JUDGMENT 1. Heard Sri Alok Singh, Sr. Advocate, assisted by Sri Lalit Tiwari, learned counsel for the petitioner and learned Standing Counsel. 2. By the present writ petition, the petitioner has prayed for a writ of certiorari quashing the orders dated 27th May, 2005 and 13th November, 2003 passed by the Additional Chief Revenue Commissioner, Uttaranchal, Dehradun and by the Collector Haridwar respectively. 3. Briefly Stated, the petitioner is a limited company incorporated under the Companies Act, 1957 and the company having purchased agricultural land of Khasra No. 89 M measuring 0.81 Hectare of village Kehda, Tehsil Laksar, District Haridwar vide registered sale deed dated 29th June, 2001 for a sum of Rs. 10,00,000/-. 4. Learned Counsel for the petitioner has submitted that as per circle rate fixed by the Collector, Haridwar at the relevant time, maximum circle rate of land was Rs. 4 lacs per hectare and according to the rate maximum market value of land purchased would be Rs. 3,26,800/-. However, the land was purchased for a sum of Rs. 10 lacs hence the stamp duty of Rs. 80,000/- was paid on the said valuation. 5. Petitioner has submitted that ADM (Finance) has issued a notice under section 47-A of the Stamp Act stating therein that since the sale deed in question is under valued and the stamp duty has not been paid correctly and hence the demand of the deficient stamp duty was made from the petitioner. 6. The collector vide his order dated 13th November, 2003 has directed the petitioner to pay a sum of Rs. 5,80,300/- towards Stamp duty and 3,40,980/- towards interest and penalty accounting to Rs. 8,21,380/- on the basis of the potential value of the land, which was purchased by the petitioner. 7. Petitioner has filled the written submission on 20.10.2003 and has also filed the two Government Orders dated 12th January, 1998 and 16th August, 1999. 8. Petitioner has challenged the order dated 13th November, 2003 before the Chief Revenue Commissioner by filling Revision No. 1/03-04. The revision was dismissed and hence, the present writ petition has been filed. 9. 7. Petitioner has filled the written submission on 20.10.2003 and has also filed the two Government Orders dated 12th January, 1998 and 16th August, 1999. 8. Petitioner has challenged the order dated 13th November, 2003 before the Chief Revenue Commissioner by filling Revision No. 1/03-04. The revision was dismissed and hence, the present writ petition has been filed. 9. A counter affidavit has been filed by the state, where it has been stated that the land is situate in urban commercial area and is adjoining to the sugar mill and as such the rates applicable to agriculture land cannot be made applicable to the land in question for the purpose of payment of stamp duty. 10. A finding recorded by the revisional court shows that the land is an agricultural land but since the land in question is adjacent to the company of the petitioner, therefore, the same cannot be believed that the land in question shall not be used for the company purposes. 11. Neither the state counsel nor the courts below have disputed that according to the circle rate at the relevant time the value of the property was Rs. 3,26,800/- and the stamp duty has been paid to the extent of Rs. 80,000/-. 12. Similarly situated land was purchased by the company arising out of sale deed dated 27.04.2001 and in accordance with the circle rate, the stamp duty was paid to the extent of Rs. 99,000/- and the Commissioner having found that there was no infirmity in the payment of stamp duty and as such the Commissioner has allowed the revision and the deficiency as well as the stamp duty as indicated by the Assistant Collector was set aside by the Commissioner in Revision No. 11 of 2001-02 and the said order has been challenged by the State of U.P. in Writ Petition No. 595 of 2005 (MS) and the said writ Petitioner has been dismissed and the order has been confirmed. 13. G.O. dated 12th January , 1998 also provides that the potential value of the land has not to be looked into but the same has to be in accordance with the circle rate alone. 13. G.O. dated 12th January , 1998 also provides that the potential value of the land has not to be looked into but the same has to be in accordance with the circle rate alone. Relevant paragraph of the G.O. is quoted below:- ß2- mijksDr fLFkfr ls fuiVus ds fy;s rFkk tulkekU; dks jkgr igq¡pkus vkSj ikjn”khZ iz”kklu nsus ds fy;s “kklu }kjk ;g fu.kZ; fy;k x;k gS fd ,sls lHkh foys[ki=ksa dks] ftu ij LVkEi M~;wVh ml {ks= esa izpfyr dySDVj }kjk fu/kkZfjr lfdZy jsV ds vuqlkj vnk dh x;h gS] mUgsa mifucU/kdksa }kjk LVkEi dh deh ds lansg esa LVkEi ,DV dh /kkjk 37&, ds varxZr mifucUèkdksa }kjk lanfHkZr ugha fd;k tk;sxkAÞ 14. Section 47-A of the Stamp Act provides as under:- “47-A. Under-valuation of instrument.