Research › Search › Judgment

Allahabad High Court · body

2017 DIGILAW 1736 (ALL)

Vijai Vishwakarma v. State of U. P.

2017-07-27

B.AMIT STHALEKAR

body2017
JUDGMENT : B. Amit Sthalekar, J. Heard Shri V.N. Agarwal assisted by Shri Kamlesh Kumar for the petitioners and Shri R.K. Shukla, learned standing counsel for the respondents. 2. The petitioners are seeking quashing of the order dated 30.5.2002 passed by the Assistant Commissioner, Stamps, Jaunpur passed in proceedings under section 47-A of the Indian Stamp Act, 1899 (the Act, 1899) as well as the revisional order dated 4.1.2005 passed by the Commissioner, Varanasi Division, Varanasi. 3. Briefly stated the facts of the case are that the petitioners purchased the property in question and paid stamp duty thereon at the circle rate. The market value of the property was assessed at Rs. 1,30,000/- and the stamp duty of Rs. 18,500/- was paid. However, proceedings under section 47-A of the Act, 1899 were initiated against the petitioner alleging deficiency of stamp duty. A report was called for from the Sub Registrar Sadar, Jaunpur who submitted his report. In this report it was stated that the land in question is situated about 150 mt. from the main kutchehry road which is a pacca road. It is also stated that the land in question is within the boundaries of Nagarpalika, Jaunpur and about 500 mt. from the bus station. It was also stated that nearby there was abadi and all around the land in question there is 7 ft. boundary wall and there was also a newly constructed room. Accordingly, the Stamp Authority took a view that the land which is within the boundaries of Nagarpalika, Jaunpur could be treated as residential as well as agricultural and the rates applicable for residential property was Rs. 1,400/- per sq. mt. On this basis the market value of the land was Rs. 17,40,000/-. It was also considered by the Stamp Authority that if the land is treated to be agricultural, its valuation would come to Rs. 1,400/- + 10 x 28 i.e. Rs. 4,31,200/-. In the impugned order there is a clear finding recorded at internal page 4 that the land in question is being used for agricultural purposes on the date of sale deed but at the same time he held that if someone wants to reside there on the date of sale deed, he has to arrange for proper road, water, electricity, drainage etc. On this finding the Stamp Authority held that the stamp duty should be determined treating the land to be residential land. Aggrieved by the order of the Assistant Commissioner, Stamps, Jaunpur, the petitioner preferred a revision. The Revisional Authority has dismissed the revision but he has also recorded a finding that on the date of the sale deed, the land in question was being used as agricultural land. There is every possibility that the land may be used for residential purposes. However, revisional authority has reduced the penalty from Rs. 32,400/- to Rs. 4,000/- and determined the deficiency of stamp duty at Rs. 46,200/-+Rs.4000/- and penalty of Rs. 1,300/- as registration charges total Rs. 51,500/-. 4. The submission of the learned counsel for the petitioners however is that the market value of the land and the stamp duty payable thereon has to be determined having regard to the nature of the land as existing on the date of the sale deed. Reference has been made to a decision of the Supreme Court reported in (1996) 4 SCC 657 , Prakash Wati v. Chief Controlling Revenue Authority Board of Revenue U.P. at Allahabad. The Supreme Court in the aforesaid decision has held that mere proximity of the land to Abadi or to a residential colony inhabited by people belonging to high income group itself would not be a factor for determining the market value of the property for the purposes of stamp duty for proceedings under the Act, 1899. The Supreme Court has held as under: "........Secondly, its being situated in an area which is close to Samrat Vikram Colony, said to be a decent locality, where people of high income group reside, does not by itself make it a part thereof. We are doubtful whether the said factum of closeness by itself would cast any reflection on the price of the property in question. ..........." 5. In (2012) 5 SCC 566 , State of U.P. v. Ambrish Tandon and others, the Supreme Court has held that merely because the property is being used for commercial purposes at the later point of time may not be a relevant criterian for assessing the value for the purpose of the nature of user is relatable to the date of purchase and it is relevant for the purpose of calculation of stamp duty. 6. 6. The judgment of the Supreme Court in the case of Ambrish Tandon (supra) has been followed by the Full Bench of this Court reported in 2015 (3) ADJ 136 (Smt. Pushpa Sareen v. State of U.P.) wherein the Full Bench has also held that the nature of the user is relatabe to the date of purchase which is relevant for the purposes of computing the stamp duty. Where however the potential of the land can be assessed on the date of execution of the instrument itself by referring to exemplar or comparable sale instances that is clearly a circumstances which is relevant and germane to determine the true market value. Paragraph 27 of the said judgment reads as under: "27.The fact that the land was put to a particular use, say for instance a commercial purpose at a later point in time, may not be a relevant criterion for deciding the value for the purpose of stamp duty, as held by the Supreme Court in State of U.P. and others v. Ambrish Tandon and another, 2012 (5) SCC 566 . This is because the nature of the user is relatable