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The petitioner is engaged in the business of constructing flats in the city of Madras. It sells undivided share of land to prospective builders/purchasers under registered sale deeds. Thereafter, the purchasers build their flats at their own expense. Hitherto, stamp duty was collected only on the value of the undivided share in the land. Consequent to the amendment of the provisions, stamp duty is demanded on the cost of proposed construction of a flat, which is unconstitutional. The consequential circular issued by the second respondent is contrary to the provisions of the Indian Stamp Act. When the transaction pertains to a sale of an undivided share in a land without reference to any building or structure thereon which may come into existence later on, the insistence by the registering authorities upon payment of ad valorem stamp duty at 13% in the city of Madras on the proposed construction is illegal and invalid. The amendments effected are beyond the legislative competence of the State Legislature and Item No. 44 of List III do not authorise enactment of such an amendment. No duty could ever be levied on a property which is not in existence on the date of the execution or registration of the instrument. In essence, it is a tax or duty on the potential value of capital assets, which is not within the powers of the State Legislature. In the absence of guidelines, the certificate of the Assistant Engineer, Public Works Department, which is made conclusive relating to "the cost of the proposed construction" leads to arbitrariness and hence article 14 of the Constitution is violated. When the impugned provisions are violative of the petitioner's right to carry on trade or business in the promotion of flat building, it offends article 19(1)(g) of the Constitution. The duty imposed on a non-existent property is violative of article 300A as well. By the impugned circular dated December 9, 1988, documents are kept pending registration, which is an interference with the powers of the registering authorities and causing considerable inconvenience and loss to owners of properties. The specified assent of the President of India as required under article 254 of the Constitution of India had not been obtained. By the illegal action of the respondents, as the petitioner's business has virtually come to a standstill, it had filed the present writ petition.

17. Yet another point taken by him is that, when a classification is feasible relating to houses and buildings subjected to duty, depending upon as to whether they are used for residential purposes or non-residential purposes, whether they are rented out or sold on instalment basis, etc., etc., and when the Legislature fails to so classify, then such a section is liable to be struck down; and, for this purpose, he relies upon the decisions in Kunnathat Thathunni Moopil Nair v. State of Kerala, , New Manek Chowk Spg. and Wvg. Mills Co. Ltd. v. Municipal Corporation of the City of Ahmedabad, and State of Kerala v. Haji K. Haji K. Kutty Naha . These decisions deal with instances wherein failure to classify would not only lead to indefiniteness, but the purpose for which the enactment is made would also be defeated. In the earliest of the decisions, it was held that inequality is writ large on the Act and is inherent in the very provisions of the taxing section. In the next decision, it was held that the flat rate method was held to result in inequalities, as there had been no classification of factories on any rational basis. In the last of the decisions, it was held that the Legislature has failed to take into account the nature of construction, the purpose for which it was used, its situation, its capacity for profitable user and other relevant facts which have a bearing on taxation, and therefore, adoption of the floor area of the building as the basis irrespective of all other considerations, results in inequality and hence, refusal to make a rational classification in some cases would operate as denial of equality. Therefore, none of these decisions would be of any avail to claim that, in the instant case, when agreements of a particular nature are made chargeable to duty, there should have been still finer classifications by taking into account factors which, in its legislative wisdom, it was thought that such an attempt is uncalled for, when the intention is only to make agreements of a particular kind alone being made chargeable to duty irrespective of the purposes for which the building may be put to use. As for the cost of construction to be arrived at based on P.W.D. classification, he would submit that the books used by the said Department are not available to the public and much worse that the certificate issued by the Assistant Engineer is made conclusive proof. In the context of section 4 of the Evidence Act, if an arbitrary determination is to be made conclusive proof, it would lead to unquestionable power being exercised by an authority who should never be entrusted with such a power. There being no provision for appeal or revision against any erroneous assessment of 'cost of proposed construction', it is an arbitrary provision which is liable to be struck down. Lastly, by referring to section 17(1) of the Registration Act, he would again emphasise the point that the building should exist at the time of the agreement in view of the use of the words "if the property to which they relate is situate in a district" in section 17(1) of the Act. Once compulsory registration of an instrument is demanded at a time when there is no building in existence, it leads to inexactitude, and the power is to be exercised contrary to the known principles of law pertaining to transfer of interest in property. While concluding his submissions, by referring to the circular issued by the Inspector-General of Registration, he states that he had interfered with the quasi-judicial functions of the Registrar, and he had directed the Deputy Inspector-General of Registration to carry out the functions of the Registrar which is contrary to the provisions of the Registration Act and the Rules framed thereunder. To assail this circular as illegal, he refers to the decision in Board of Revenue v. Sardarani Vidyawati' in which the Supreme Court held that, when the provision of an Act is silent, the duty to act judicially may be inferred from the provisions of the statute or may be gathered from the cumulative effect of the nature of the rights affected, the manner of the disposal provided, the objective criterion to be adopted and the phraseology used and other indicia afforded by the statute. Dealing with the scope of section 56(2) of the Indian Stamp Act, it was held that the Collector was performing the duties which would be of a quasi-judicial nature. When a G.O. was issued by the Government relating to allotment of marks under the Motor Vehicles Act, 1939, it was held that such a G.O. fetters the independent discretion of the quasi-judicial authority and, therefore, such a G.O. cannot be taken into account. It was in B. Raiagopala Naidu v. State Transport Appellate Tribunal, , which was relied upon in this decision, it was held, that no doubt section 43A of the Motor Vehicles Act confers power on the Government to issue administrative orders, but if any direction is given to the Tribunal which will have to be dealt with in a quasi-judicial manner, then it is invalid.

