Research › Search › Judgment

Allahabad High Court · body

2014 DIGILAW 3823 (ALL)

VARUN GOPAL v. STATE OF U. P.

2014-12-23

SUNEET KUMAR

body2014
JUDGMENT Hon’ble Suneet Kumar, J.—Heard learned counsel for the petitioner and Sri Nimai Das, learned Standing Counsel. 2. The petitioner purchased half of the agricultural land through sale-deed No. 4374 on 24.8.2011 being Khasra No. 231 ad measuring 0.501 hectare i.e. 0.2505 hectare in Villega Gahri Tamna, Chungi Bazar, Hathras. On inspection report, stamp case No. 34 of 2011 was registered under Section 47-A of Indian Stamp Act 1899. The petitioner in his objection to the notice stated that the disputed property is an agricultural land and is used as such, there is no residential activity within 200 meters of property in question, further, no declaration under Section 143 of U.P.Z.A. & L.R. Act has been notified regarding the change of land use. 3. The Collector by order dated 22.1.2013, determined the stamp deficiency of Rs. 1,94,125/- and imposed penalty of equal sum alongwith interest @ 1.5% per month. Aggrieved, petitioner filed appeal No. 15/79 of 2012-13 before the respondent No. 2, Additional Commissioner (Stamp) Aligarh Division, Aligarh, which was rejected on 31.5.2013 on the ground that the property in question is situated in the vicinity of agricultural land being plotted for residential purposes, and hence, the property in question was valued at residential rate considering the potentiality of the land. 4. The petitioner is assailing the order dated 31.5.2013 passed by the respondent No. 2, Additional Commissioner (Stamp) Aligarh Division, Aligarh and order dated 22.1.2013 passed by the Collector, Hathras. 5. The contention of learned counsel for the petitioner is that the impugned order has been passed on ex parte inspection report, no material was available with the respondents which could have been the basis of determining the market value. The petitioner has paid the stamp duty in excess of the stipulated rate prescribed by the Collector, thus, mere situation of the property in close proximity to residential area will not enhance the market value of the property. Admittedly, the property was recorded as agricultural land and there is no declaration under Section 143 of the U.P.Z.A. & L.R. Act. 6. Admittedly, the property was recorded as agricultural land and there is no declaration under Section 143 of the U.P.Z.A. & L.R. Act. 6. Per contra, Sri Nimai Das, learned Standing Counsel would submit that the minimum value as referred to under Section 47-A has to be read alongwith Article 23(a) of Scheduled 1-B of the Act which refers to market value on which stamp duty is payable on conveyance, thus, the minimum value determined by the Collector need not reflect the market value of the property. It is admitted that the property is situated in the vicinity of land being plotted for housing purpose, merely because the property is recorded as an agricultural land would not mean that the market value of the property is of an agricultural land. Declaration under Section 143 of the U.P.Z.A. & L.R. Act has no bearing in determining the market value of the land for the purposes of stamp duty. 7. Rival submissions fall for consideration. 8. The conveyance instrument categorically states that the land in question is situated out side the urban area, “Chungi Bahar, Hathras” and as per the circle rate of agricultural land stamp duty of Rs. 68,900/- was paid. The land is Bhumidari (Sankramaniya) being Khasra No. 231, land revenue payable is Rs. 24.80 paisa, the property in question is bounded on all sides by agricultural land belonging to different persons as is reflected from the map at the foot of the instrument. 9. The proceedings under Section 33/47-A was instituted, based on spot-inspection report dated 29.9.2011, submitted by sub-Registrar. It was reported that the land in question is a bhoomidhari land (agricultural) situated in abadi, further, the lands adjoining the property in question i.e. khasra No. 225, 235, 251, 245, 233 etc. is being plotted for residential purpose. As per the exemplars, the market value ranges between Rs. 1.40 crores to Rs. 2 crores per hectare, though on spot the land in question is bhoomidhari in nature but has residential potential, thus, market value of the said property should be valued at Rs. 2.10 crores per hectare, whereas, the petitioner had paid the stamp duty at Rs. 55 lakhs per hectare. Accordingly, the stamp duty payable was Rs. 2,62,500/- but the petitioner had paid Rs. 68,900/-, thus, the deficient stamp duty was Rs. 1,93,600/-. 10. 2.10 crores per hectare, whereas, the petitioner had paid the stamp duty at Rs. 55 lakhs per hectare. Accordingly, the stamp duty payable was Rs. 2,62,500/- but the petitioner had paid Rs. 68,900/-, thus, the deficient stamp duty was Rs. 1,93,600/-. 