to the date of purchase which is relevant for the purpose of computing the stamp duty. Where, however, the potential of the land can be assessed on the date of the execution of the instrument itself, that is clearly a circumstance which is relevant and germane to the determination of the true market value. At the same time, the exercise before the Collector has to be based on adequate material and cannot be a matter of hypothesis or surmise. The Collector must have material on the record to the effect that there has been a change of use or other contemporaneous sale deeds in respect of the adjacent areas that would have a bearing on the market value of the property which is under consideration. The Collector, therefore, would be within jurisdiction in referring to exemplars or comparable sale instances which have a bearing on the true market value of the property which is required to be assessed. If the sale instances are comparable, they would also reflect the potentiality of the land which would be taken into consideration in a price agreed upon between a vendor and a purchaser." 7. If the sale instances are comparable, they would also reflect the potentiality of the land which would be taken into consideration in a price agreed upon between a vendor and a purchaser." 7. A Division Bench of this Court in 2016 (2) ADJ 533 (DB) Sumati Nath Jain v. State of U.P. and another has held in paragraphs 18 and 19 as under: "18. We may note that on the date of execution of the instrument the land was admittedly recorded as agricultural. In fact the Khasra of the property remained unchanged throughout and continued to represent the land as recorded for agricultural purposes. The respondents were in our opinion wholly unjustified in initiating proceedings based on an unsubstantiated assumption that the property in future was likely to be put to non-agricultural use. 19. The perceived or presumed use to which a buyer may put the property in the future can never be the basis for adjudging its value or determining the stamp duty payable. The Act, we may note is a fiscal statute. The taxable event with which it concerns itself is the execution of an instrument which is chargeable to duty. The levy under the statute gets attracted the moment an instrument is executed. These propositions clearly flow from a plain reading of the definition of the words "chargeable", "executed" and "instrument" as carried in the Act. In the case of an instrument which creates rights in respect of property and upon which duty is payable on the market value of the property comprised therein, since the tax liability gets fastened immediately upon execution it must necessarily be quantified on the date of execution. The levy of tax or its quantum cannot be left to depend upon hypothetical or imponderable facets or factors. The value of the property comprised in an instrument has to be adjudged bearing in mind its character and potentiality as on the date of execution of the instrument. For all the aforesaid reasons we fail to find the existence of the essential jurisdictional facts which may have warranted the invocation of the powers conferred by section 47A (3). We are therefore of the firm opinion that the initiation of proceedings as well as the impugned order based upon a presumed future use of the property for residential purposes was wholly without jurisdiction and clearly unsustainable. We are therefore of the firm opinion that the initiation of proceedings as well as the impugned order based upon a presumed future use of the property for residential purposes was wholly without jurisdiction and clearly unsustainable. Dealing with this aspect of the matter and after noticing the consistent line of precedent on the subject the Division Bench in Smt Vijaya Jain observed :- "This Court on more than one occasion has held that the market value of the land is not liable to be determined with reference to the use to which a buyer intends to put it in future. The market value of the property is to be determined with reference to its character on the date of execution of the instrument and its potentiality as on that date. xxx xxx xxx The above principles of law enunciated in the aforementioned judgments have been consistently followed by this Court. We however find that the order of the Collector relies upon no evidence which would support imposition of residential rates on a property which was stated to be agricultural on the date of execution of the instrument. " 8. Considering the law laid down by the Supreme Court as well as the Full Bench and Division Bench of this Court it is quite clear that the stamp authority has gravely erred in computing the market value of the property treating the said property to be having a future potential for residential purposes although the findings of fact that the respondents themselves that the land in question on the date of sale deed was being used for agricultural purposes. 9. It is not disputed that the petitioners have paid stamp duty on the basis of the circle rates as applicable to agricultural land and this fact has not been disputed by the respondents either. 10. In this view of the matter the impugned orders of the Assistant Commissioner of Stamps, Varanasi as well as the Commissioner, Varanasi Division, Varanasi cannot survive and are accordingly quashed. 11. The writ petition stands allowed. 12. Any amount which has been paid by the petitioners under the interim order of this Court shall be refunded to them within a period of two months from the date of receipt of the certified copy of this order.