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2008 DIGILAW 677 (ALL)

Vijay Kumar v. Commissioner, Meerut Division

2008-03-27

PRAKASH KRISHNA

body2008
ORDER :- By means of a registered sale deed registered on 21-3-1992 in the office of Sub Registrar, Tehsil Kairana, District Muzaffarnagar, the petitioner purchased a double-storey shop measuring 58 square meter situate in Mohalla Dhimanpura, M.S.K Road Shamli, District Muzaffarnagar from one Manohar Singh for a sum of Rs. 1,70,000/- and paid the stamp duty thereon as per the circle rate fixed by the District Magistrate. The Sub Registrar, Tehsil Kairana District Muzaffarnagar on 25-3-1992 sent a report to the Additional District Magistrate (Finance and Revenue) that the valuation of the property has not been correctly disclosed in the sale deed. According to him the market value of the property is Rs. 3,60,000/- instead of Rs. 1,70,000/- on which a sum of Rs. 52,200/- was payable as stamp duty. In other words according to him there was a deficiency of stamp duty of Rs. 27,550/-. Proceedings under Section 47-A of Indian Stamp Act was initiated by the Additional District Magistrate (Finance and Revenue) on the basis of the said report. He also called for a report regarding the market value of the property in question from the Tahsildar who reported that the market value of the land is around Rs. 1,40,400/-and the cost of the construction standing there on is approximately Rs. 40,000/-. Thus the total value of the property sold as per his report was Rs. 1,80,400/- while it was shown as Rs. 1,70,000/- in the instrument i.e the sale deed. 2. The petitioner, in response to the show cause notice, appeared before the ADM(FandR) and contended that the sale consideration in the instrument has been properly and correctly set out. The stamp duty has been paid as per the circle rate fixed by the District Magistrate. He further submitted that the exemplar referred to in the report of the Sub Registrar are not applicable to the facts of the present case as properties mentioned there in are differently situated. 3. The ADM (FandR) by the order dated 29-11-1995 rejected the report of the Tahsildar as well as the case of the petitioner and presumed that at the time of the transfer, the monthly rent of the property in question could not have been less than Rs. 1,200/-and by multiplying it by 300/-as provided for under Rule 341 of Indian Stamp Rule, it estimated the valuation at Rs. 3,60,000/-. 1,200/-and by multiplying it by 300/-as provided for under Rule 341 of Indian Stamp Rule, it estimated the valuation at Rs. 3,60,000/-. This order was challenged by way of revision No. 4 of 1995-1996 before the Commissioner, Meerut Division, Meerut, under Section 56 of the Indian Stamp Act. The revision having been dismissed by the impugned order dated 29-11-1998, the present writ petition has been filed for quashing the impugned orders. 4. Heard and considered the respective submissions of the learned counsel for the parties and perused the record. 5. Section 47-A of the Act, for the sake of convenience, is reproduced below :- 47-A Undervaluation 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 forth 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. (b) When the deficit stamp duty required to be paid under clause (a), is paid in respect of any instrument and the instrument is presented again for registration, the registering officer shall certify by endorsement thereon, that the deficit stamp duty has been paid in respect thereof and the name and the residence of the person pay them and register the same. (c) Notwithstanding anything contained in any other provisions of this Act, the deficit stamp duty may be paid under clause (a) in the form of impressed stamps containing such declaration as may be prescribed. (d) If any person does not make the payment of deficit stamp duty after receiving the order referred to in clause (a) and presents the instrument again for registration, the registering officer shall, before registering the instrument refer the same to the Collector for determination of market value of the property and the proper duty payable thereon. (d) If any person does not make the payment of deficit stamp duty after receiving the order referred to in clause (a) and presents the instrument again for registration, the registering officer shall, before registering the instrument refer the same to the Collector for determination of market value of the property and the proper duty payable thereon. (2) On receipt of a reference under sub-section(1), the Collector shall, after giving the parties a reasonable opportunity of being heard, and after holding an inquiry in such manner as may be prescribed by rules made under this Act, determine the market value of the property which is the subject of such instrument, and the proper duty payable thereon. (3) The Collector may, suo motu, on a reference from any Court or from the Commissioner of Stamps, or an Additional Commissioner of Stamps or a Deputy Commissioner of Stamps or an Assistant Commissioner of Stamps or any officer authorised by the State Government in that behalf, within four years from the date of registration of any instrument, on which duty is chargeable on the market value of the property 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 of such instrument, and the duty payable thereon and if after such examination he has reason to believe that the market . value of such property has not been truly set forth in such instrument, he may determine the market value of such property and the duty payable thereon : Provided that, with the prior permission of the State Government an action under this sub-section may be taken after a period of four years but before a period of eight years from the date of registration of the instrument on which duty is chargeable on the market value of the property. Explanation ....................... Sub-sections (4-A) to (6) are not relevant." 