the corporation, an artificial class has been created within the class of those properties which are beyond the municipal limits which amounts to virtually including the said area within the municipal limits. The levy of tax being on the basis of territorial location of the property is alien to the provision of the Indian Stamp Act, thus, violating the Principal Act and thus, cannot sustain.
Before we proceed to evaluate this argument, the parameters, which are, by now, settled by the Supreme Court for testing the constitutional validity of a Statute enacted by the State Legislature, need to be outlined. When we refer to the judgment of the Supreme Court in Rakesh Kohli's case (supra) where earlier judgments of the Supreme Court have been referred to, the conclusion has been drawn out in para-29 of the said judgment, which reads as follows:-
"29. While dealing with constitutional validity of a taxation law enacted by Parliament or State Legislature, the court must have regard to the following principles: (i), there is Prerna datta always presumption in favour of constitutionality of a law 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 12 made by Parliament or a State Legislature (ii), no enactment can be struck down by just saying that it is arbitrary or unreasonable or irrational but some constitutional infirmity has to be found (iii), the court is not concerned with the wisdom or unwisdom, the justice or injustice of the law as the Parliament and State Legislatures are supposed to be alive to the needs of the people whom they represent and they are the best judge of the community by whose suffrage they come into existence (iv), hardship is not relevant in pronouncing on the constitutional validity of a fiscal statute or economic law and (v), in the field of taxation, the Legislature enjoys greater latitude for classification."
The Hon'ble Supreme Court had repeatedly emphasized that the legislative enactment can only be struck down by the Court only on two grounds i.e. (i) lack of legislative competence and (ii) violation of any of the fundamental rights guaranteed in para III of the Constitution or any other constitutional provision. There is no third ground, on which a law made by the Parliament or the legislature can be struck down. If an enactment is challenged as being violative of Article 14, it can be struck down only if it is found that it is violative of equality clause or equal protection as enshrined in the Constitution. No enactment can be struck down by just saying that it is arbitrary or unreasonable. There has to be one or the other constitutional infirmity, which is found by the Court before invalidating an Act. Prerna datta Unless a provision of the Act is clearly violating some constitutional 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 13 provision and that too leaving no manner of doubt, can the Statute be declared to be unconstitutional. Where two views are possible, one making the Statute constitutional would be preferred. It need not be emphasized that the legislature is the best judge of what is good for the community as they are the voice of the citizens. The Court should leave it to the wisdom of the Legislation ordinarily unless there is no doubt about its unconstitutionality.
In the case of Mohd. Hanif Quareshi (supra), the Constitutional Bench of the Hon'ble Supreme Court, while dilating upon the meaning, scope and effect of Article 14, reiterated that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and such differentia must have a rational relation to the object sought to be achieved by the Statute in question. If these tests are fulfilled, the classification would be permissible. In the said judgment, it was held that classification based on geographical, occupational and other objects, if makes out a basis of classification, would be a valid classification. In any case, in the field of taxation when a Legislature enacts it enjoys a greater latitude for classification, which has been so held by the Supreme Court in various judgments such as M/s Steelworth Limited v. State of Assam, 1962 Supp (2) SCR 589; Gopal Narain v. State of Uttar Pradesh and another, AIR 1964 SC 370; Ganga Sugar Corporation Limited v. State of Uttar Pradesh and others, (1980) 1 SCC 223; R.K.Garg v. Union of India and others, (1981) 4 SCC Prerna datta675 and State of W.B. and another v. E.I.TA. India Limited and 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 14 others, (2003) 5 SCC 239.
When the impugned enactment is put to test on the principles, as have been referred to above, it is apparent that the challenge to the same must fail.
It is not in dispute that the additional stamp duty, as has been imposed by the Amendment Act, is a tax. It is also not in dispute that the State has the power to fix the rate of stamp duty. The only objection appears to be that it has not been exercised uniformly within the State as there has been a classification made on the basis of the location of the property. The rationale, which is apparent as has been explained by the counsel for the respondents, that the proximity of the location of the property to the municipality/corporation. The property, which is adjacent to the urbanization area, has a distinct character of its own from the area, which is beyond the periphery of 5 Kms. from the corporation/municipal limits. The potential urbanization of the property, which is peripheral to the urban area, itself distinguishes it from the property which is beyond the peripheral area. For the purpose of taxation, it was essential to specify the limits for imposing a tax, therefore, the fixing of the limit of 5 Kms. beyond the outer limit of the corporation/municipal limits is justified. It cannot thus, be said that a sub-class has been created within the area outside the municipal limits. Although all areas beyond the corporation/municipal limits would form a class in itself but the classification of properties within the 5 Kms. of the municipal limits itself creates a homogenous Prerna datta class and such creation of the class would fall within the ambit of the 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 15 permissible classification as it is found on an intelligible differentia which distinguishes the said property from the other left out group. Hardship is not relevant in pronouncing on the constitutional validity of a fiscal statute or economic law and, therefore, greater latitude for classification has to be granted in the taxation field of legislation. There being reasonable classification founded out on the locational basis of the property, the same cannot be said to be unconstitutional or said to be violative of Articles 14, 19 and 21 of the Constitution of India.