10. The Collector on the report dated 13.1.2013 came to the conclusion that the petitioner had deliberately not stated that the land is in vicinity of the agricultural land being plotted for residential purposes, further, the petitioner, in order to avoid the payment of stamp duty, deliberately did not state that the land is situated on a pakka road rather stated that it is situated on ‘Bagada’, hence the value of the land was deliberately undervalued. As per circle rate (minimum value) for abadi land, the land situated on the road is valued at Rs. 4000/- per sq. meter and land situated away from the road is valued at Rs. 2100 per sq. m., thus relying upon the exemplars of adjoining land being plotted the value was assessed as per abadi land. 11. The facts are not in dispute between the parties, the land is recorded as agricultural land, situated on a pakka road. The property was purchased on 23.8.2011, the exemplars relied upon by the Collector of the adjoining agricultural land being plotted for residential purposes is of 2008-2009. 12. On rival submission, the only question for determination is as to whether the land recorded as agricultural land and there being no declaration under Section 143 of the U.P.Z.A. & L.R. Act, whether stamp duty can be charged on such land treating it to be abadi land or having the potential for residential use. 13. This Court in Ratna Shanker Dwivedi v. State of U.P. and others, 2012(5) ADJ 414 , explained the objects of the Stamp Act as follows : “The Stamp Act is a fiscal measure enacted with an object to secure revenue for the State on certain classes of instruments. It is not enacted to arm a litigant with a weapon of technicality to meet the case of his opponent. The stringent provisions of the Act are conceived in the interest of the revenue. Once that object is secured according to law, the party staking his claim on the instrument will not be defeated on the ground of initial defect in the instrument. The stringent provisions of the Act are conceived in the interest of the revenue. Once that object is secured according to law, the party staking his claim on the instrument will not be defeated on the ground of initial defect in the instrument. The sole object of Stamp Act under its various provisions is to require the parties concerned to set forth correct market value of the property at which the transaction has taken place so that appropriate duty in accordance with the Act is paid by them to avoid large scale evasion of stamp duty. It also mandates that while setting forth the correct market value of the property in dispute the competent authority must not apply their mind in a fact fashion and in a haphazard way. “ 14. The question before the Court was as to whether any declaration as contemplated under Section 143 of the U.P.Z.A. & L.R. Act was made before the execution of the sale-deed? In the facts of that case, the Court held that though a part of the land in question may have been put to abadi use, it will remain to be an agricultural land in the absence of declaration under Section 143 of the U.P.Z.A. & L.R. Act. The Collector cannot proceed to value the land at the rate of residential land merely because the land is adjacent to abadi, other relevant facts have to be taken into consideration. The Court in paragraph 16 observed as follows : “16............The contention as raised by learned Standing Counsel that immediate potential user of the land is relevant for the purpose of determining market value, cannot be disputed but that is one of the relevant consideration and cannot be the sole basis for holding that the value of the property as set forth in the instrument is not correct and it must be higher than that. Learned Standing Counsel also failed to point out as to which kind of land has no potential at all for user as residential purposes in future. The nature and character of land can always be changed subject to its use by its inhabitants in future. Hence future potential of the land for residential user by itself would not be a sole determinative factor for determining market value though, of course, it may be one of the relevant consideration for the same. The nature and character of land can always be changed subject to its use by its inhabitants in future. Hence future potential of the land for residential user by itself would not be a sole determinative factor for determining market value though, of course, it may be one of the relevant consideration for the same. The Collector however has to examine all relevant aspects in the matter and thereafter to find out what is the correct market value of the property in question. He cannot proceed merely by saying that since the land is adjacent to Abadi, therefore, it must be valued at the rate of residential land and duty must be charged accordingly.” 15. The Court in Aniruddha Kumar and Ashwini Kumar v. Chief Controlling Revenue Authority U.P. Alld. and another, 2000(91) RD 566 (HC), clearly laid down that where in respect of agricultural land there is no declaration under Section 143 of the U.P.Z.A. & L.R. Act its nature would not change and its market value for the purposes of payment of stamp duty would be determined on the basis of the agricultural character of the land not on the future potentiality. 