6. Section 47-A refers to minimum value determined in accordance with Rules made under the Act, as held by the Apex Court in Ramesh Chandra Bansal v. District Magistrate, AIR 1999 SC 2126 : (1999 All LJ 1547) confers power upon a registering authority to deal with the case of under valuation. Sub-sections (4-A) to (6) are not relevant." 6. Section 47-A refers to minimum value determined in accordance with Rules made under the Act, as held by the Apex Court in Ramesh Chandra Bansal v. District Magistrate, AIR 1999 SC 2126 : (1999 All LJ 1547) confers power upon a registering authority to deal with the case of under valuation. Section 47-A uses the words minimum value determined in accordance with any Rules made under the Act in sub clause (1) of Section 47-A. A Division Bench of this Court in Kaka Singh v. The Additional Collector and District Magistrate (Finance and Revenue) Bulandshahr and another, 1986 ALJ 49 has held that Section 47-A empowers the Collector to deal with those cases where the parties by arrangement deliberately under valued the property while setting forth the market value less than the minimum value determined under Rule 341 with a view to defraud the Government of legitimate revenue by way of stamp duty. In the present case, it is not disputed by the respondents that the petitioners have not paid even the minimum value fixed under the Rules i.e. circle rate. The power appears to have been exercised under sub section (3) of Section 47-A. It may be noticed that in sub section (3) of Section 47-A, power has been conferred on the Collector to examine any instrument within four years from the date of registration on which duty is chargeable on a market value of the property. The Collector, if after such examination, has reason to believe that the market value of such property has not been truly set forth, he may determine the market value of such property and duty payable thereon. On a close reading of sub section (3) of Section 47-A the words used therein are reason to believe and market value of such property. These are key words. 7. The Stamp Act is a fiscal statute and it has to be interpreted strictly and construction of hardship or equity has no role to play in its construction. It is a taxing statute and has to be read as it is. In other words, the literal rule of interpretation applies to it. See-State of Rajasthan v. Khandaka Jain Jewellers, AIR 2008 SC 509 . It is a taxing statute and has to be read as it is. In other words, the literal rule of interpretation applies to it. See-State of Rajasthan v. Khandaka Jain Jewellers, AIR 2008 SC 509 . In this case the Supreme Court has referred its earlier judgment in the case of A.V. Fernandez v. State of Kerala AIR 1957 SC 657 . Also Government of A. P. and others v. Smt. P. Laxmi Devi 2008 AIR SCW 1826 : AIR 2008 SC 1640 . 8. In the above background the phrase reason to believe occurring in sub-section (3) of Section 47-A has to be considered. Identical phrases have been placed in almost every fiscal statutes such as Income-tax Act, Sales Tax Act etc. With reference to the expression reason to believe used in Section 34 of the Old Income-tax Act it has been held that they do not mean purely subjective satisfaction on the part of the Income Tax Officer. The belief must have been held in good faith, it cannot be merely a pretence. To put it differently it is open to Court to examine the question whether the reasons to believe have a rational connection or a relevant bearing to the formation of belief and are not extraneous or irrelevant to the purpose of section, as held in S. Narayanappa and others v. CIT Bangalore, AIR 1967 SC 523 . The words reason to believe are stronger than the expression for satisfaction Belief must not be arbitrary or irrational. It must be reasonable or must be based on reasons which are relevant and material. 9. In view of the fact that expression reason to believe has been used in sub-section (3) of Section 47-A of the Act, the power conferred under this section though is wide but they are not plenary. The power cannot be exercised when the Collector has reason to suspect that there is evasion of proper stamp duty. 10. A Division Bench of this Court in Kishore Chandra Agarwal v. State of U. P. and others 2008 (104) RD 235 has held as follows : "25. Every wide power, the exercise of which has far reaching repercussion, has inherent limitation on it. It should be exercised to effectuate the purpose of the Act. In legislations enacted for general benefits and common good the responsibility is far graver. It demands purposeful approach. Every wide power, the exercise of which has far reaching repercussion, has inherent limitation on it. It should be exercised to effectuate the purpose of the Act. In legislations enacted for general benefits and common good the responsibility is far graver. It demands purposeful approach. The exercise of discretion should be objective. Test of reasonableness is more strict. The public functionaries should be duty conscious rather than power charged. Its actions and decisions, which touch the common man, have to be tested on the touchstone of fairness and justice. An arbitrary action is ultra vires." 11. In Hajari Lal Sahu v. State of U. P. and others, 2004(1) AWC 899 : 2004 All LJ 1639 a learned Single Judge of this Court has taken the similar view. 12. The other phrase used in sub-section (3) of Section 47-A is market value. The market value means what a willing purchaser would pay to a willing seller for the property having regard to the advantages available to the land and the development activities which may be going in the vicinity and potentiality of the land and as such, an offer of sale of land to an industrialist on concessional rate with a view to induce him to set up industry in a particular area is not market value. See Mahabir Prasad v. Collector, Cuttack, AIR 1987 SC 720 . 