In any case, the additional tax, which has been imposed, is for the purpose of creating Social Security Fund, which is exclusively to be utilized for the purpose of financing the social security measures such as old age pension, financial assistance to widows and destitute women, dependent children, disabled persons, Aashirwad to SC/Christian girls and daughters of widows at the time of marriage, education for Backward Class, Scholarship for Post- Matric Scheduled Caste students, Attendance scholarship of Scheduled Caste primary girl students, Pre-Matric Scholarship to children of parents engaged in unclean occupation and free books to Scheduled Caste students of 1 to 10 Classes etc. itself justifies the imposition of the tax. No mala-fides can be attributed to the legislature as the said Social Security Fund would fulfil the mandate of the Constitution, as has been laid down in Part-IV of the Constitution. The challenge thus, to the impugned Amendment Act, 2005 stands rejected.
Prerna datta
The judgments, on which reliance has been placed by the 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 16 counsel for the petitioner, would not be applicable to the case in hand. In the case of Aashirwad Films, the Court struck down the imposition of the different higher rate of tax on the non-Telugu films viz-a-viz a Telugu film on the ground that it differentiated on the basis of the language alone which in its initiative was not found to be reasonable classification. In the case of Nalla Raja Reddy, the challenge was to the Andhra Pradesh Land Revenue (Additional Assessment) and Cess Revision Act, 1962, which was passed with the object of bringing uniformity in assessment of land revenue in the Telengana and Andhra areas of the State and the Court held that the imposition of assessment was left to the arbitrary discretion of the officers not named in the Act without giving any remedy to the assessees for questioning the correctness of any of the stages in the matter of assessment. Not only the scheme of classification was held to be having any reasonable relation to the objects sought to be achieved i.e. fixation of rational rates but the arbitrary power of assessment conferred under the Act enables the appropriate officers to make unreasonable discrimination between different persons and land. On that basis, the Court held that the Act offended Article 14 of the Constitution. In the case of Haji K. Haji K. Kutty Naha and others, the challenge was to the Kerala Buildings Tax Act, 1961, whereby tax on buildings levied solely on the ground of floor area was imposed through out the State. It was not dependent on the class of building, the use for which it was put, material used in the construction and the extent of profitable user to which the building may be put, its cost and Prerna datta its economic rental and thus, was held to be violative of Article 14 of 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 17 the Constitution and, therefore, struck down.
In the present case, it has been held by us that there is a reasonable classification based on intelligible differentia which would bring the legislation out of the shadow of violating Article 14 of the Constitution of India which would lead to passing of the test of permissible classification. In Mohd. Hanif Quareshi's case (supra), the Hon'ble Supreme Court, in para-15, has held as follows:-
" ..The courts, it is accepted, must presume that the legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. It must be borne in mind that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest and finally that in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation "
Now moving to the challenge to the order dated 29.08.2011 (Annexure P-10) passed by the District Collector, Sangrur and the order dated 28.03.2012 (Annexure P-12) passed by the Commissioner, Patiala Division, Patiala. The same are challenged Prerna datta on the ground that the power exercised under Section 47-A of the 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 18 District Collector, Sangrur is beyond the period of limitation prescribed under Section 47-A of the Indian Stamp Act.
The facts are not in dispute that the sale deed is dated 02.06.2008 and the notice (Annexure P-7) was issued on the basis of the objections raised by the Audit General vide letter dated 23.02.2010 by the District Collector, Sangrur to the petitioner- Company to appear before him on 15.04.2010 at 10 A.M. This notice was issued under Section 47-A of the Indian Stamp (Punjab Amendment) Act, 1982. It was admittedly received by the petitioner. The period of limitation, as prescribed under sub-section (3) of Section 47-A of two years from the registration of an instrument would not apply to the present case.