-[(1)(a) if the market value of any property, which is the subject of any instrument, on which duty is chargeable on market value of the property as set fourth in such instrument is less than even the minimum value determined in accordance with the rules made under this Act, the registering officer appointed under the Registration act, 1908, shall , notwithstanding anything contained in the said act, immediately after presentation of such instrument, and before accepting it for registration and taking any action under Section 52 of the said Act, require the person liable to pay stamp duty under section 29, to pay the deficit stamp duty as computed on the basis of the minimum value determined in accordance with the said rules and return the instrument for presenting again in accordance with Section 23 of the Registration Act, 1908.” 15. A perusal of Rules 340,341 and 349 of the Stamp Rules provide the guidelines while deciding the question with regard to deficiency of stamp duty. 16. Rules 341 and 349 of the U.P. Stamp rules, 1942 are quoted below:- “ 341. A perusal of Rules 340,341 and 349 of the Stamp Rules provide the guidelines while deciding the question with regard to deficiency of stamp duty. 16. Rules 341 and 349 of the U.P. Stamp rules, 1942 are quoted below:- “ 341. For the purposes of payment of stamp duty, the minimum market value of immovable property forming the subject of an instrument of conveyance, exchange, gift, settlement, award or trust, referred to in Section 47-A(1) of the Act, shall be deemed to be not less than that as arrived on the basis of the multiples given below: (i) Where the Subject is land — (a) in case of Bhumidhari-800 times the land revenue; (b) in case of Sirdari land-400 times the land revenue; (c) where the land is not assessed to revenue but net profits have arisen from it during the three years immediately preceding the date of the instrument 25 times the annual average of such profits; (d) where the land is not assessed to revenue and not profits have arisen from it during the three years immediately proceeding the date of the instrument 400 times the assumed annual rent; (e) where the land is non-agricultural and is situate within the limits of any local body referred to in clause C of the sub-rule(i) Rule 340-equal to the value worked out on the basis of the average price per square meter, prevailing in the locality on the date of the instrument, (ii) where the subject is grove or garden — (a) If assessed to revenue the value of the land shall be worked out in the manner laid down in Rule 341(i)(a) and the value of the trees standing thereon shall be worked out according to the average price of the trees of the same size, and age prevailing in the locality on the date of the instrument. (b) If not assessed to revenue or in exempted from it, the value there of shall be determined at 20 times the annual rent plus the premium or 20 times of the annual average of income which has arisen during the three years immediately preceding the date of instrument and the value of the trees thereon shall be determined in accordance with rule 341(ii)(a). 349. 349. The Collector shall, in the course of enquiry, consider such documentary evidence and take such oral evidence as may be relevant or material regard to subject matter involve and complete the inquiry, as far as possible, within a period of three months and determine the market-value which shall not be less than that determined in accordance with Rule 341.” 17. Rules 3 and 4 of the U.P. Stamp (Valuation of Property) Rules, 1997 also provide as under:- “3. Facts to be set forth in an instrument.-In case of an instrument relating to immovable property chargeable with an ad valorem duty, the following particulars shall also be fully and truly stated in the instrument in addition to the market value of the property;- (1) In case of land; (a) included in the holding of a tenure holder, as defined in the law relating to land tenures:- (i) the Khasra number and area of each plot forming part of the subject matter of the instrument; (ii) whether irrigated or un-irrigated and if irrigated, the source of irrigation; (iii) if under cultivation whether do-fasali or otherwise; (iv) land revenue or rent whether exempted or not and payable by such tenure holder; (v) classification of soil, supported in case of instruments exceeding twenty thousand rupees in value, by the certified copies, or extracts from the relevant revenue records issued in accordance with law; (vi) location (whether lies in an urban area, semi-urban area, or country side); and (vii) minimum value fixed by the Collector of the district. 4. Fixation of minimum rate for valuation of land, construction value of non-commercial building and minimum rate of rent and commercial building. (1) The Collector of the district shall biennially, as far as minimum value per acre/per square metre of land, the minimum value per square metre of construction of non-commercial building and the minimum monthly rent per square metre of commercial building, situated in different parts of the district taking into consideration the following facts- (a) in case of land- (i) classification of soil; (ii) availability irrigation facility; (iii) proximity to road, market, bus-station, railway station, factories, educational institutions, hospitals and government officers; and (iv) location with reference to its situation in urban area, semi-urban area or countryside.” Circle rates are also fixed by the Collector in accordance with Stamp Rules, 1997. 