16. In M/s. Maya Food and Vanaspati Ltd. Co. v. Chief Controlling Revenue Authority (Board of Revenue) Allahabad, 1990 (90) RD 57, the Court held that market value of the land for the purposes of payment of stamp duty cannot be determined with reference to its future use or the intended use to which it is likely to be put by the purchaser. 17. A Division Bench in Kishore Chandra Agarwal v. State of U.P. and others, 2007(10) ADJ 607 (DB)(LB), in the facts of that case, the land was recorded as bhoomidhari or agricultural land and stamp duty was being demanded treating the land commercial land to be in semi-urban area. The Court in para 23 and 25 made following observation : “23. The rate list dated 16.6.2004 also provides that the valuation of the agricultural land situate on the main road for the purpose of stamp duty and registration from Chinhat circle up to the border of Lucknow district has been fixed at the rate of Rs. 24,00,000/- per hectare and the petitioner has paid the stamp duty at the rate of Rs. 24,00,000/- per hectare. 24,00,000/- per hectare and the petitioner has paid the stamp duty at the rate of Rs. 24,00,000/- per hectare. The agricultural land situate on the roadside of a highway in semi-urban area or countryside area cannot be treated as commercial or residential unless that area is declared as commercial or residential in the Master Plan prepared by the State Government. Admittedly, Khasra No. 448 is recorded, as agricultural land and it cannot be treated to be a residential plot or commercial plot until there is a declaration under Section 143 of the U.P. Zamindari Abolition and Land Reform Act. 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 benefit 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 virus.” 18. In Prakashwati v. Chief Controlling Revenue Authority Board of Revenue, Allahabad, 1996 (87) RD 419 (SC), the Hon’ble Supreme Court held that situation of a property in an area close to a decent colony would not by itself make it part thereof and should not be a factor for approach of the authority in determining the market value. Accordingly, valuation has to be determined on constructive materials, which could be made available before the authorities concerned. 19. This Court in Shivkali Devi v. Commissioner, 2014 (124) RD 739, relying upon Prakashwati (supra) and Kishore Chandra Agarwal (supra), observed that the land recorded in revenue record as agricultural land cannot be treated as non agricultural land merely on report of Additional Collector, further observed that the provisions of the Stamp Act cannot be held to have been framed solely for the protection of revenue and for the purpose of being enforced solely at the instance of the revenue officials. Paragraph 10 and 11 are reproduced as below : “10. Paragraph 10 and 11 are reproduced as below : “10. Issue as to whether in absence of any declaration under Section 143 of U.P. Act No. 1 of 1951, the land recorded as agricultural land in the revenue record can be treated as non-agricultural land for the purposes of stamp duty, came for consideration before this Court in Smt. Neelam Gupta v. Commissioner, 2007 (102) RD 147. This Court held that only on the basis of report of Additional Collector, the land recorded in the revenue record as agricultural land cannot be treated as non-agricultural land. This judgment has been consistently followed by this Court in Veer Bal Singh v. State of U.P., 2009 (109) RD 124, Smt. Kusum Lata Jaisawal v. State of U.P., 2010 (109) RD 414, Ashish Kumar v. State of U.P., 2010 (28) LCD 945, Misc. Single No. 1793 of 2008, Suresh Kumar v. Commissioner and others, decided on 24.4.2013. Even in Kishore Chandra Jaiswal’s case (supra) Division Bench held that in exercise of powers under the Act, the Collector has no jurisdiction to hold an agricultural land as non-agricultural land. 11. Supreme Court in District Registrar v. Canara Bank, AIR 2005 SC 186 and Chiranji Lal (Dr.) v. Hari Das, AIR 2005 SC 2564 , relying upon the judgment of Privy Council in Surajmull Nagoremull v. Triton Insurance Co. Ltd., AIR 1925 PC 83 , held that it clear that the provisions of the Stamp Act cannot be held to have been framed solely for the protection of revenue and for the purpose of being enforced solely at the instance of the revenue officials. Power to impound a document and to recover duty with or without penalty thereon has to be construed strictly and would be sustained only when falling within the four corners and letter of the law.” 20. Market value as referred to in Section 47-A(3) is the price which a willing purchaser would pay to a willing seller for the property. 21. The Court in Vijay Kumar and another v. Commissioner, 2008(7) ADJ 293 , in paragraph Nos. 10 and 14, explained “market value”: “10. The other phrase used in sub-section (3) of Section 47-A is ‘market value’. 21. The Court in Vijay Kumar and another v. Commissioner, 2008(7) ADJ 293 , in paragraph Nos. 10 and 14, explained “market value”: “10. 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. 14. 