While dealing with Section 47-A of the Act viz-a-viz the limitation prescribed in sub-section (3) of Section 47-A, the Hon'be Supreme Court in the case of M/s Mahajan Sabha, Gurdaspur, in paras 6 to 9, has held as follows:-
6. Sub-section (1) of Section 47-A gives power to the Registration Authority, i.e., Sub-Registrar, when he has reason to believe that the value of the property or consideration, as the case may be, has not been truly set forth in the instrument, he may, after registering such instrument, refer the case to the Collector for determination of the value of the property or the consideration, as the case may be, for proper stamp duty payable thereon. For initiation of action under sub-section Prerna datta (2) before giving opportunity to the vendee etc., the 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 19 condition precedent is the receipt of reference under subsection (1). In other words, on receipt of reference under Section 47A(1), notice under Sub-section (2) is to be given to the vendee/vendor. The impugned notice given to the respondents clearly indicates that the Collector had taken action under the sub-section (2) and (3) of Section 47-A of the Act on the receipt of reference under sub-section (1) of Section 47A. It reads thus :
"Regarding determination/assessment of the deficient amount of duty by Collector under Sub-
section (2) and (3) of Section 47-A of the Indian Stamp Act, 1809 in respect of sale deed No.3033 dated 4.9.87."
7. It would thus be seen that the question of initiating the action under sub-section (2) would arise only after receipt of the reference under sub-section (1). The reference will be only by the Registering Authority, namely, the sub-Registrar who registered the document.
8. By operation of sub-section (3) which envisages that "the Collector may suo motu or ...................
" (emphasis supplied) call for and examine the instrument for the purpose of satisfying himself as to the correctness of its value or consideration, as the case may be, and the duty payable thereon and after such examination, he has to believe that the value of consideration has not been Prerna datta truly set forth in the instrument, he may determine the 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 20 value or consideration and the duty as aforesaid in accordance with procedure provided in sub-section (2) and the deficient amount of duty, if any, shall be payable by the person liable to pay the duty." The limitation of two years prescribed in sub-section (3) would apply only in a case where the Collector takes action either suo motu or on receipt of reference from the Inspector General of Registration or the Registrar of the District appointed under the Registration Act, 1908 (Central Act 16 of 1908) in whose jurisdiction the property or any portion thereof, which is the subject matter of the instrument, is situated. In case of initiation of the action by the aforesaid officers, the limitation of two years from the date of the registration of any instrument would arise. In other words, the limitation prescribed in sub-section (3) of Section 47-A has no application to the case when a reference was made by the Registering Authority, namely, the primary authority under sub-section (1) of Section 47-A. If all the three sub-sections are conjointly read, the inevitable conclusion would be that the action of the Collector taken under sub-sections (2) and (3) on reference under sub- section (1) is not controlled by the limitation of two years prescribed under sub-section (3). Accordingly, we hold that the action initiated by the Collector was not barred by limitation.
Prerna datta
9. Admittedly, neither stamp duty nor the registration 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 21 fee has been paid on the value of the instrument mentioned in registered document No.3033. Under those circumstances, the action taken by the authorities is clearly consistent with the provisions of the Act." In any case, in the present case, the sale deed is dated 02.06.2008 and the notice has been issued by the District Collector to the petitioner to appear on 15.04.2010 i.e. within a period of two years. Merely because the petitioner has filed its reply on 07.06.2010, it cannot be said that the same is beyond a period of two years.
That apart, present is not a case where ultimately under- valuation of the property has been found. It is a case of non- payment of additional stamp duty as imposed under the impugned Amendment Act. In such a situation, the limitation, as provided under Section 47-A, would not be applicable as it is a tax leviable under the Statute for recovery of which no limitation has been imposed by the Statute. In the absence of a specific provision restricting the authority to exercise its power within some time limit, the same cannot be imported or made applicable. In the present case, the additional stamp duty was required to be paid along with the stamp duty at the time of registration of the document, which the petitioner did not and the notice was issued prior to the expiry of two years from the date of registration of the sale deed and the demand for the additional stamp duty has been raised within a reasonable time and the same thus cannot be said to be arbitrary.
Prerna datta
In view of the above, finding no merit in the present writ 2014.02.19 11:22 I attest to the accuracy and integrity of this document High Court, Chandigarh CWP No. 25108 of 2012 (O&M) 22 petition, the same stands dismissed.
(SANJAY KISHAN KAUL) (AUGUSTINE GEORGE MASIH)
CHIEF JUSTICE JUDGE
February 18, 2014
pj
Referred to Reporter-Yes/No
Prerna datta
2014.02.19 11:22
I attest to the accuracy and
integrity of this document
High Court, Chandigarh