18. In Aniruddha Kumar and another Vs. 18. In Aniruddha Kumar and another Vs. Chief Controlling Revenue Authority, Uttar Pradesh, Allahabad and another 2000(18) LCD 1203, the learned Single Judge of the Allahabad High Court has held that an agricultural land cannot be treated to be a residential plot and further Rules 341 and 349 of the U.P. Stamp Rules do not permit the market rate to be calculated on the basis of potential value. Relevant observations are quoted below:- “8. A plain reading of sub-section (1) of Section 47 A shows that when the registering authority finds that the value set forth in an instrument is less than the minimum value determined in accordance with rules, in that event the registering authority is empowered to refer the same to the Collector for determination of the market value of such property and the duty payable thereon. Rule 341 is a guide-line for determining the minimum market value to find out if the valuation set forth in the instrument is even less than the minimum market value, and then he can assume jurisdiction to refer the same to the Collector. Thus rule 341 is a guiding factor to be taken into account for the purpose of determining the minimum market value in order to enable the registering authority to satisfy itself that the instrument produced before him, is one fit for reference under sub-section (1) of Section 47A. We may note that the expression used is less than the minimum value which could be determined according to rules. But at the same time sub-rule (2) prescribes that without prejudice to sub-section (1), if the registering authority has reason to believe that the market value set forth in the instrument has not been truly set forth, then he can refer the matter to the Collector under sub-Section. (2) Thus the contention of Mr. Kesari to the extent that unless the value is less than the minimum as provided in sub-section (1) read with Rule 341 the registering authority cannot assume jurisdiction to refer the same under Section 47A and the Collector could not have assumed jurisdiction upon such a reference and that the entire proceeding is void and without jurisdiction cannot be accepted. By reason of sub-section (1) when the value is less than the minimum in terms of Rule 341, then the registering authority may refer the same to the Collector. By reason of sub-section (1) when the value is less than the minimum in terms of Rule 341, then the registering authority may refer the same to the Collector. Then again by reason of sub-section (2), he has the same jurisdiction to refer wherever he has reason to believe that the market value set forth in the instrument, has not been truly set forth even if the valuation set forth may be higher than the minimum market value. Thus I am unable to agree with the contention of Mr. Kesari that the proposition impugned in these proceedings is void the orders passed are without jurisdiction as such. 14. In the present case, from the revenue records, admittedly, the land appears to be an agricultural land. Even though some fraction has been purchased still then on the date of purchase it remained agricultural land and, therefore, it cannot be treated to be a residential plot and the valuation cannot be determined straightway on such an assumption that the land is situated in close proximity of residential plot and that the land has to be treated as residential plot and the valuation is to be determined on the basis of building potential. In fact, the market value has to be determined on the basis of the character of the land as well as usage thereof and user of the same having regard to the other factors as are provided in the Act and the Rules. It would be immaterial whether the land is residential plot or agricultural land and for the purpose of determining the market value since the market value is to be determined on the basis of the factors that are laid down in the Act and the Rules. 15. Rule 340 A provides for circulation of a circle rate, which according to Ms. Goswami is an average rate of an area. In his usual fairness, Mr. Goswami has poitned out that the provisions contained in Rule 340A is also a guiding factor and is not a binding principle. The valuation that has to be determined is the market value, which may be less or more than the circle rate depending on each individual case having regard to the various factors which had to be weighed at the time of determining the valuation. As rightly contended by Mr. Kesari as well as Mr. The valuation that has to be determined is the market value, which may be less or more than the circle rate depending on each individual case having regard to the various factors which had to be weighed at the time of determining the valuation. As rightly contended by Mr. Kesari as well as Mr. Goswami, Rule 340A is also a guiding factor which lays down the guide line about the average market value of the land situated in the area. The circle rate cannot be treated to be binding and unenforceable. It is to be treated as average rate of market value in the area. The market value of a