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 as 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 Registrar 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 ALT 49. (Refer: Ashok Kumar Pandey v. State of U.P. and others, 2008 (4) AWC 3718 (All)) 22. In Ratna Shankar Dwivedi (supra) the Court again explained, the meaning of ‘market value’ under the Act. Normally the consideration stated as the market value in a given instrument should be taken to be correct unless circumstances exist which suggest fraudulent evasion, para 13 & 14 are as follows : “13. The term “market value” has not been defined under the Act. However there are some precedents laying down certain guidelines as to how and in what manner a market value would be determined. The consensus opinion is that the market value of any property is the price which the property would fetch or would have fetched if sold in the open market, if sold by a willing seller, unaffected by the special need of a particular purchaser. The consensus opinion is that the market value of any property is the price which the property would fetch or would have fetched if sold in the open market, if sold by a willing seller, unaffected by the special need of a particular purchaser. It is interesting to note that the Act provides first for determination of minimum value of the property and further says that if the market value of the property set forth in the instrument is less than the minimum value determined under the Act, in such case before registering the instrument the registering authority shall refer the instrument to Collector for determination of market value of the property and the proper duty payable thereon and when the Collector determines market value of the property thereafter the parties shall proceed accordingly. Therefore, a market value of the property in all cases cannot be said to be higher than the alleged minimum value determined under the rule by the concerned authority, inasmuch as, it is only a The consensus opinion is that the market value of any property is the price which the property would fetch or would have fetched if sold in the open market kind of guideline provided to the authorities for the purpose of considering as to whether the proper stamp duty is being paid by setting forth true market value of the property in question in the instrument. The various provisions with respect to minimum value etc. are only in aid and assistance of the authorities to find out the true amount of consideration on which the parties have entered into transaction so that the correct duty is collected therefrom. 14. A Division Bench of this Court, considering the provisions of the Act, in Kaka Singh v. Additional Collector & District Magistrate (F & R), AIR 1986 All 107 held: “We are inclined to think that the object of the Amending Act being to avoid large scale evasion of stamp duty, it is not meant to be applied in a matter of fact fashion and in a haphazard way. Market value itself as we already mentioned, as a changing factor and will depend on various circumstances and matters relevant to the consideration. No exactitude is in the nature of things possible. In working the Act, great caution should be taken in order that it may not work as an engine of oppression. Market value itself as we already mentioned, as a changing factor and will depend on various circumstances and matters relevant to the consideration. No exactitude is in the nature of things possible. In working the Act, great caution should be taken in order that it may not work as an engine of oppression. Having regard to the object of the Act, we are inclined to think that normally the consideration stated as the market value in a given instrument brought for registration should be taken to be correct unless circumstances exist which suggest fraudulent evasion.” 23. Market value of the property has to be seen irrespective of the fact whether it is residential, commercial or agricultural. Nature of the land and its current use may not be relevant, if around the plot in question, properties were being sold and bought at commercial rates, then for determination of stamp duty, market value of the property would be the same as that of property bought for commercial use. (D.P.R. Foods (P) Ltd. v. State of Uttar Pradesh, 2010(6) ADJ 341 . 24. The sine qua non for invoking provisions of Section 47-A(3) of the Act is that the Collector had reason to believe, that the value had not been properly set forth in the instrument as per market value of the property. Once the instrument is registered and the stamp duty as prescribed by the Collector was paid, the burden to prove that the market value was more than the minimum prescribed by the Collector under the rules, was upon the Collector. The report of the sub-Registrar or Tehsildar was not sufficient to discharge that burden. (Vijay Kumar v. Commissioner, Meerut Division, 2008(7) ADJ 293 ) 25. Where agreement for sale, presented for registration, was under-valued, registering authority could hold enquiry to find out if the stamp duty was chargeable on market value of the property. It was not enough for the authority for the purpose of invoking Section 47-A of the Act that the consideration