13. The market value of land means a price at which both buyers and sellers are willing to do business; the market or current price. 14. Having noticed the imports of the aforesaid two expressions used in sub section (3) of Section 47-A now the facts of the present case may be looked upon. 15. The learned counsel for the petitioner submits that indisputably the shop in question was not let out at any point of time. Except the report of the Sub Registrar, there is no material on record to show that the market value set out in the instrument is incorrect. He further submits that the said report of the Sub-Registrar cannot be relied upon for the purposes of determining the deficiency if any in payment of Stamp Duty under Section 47-A of the Act as the said report is not relevant or admissible for passing the order thereunder. He further submits that the said report of the Sub-Registrar cannot be relied upon for the purposes of determining the deficiency if any in payment of Stamp Duty under Section 47-A of the Act as the said report is not relevant or admissible for passing the order thereunder. Elaborating the argument he submits that the exemplars were wrongly relied upon being document 1485 of 1989 and 6960 of 1989 wherein the rent of that property has been shown at Rs. 800/- and 1200/- per month. The submission is that there is no evidence to show that the property in question is similarly situate as those of the properties referred in the aforesaid two documents. In substance, the document Nos. 1485 of 1989 and 6960 of 1989 cannot be treated as exemplar in the absence of material to show that they are comparable with the property in question. The learned standing counsel on the other hand supports the impugned orders. 16. The sole basis of the impugned orders holding that proper stamp duty has not been paid by the petitioners is the report of the Sub Registrar, reporting the matter to the ADM (FandR) that proper stamp duty has not been paid. Except the said report, there is no material on record to show that the petitioners by arrangement deliberately under valued the property while setting forth the market value in the instrument. 17. In Ram Khelawan alias Bachcha v. State of U. P. through Collector, Hamirpur and another, 2005(98) RD 511, it has been held that report of Tahsildar may be a relevant factor for initiation of proceedings under Section 47-A of the Act but it cannot be relied upon to pass an order under the aforesaid section. In other words the said report cannot form itself basis of the order passed under Section 47-A of the Act. As already pointed out above, the only material is the report of Sub Registrar. It may also be noticed that the report of the Tahsildar was rejected by the authorities. 18. The learned counsel for the petitioners rightly pointed out that in the two impugned orders, there is no such discussion to show that the shop in question is similarly situate as the shops mentioned in document No. 1483 of 1989 or 6960 of 1989. These documents therefore, cannot be relied upon as exemplar. 19. 18. The learned counsel for the petitioners rightly pointed out that in the two impugned orders, there is no such discussion to show that the shop in question is similarly situate as the shops mentioned in document No. 1483 of 1989 or 6960 of 1989. These documents therefore, cannot be relied upon as exemplar. 19. In the case of Prakashwati v. Chief Controlling Revenue Authority Board of Revenue, Allahabad, 1996 (87) R.D.419 "Honble the Apex Court has 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 said decision, valuation has to be determined on constructive materials, which could be made available before the authorities concerned. 20. There is another aspect of the case. The sine qua non for invoking the provisions of Section 47-A(3) of the Act is that the Collector has reason to believe that the stamp duty has not been properly set forth in the instrument as per market value of the property. Once the instrument is registered and the prescribed stamp duty as prescribed by the Collector has been paid, the burden to prove that the market value is more than the minimum as prescribed by the Collector under the rules, is upon the Collector. The report of the Sub Register or Tahsildar itself is not sufficient to discharge that burden. Reference can be made to a Division Bench judgment of this Court in Kaka Singh v. The Additional Collector and District Magistrate (Finance and Revenue) Bulandshahr and another, 1986 ALJ 49. 21. Viewed as above, the impugned orders cannot be sustained and they are liable to be quashed. This Court while entertaining the writ petition granted a conditional stay order on 27-1-1999 wherein it was provided that on deposit of half of the deficiency within one month, the further recovery shall be stayed. It was further directed that the amount so deposited shall be subject to the decision of the writ petition. 22. This Court while entertaining the writ petition granted a conditional stay order on 27-1-1999 wherein it was provided that on deposit of half of the deficiency within one month, the further recovery shall be stayed. It was further directed that the amount so deposited shall be subject to the decision of the writ petition. 22. In view of the above order, the respondents are liable to refund the amount thus deposited by the petitioner along with the accrued interest within a period of one month from the date of production of a certified copy of this order failing which they shall be liable to pay the interest @ 10% per annum thereafter on the sum due to the petitioner, till the date of actual payment. 23. In the result, the writ petition succeeds and is allowed. The impugned orders dated 29-11-1995 (Annexure-5) and 19-11-1998 (Annexure-7) are hereby quashed and it is held that the petitioners are not liable to pay any further stamp duty on the instrument in question. No order as to costs. Petition allowed.