18. In A. L. A. Firm v. CIT [1976] 102 ITR 622, a Division Bench of this court held that no circular of the Central Board of Direct Taxes in income-tax matters could ever fetter the judicial discretion of the authorities administering the Act.

19. Learned counsel, Mr. Vedantham Srinivasan, by referring to certain English decisions and Halsbury's Laws of England, would claim that property is a complex bundle of rights inhering in a person or to a thing, and it would consist of rights of ownership, possession, enjoyment, etc., and may result in creation of limited or total estate capable of being transferred. What does not exist can never be transferred in praesenti, particularly with regard to immovable properties. No person, who does not have any legal interest in an existing immovable property, can ever be compelled to transfer it in favour of another person, as could be done in respect of future goods which are movable in nature. The concept of transfer of interest in non-existing goods under the Sale of Goods Act cannot be imported in relation to immovable properties. Lack of registration would not invalidate transfer, but for certain legal incidences to occasion as and when rights therein are to be agitated in a court of law or an agreement is to be enforced and the like. In this context, he would touch upon section 53A of the Transfer of Property Act and section 49 of the Registration Act and claim that, in respect of immovable properties, unless the building exists on the date of the execution of the instrument, by making an agreement under article 5(i) of the Act as compulsorily registrable under section 17(1)(f) of the Registration Act, it cannot be claimed that the essential incidents of transfer of rights in the property had passed in favour of the vendee which is the expression used in article 5(i). The Indian Stamp Act and Registration Act are procedural in nature. In spite of being aware of the Delhi Apartment Ownership Act, 1984, and the Maharashtra Act 5 of 1984, half-hearted and ununderstandable amendments have been brought about, which are injected with vagueness and uncertainties in implementation, leading to a high degree of arbitrariness which would be much worse than what is presently happening in Sub-Registrar's offices when documents are presented for registration. He would submit that, even today no document gets registered by following the prescribes procedure known to law, and if the procedure now envisaged in the amending Act has to be implemented, it would lead to more corruption, because the certificate of P.W.D. Assistant Engineer having been given the status of conclusive proof, and as to what is a multi-unit house or building not having been precisely explained as now being experienced by persons like the petitioners in the hands of the registration authorities, it would only lead to unjust enrichment by persons in charge of the affairs of the Department. He then submits that construction of a building is a works contract, and that section 8 of the Transfer of Property Act cannot be relied upon while article 5(i) is invoked. This being a colourable legislation, it is liable to be struck down. He refers to certain passages extracted herein.

24. Narasimhaswami v. Venkatalingam, AIR 1927 Mad 636 [FB], holds that, in deciding whether a document requires registration or not, one has to take the document as a whole and construe it with reference to its terms and not with what might have been the intention of the parties. By referring to sections 4 to 6 and 17 of the Act, he points out that the choice is left to the parties to choose as to which one of them will be the principal instrument, and if the highest duty is paid on the principal instrument, then, on the other instrument, as per section 4(1), the duty could be only Rs. 5. If an instrument is drafted as to come within two or more of the descriptions in Schedule I, then it is chargeable only with the highest of such duty. After referring to the Delhi Apartment Ownership Act and the Maharashtra Act, 1984, he too submits that, in spite of a substantial number of M.L.As. from this State having gone to these places and submitted a report, the amendment which is now challenged has turned out to be a colourable exercise of power without comprehension of the mischief which the objects and reasons claims to remove, and, in fact, the amendment has brought about greater complications by its vagueness and indefiniteness and which would lead to arbitrary functioning by registering authorities.