amount shown in the agreement for sale was less than the prevailing market value, but the authority must be satisfied as to an attempt on the part of the party to under value the property. (Residents Welfare Association v. State of U.P., (2009) 14 SCC 716 ) 26. The expression “reason to believe” is not synonymous with subjective satisfaction of the officer. (Residents Welfare Association v. State of U.P., (2009) 14 SCC 716 ) 26. The expression “reason to believe” is not synonymous with subjective satisfaction of the officer. The belief must be held in good faith, it cannot be merely a pretence. It is open to the Court to examine the question whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not irrelevant or extraneous to the purpose of the section. (Dr. Pratap Singh v. Director of Enforcement Foreign Exchange Regulation Act, AIR 1985 SC 989 ) 27. The word “reason to believe” means some material on the basis of which department can reopen proceedings. However, “satisfaction” is necessary in terms of material available on record, which should be based on objective satisfaction arrived at reasonably. (BPL Limited v. Deputy Commissioner, Gift Tax, Central Circle-II, AIR 2007 NOC 717 (Kar)). 28. The word “reason to believe” means a cogent reason for believing that the value mentioned in the instrument is not truly set forth and such reason should be based on material on record. (Harvinder Kaur (Smt.) v. State of M.P., AIR 2007 MP 86 ). 29. Penalty can be imposed, if there is an attempt to evade stamp duty. Penalty presupposes culpability and an intention to conceal or to play fraud with authorities. Before imposing penalty, authorities must record finding based on relevant material that the purchaser or the person liable to pay stamp duty had concealed relevant facts in execution of sale-deed and had intention to evade payment of stamp duty. (Asha Kapoor (Smt.) v. Additional Collector (Finance and Revenue), Ghaziabad, AIR 2008 NOC 2428). 30. While exercising powers under sub-section (4) of Section 47-A of the Act, Collector can determine market value of the property and the stamp duty payable on the instrument as a result of such determination, but has no power to impose penalty. (Shailendra v. Chief Controlling Revenue Authority, AIR 2007 NOC 175). 31. 30. While exercising powers under sub-section (4) of Section 47-A of the Act, Collector can determine market value of the property and the stamp duty payable on the instrument as a result of such determination, but has no power to impose penalty. (Shailendra v. Chief Controlling Revenue Authority, AIR 2007 NOC 175). 31. The Supreme Court in Neeraj Jain v. State of U.P. and others, passed in Civil Appeal No. 8286 of 2014 decided on 26.8.2014,has observed that “the Court should require State Government to put forth the material on record that there has been a change of user or there are other contemporaneous sale-deeds in respect of adjacent area and the market value has been increased or there has been a change in the agricultural land to the urban agglomeration and such other ancillary aspects.” 32. In the facts of the case, it is admitted that the property is agricultural property and is being used for agricultural purpose, the property adjoining the property is also agricultural property. The basis of the Collector concluding that the property is undervalued is the spot inspection report, stating that the adjoining agricultural property is being plotted for residential purpose. The exemplars (sale-deeds) referred to have not been discussed, nor does it show they are comparable with the property in question. The property on which plotting is taking place is agricultural land and not abadi. It is not the case of the State that the land in and around the property in question has become abadi primarily. The minimum value fixed by the Collector is Rs. 55 lacs per hectare for agricultural land whereas the Collector has determined the market value at Rs. 210 lac per hectare i.e. four times over and above the minimum value fixed under the Rules, which on the face of it appears to be irrational. The ‘belief’ must not be arbitrary or purely subjective satisfaction, belief must have rational connection or relevant bearing to the formation of the belief/opinion. 33. For the reasons and law stated hereinabove the writ petition succeeds and is allowed. The impugned order dated 31.5.2013 passed by the respondent No. 2, Additional Commissioner (Stamp) Aligarh Division, Aligarh and order dated 22.1.2013 passed by the Collector, Hathras are quashed. 33. For the reasons and law stated hereinabove the writ petition succeeds and is allowed. The impugned order dated 31.5.2013 passed by the respondent No. 2, Additional Commissioner (Stamp) Aligarh Division, Aligarh and order dated 22.1.2013 passed by the Collector, Hathras are quashed. The sum of deficient stamp duty deposited by the petitioner shall be refunded within four weeks from the date of receipt of certified copy of this order, failing which, the petitioner shall be entitled to 8% interest from the date of deposit. 34. No order as to cost. —————