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(3) The Collector may, suo motu, or otherwise, within five years from the date of registration of any instrument of conveyance, exchange, gift, release of benami right or settlement, 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 matter of conveyance, exchange, gift, release of benami right or settlement, and the duty payable thereon and if after such examination, 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 the duty as aforesaid in accordance with the procedure provided for in sub-section (2). The difference, if any, in the amount of duty, shall be payable by the persons liable to pay the duty;

“Rule 7 of the Rules also mandates that the Collector shall after considering the representations and after careful consideration of all relevant factors and evidence available with him pass an order within 3 months from the date of first notice. Rule 7 also has to be read in the light of Rule 4 (1) of the Rules which provides for a timeline of 21 days from the date of Civil Appeal No.2586 of 2020 @ SLP (C)No.15790 of 2019 etc. The Inspector General of Registration, Tamil Nadu & Ors. vs. K. Baskaran service of the notice for parties to provide their representations on whether the market value has been truthfully set forth. Therefore, Rule 7 read in the light of Rules 4 and Section 47-A (2) provides for a mandatory requirement to complete the inquiry and pass an order within the timelines set forth. It would also be pertinent to note that the timeline to pass an order within 3 months was introduced vide an amendment indicating the intention to have a mandatory timeline to pass orders.

… … … Rule 7 as originally enacted did not prescribe a time period for the Collector to pass an order determining the market value of the properties. Rule 7 was amended vide G.O.Ms.No. 69 dated 26.02.1997 on suggestion of the Inspector General of Registration (the “1997 Amendment) to introduce a month time period.”

20. Under sub-section (1) of Section 47-A of the Act, if there is reason to believe that the market value has not been truly set forth in the Instrument tendered for registration, a reference can be made to the Collector, who (i) after giving the parties reasonable opportunity of being heard; and (ii) after holding an enquiry in such manner as may be prescribed by Rules, has to determine the correct value of the concerned property. The Section by itself does not lay down any period within which the entire process is to be completed by the Collector. It simply states that the enquiry be held in “such manner” as may be prescribed by Rules. In this backdrop the manner in which the enquiry must be held as set out in the Rules, is required to be considered. Civil Appeal No.2586 of 2020 @ SLP (C)No.15790 of 2019 etc. The Inspector General of Registration, Tamil Nadu & Ors. vs. K. Baskaran According to the Rules, following steps are required to be undertaken:

A) On receipt of reference as stated above, the Collector must issue notice in Form I to the persons by whom and in whose favour the Instrument is executed, informing such persons to produce all evidence to show that the market value has been truly set forth in said instrument. The notice must give such persons time of twenty one days from the receipt of notice to represent or respond. [Rule 4(1)] B) The Collector may record statement of any such noticee.