particular land is to be determined having regard to the various factors as are necessary to be gone into. In so determining, the circle rate may also be one of the factor to be taken into consideration. The price may be more or less than the circle rate prescribed having regard to the facts of each case, which has to be taken into account by the authorities concerned. “19. In the present case the market value is to be determined on the basis of the value that would satisfy the vendor. Thus the question of future potential cannot be a factor for determining the market value of such a land for the purpose of stamp duty payable under the Stamp Act. The vendee pays the price that satisfies the vendor and, therefore, it is the utility of the land as on the date of transfer by the vendor and as such, if the land was an agricultural land, it has to be treated as such and the valuation has to be done accordingly. Whether in future the purchaser puts the land into residential use or change the character is immaterial for the purpose of payment of stamp duty. The principle that has been laid down in P. Ram Reddy (Supra) can be attracted for the purpose of determining the market value only to the extent of potential as on the date of transfer and not beyond. The principle that has been laid down in P. Ram Reddy (Supra) can be attracted for the purpose of determining the market value only to the extent of potential as on the date of transfer and not beyond. Thus the market value has to be determined according to the factors, which includes the situation of the land, the amenities available in and around and various others factors, including the close proximity of the residential area as well as any transfer made immediately before the transfer or after the transfer in close proximity if such documents are produced in respect of the area that similarly situated land by either of the parties. 20. In the case of Prakashwati v. Chief Controlling Revenue Authority, Board of Revenue, Allahabad (1996 AWC 1331) the apex court had held that situation of a property in an area close to a decent colony not by itself would make it part thereof and should not be a factor for approach of the authority in determining the market value. According to the said decision, valuation has to be determined on constructive materials which could be made available before the authorities concerned.” 19. In Rakesh Chandra Mittal and others Vs. Additional District Magistrate (Finance and Revenue) Moradabad and others (2004 All. CJ. 1001), the Division Bench of the Allahabad High Court has held as under:- “It is well settled that market value of the property has to be determined with reference to the date on which the document is executed. Market value as such keeps on varying and changing. Any subsequent improvement or change in the nature of user of the land, which may result into enhancement of the market value of the property on the date of execution of the document that is to be considered for the purpose of determination of proper stamp duty payable on the instrument.” 20. In Ramesh Chand Bansal and others V. District Magistrate/Collector Ghaziabad and others 1999 (90) RD Page 499 (S.C.), the Apex Court has held as under:- “It would thus be seen that the aforesaid guidelines would inhibit the Registering Authority to exercise his quasi-judicial satisfaction of the true value of the property or consideration reflected in the instrument presented before him for registration. The statutory language clearly indicates that as and when such an instrument is presented for registration, the Sub-Registrar is required to satisfy himself, before registering the document whether the true price is reflected in the instrument as it prevails in the locality.” “Thus, an obligation is cast on the authority to properly ascertain its true value for which he is not bound by the apparent tenor of the instrument. He has to truly decide the real nature of the transaction and value of such property. For this, the Act empowers an authority to charge stamp duty on the instrument presented before it for registration. The market value of a property may vary from village to village, from location to location and even may differ from the sizes of area and other relevant factors. This apart there has to be some material before such authority as to what is the likely value of such property in that area. In its absence it would be very difficult for such registering authority to assess the valuation of such instrument. It is to give such support to the registering authority that Rule 340-A is introduced. Under this the Collector has to satisfy himself based on various factors mentioned therein before recording the circle rate, which would at best be the prima facie rate of that area concerned. ****************** ******************* Thus, the circle rate, as aforesaid, is merely a guideline and is also indicative of a division of exercise of power between the registering authority and the Collector. 6. Reverting to the submission for the appellants that enhancement by 20% for the next year in question was beyond the power of the Collector under Rule 340-A as he could only fix one circle rate in a span of two years, we find no merit in it. Under the said rule the Collector has to supply biennially to the District Registrar a copy of the statement recording circle rate and the average price of land etc. in every pargana, corporation or local body of his district. The supply of biennial statement would only mean supplying such statement once in two years but while supplying that statement there is no inhibition either under this rule or any other rule or under the Act nor any pointed out which restricts the Collector to give such rate differently for two years. The supply of biennial statement would only mean supplying such statement once in two years but while supplying that statement there is no inhibition either under this rule or any other rule or under the Act nor any pointed out which restricts the Collector to give such rate differently for two years. The restriction, if any, is that such statement shall only be supplied once in two years. If there be any material in possession of the Collector clearly indicating a regular pattern of increasing percentage of the prices of land every year then to that extent if he in his biennial statement refers to such increase for the following years it cannot be said that the Collector lacks competence to exercise such power. As we have said, this assessment by the Collector is only prima facie and is not final and is open to both the authorities or persons seeking registration to prove to the contrary the actual market value of such property. This circle rate in no way affects any party when finally determining its value. In the present case, the vires of this rule is not under challenge, nor is there any challenge that there was no such material before the Collector to enhance for subsequent year by 20 per cent. We do not find any such ground raised, nor could the appellants point out any raised before the authorities concerned. On the contrary, learned counsel for the State submits that there was sufficient material before the State showing the trend of increase in land prices during the relevant years in question to sustain the fixation of 20% enhanced price for the next year in question.” 21. Learned counsel for the petitioner has further referred the judgment of 2004 All. CJ, 402 Sheo Prakash Gupta Vs. State of U.P. and others; 2000 (18) LCD 1203 Anirudhdha Kumar and another Vs. Chief Controlling Revenue Authority, Uttar Pradesh and another. It has been held in all the cases that the potential value has not to be seen while taking into consideration the stamp duty. 22. CJ, 402 Sheo Prakash Gupta Vs. State of U.P. and others; 2000 (18) LCD 1203 Anirudhdha Kumar and another Vs. Chief Controlling Revenue Authority, Uttar Pradesh and another. It has been held in all the cases that the potential value has not to be seen while taking into consideration the stamp duty. 22. From Rules 341 and 349 of the U.P. Stamp Rules, 1942 as well as Rules 3 and 4 of the U.P. Stamp (Valuation of Property) Rules, 1997 and G.C. dated 25.09.1997, it is evident that the market value has to be calculated on the basis of the relevant date on which the sale deed has been executed and the potential value of the land has nothing to do. In the present case, the land in question has been recorded as an agricultural land as will appear from the Khatauni and therefore, the notice issued under Section 47-A of the Indian Stamp Act as amended in State of U.P. on the basis of the potential value of the land or the future user of the land cannot be made a criteria for determining the value of the land. 23. Further there was no material on record to show the rate except the value of the land as further held by the parties. Stamp duty has to be paid in accordance with the relevant date on which the deed was found to be executed and not on the basis of any imagination of the future potential value. 24. After examining the record, it is evident from a perusal of the sale deed that the sale deed has been executed in accordance with the circle rate. The land consists of 0.81 Hectare, the circle rate as admitted between the parties comes 4 lacs per hectare. Thus the sale deed executed on 29th June, 2001 cannot, therefore, attract the provisions of Section 47-A of the Indian Stamp Act as amended in State of U.P. 25. As will appear that Section 47-A is attracted only if the Collector finds that there is a deficiency in the payment of stamp duty, the notice therefore, has to be issued after taking into consideration the relevant material and rules and not in routine manner. 26. As will appear that Section 47-A is attracted only if the Collector finds that there is a deficiency in the payment of stamp duty, the notice therefore, has to be issued after taking into consideration the relevant material and rules and not in routine manner. 26. A writ of certiorari is issued quashing the order dated 27th May, 2005 and 13th November, 2003 passed by the Additional Chief Revenue Commissioner, Uttaranchal, Dehradun and by the Collector Haridwar respectively. 27. In view of the aforesaid, the writ petition succeeds and is allowed.