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2017 DIGILAW 1936 (ALL)

Vikas Sahakari Avas Samiti Ltd. v. State of U. P.

2017-08-22

B.AMIT STHALEKAR

body2017
JUDGMENT : B. Amit Sthalekar, J. Heard Sri K.M. Garg, learned counsel for the petitioner and the learned Standing Counsel for the respondents. 2. The petitioner is seeking quashing of the order dated 30.8.2005 passed by the Assistant Commissioner, Stamps, Gautam Budh Nagar and the order dated 9.12.2005 passed by the Additional Commissioner (Administration), Meerut Division, Meerut in proceedings under section 47A of the Indian Stamp Act, 1899 (the Act, 1899). 3. Briefly stated the facts of the case are that the petitioner society purchased an agricultural land area 0-8-8 Bigha pukhta situated in Village Baraulla District Gautam Budh Nagar for a consideration of Rs. 3,57,000/- vide registered sale deed dated 28.12.2001 and paid Rs. 28,560/- towards stamp duty. 4. On an allegation that there was deficiency of stamp duty, proceedings under Section 47A of the Act, 1899 were initiated against the petitioner society. The Assistant Commissioner/Stamp Authority has computed deficiency of stamp duty of Rs. 28,560/- treating the land in question to have been used for residential purposes. Penalty of Rs. 11,440/- has also been imposed, total Rs. 40,000/-. Aggrieved by the order dated 30.8.2005, the petitioner preferred an appeal which has also been rejected by the other impugned order dated 9.12.2005. 5. A bare reading of the impugned order shows that the Sub-Registrar in his report has himself stated that at the time of sale the land was in use for agricultural purposes and that it was agricultural land. The Stamp Authority on the other hand has treated the land to be useful for residential purposes on the ground that later on it was found that there was construction being made on the land purchased and the petitioner was a builder of Sahkari Awas Samiti Ltd. 6. This controversy is no longer res integra that the land in question can be assessed to the stamp duty only on the basis of the status of the land on the date of execution of the sale deed and not on the basis of the potential use to which it may be put at a future date. Its potential user at a future date cannot be a criteria for determining the deficiency of stamp duty. 7. Its potential user at a future date cannot be a criteria for determining the deficiency of stamp duty. 7. 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. 8. 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 28 of the said judgment reads as under: "28. 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. 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." 9. 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 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. 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. " 10. The learned Standing Counsel could not dispute that the Sub-Registrar has himself held that on the date of the sale deed the land in question was agricultural land and was being used for agricultural purposes and that agricultural activity was going on, on the said land. He also could not dispute the legal proposition settled by the Supreme Court and by the Full Bench of this Court. 11. Therefore, on the admitted facts of the case that the land in question was agricultural land and even on the date of spot inspection agricultural activity was going on. the market value cannot be assessed on a mere assumption that it has future potential usage as residential property. 12. 11. Therefore, on the admitted facts of the case that the land in question was agricultural land and even on the date of spot inspection agricultural activity was going on. the market value cannot be assessed on a mere assumption that it has future potential usage as residential property. 12. For the reasons aforesaid and the law laid down by the Supreme Court a well as this Court, the impugned orders dated 30.08.2005 and 09.12.2005 cannot survive and are accordingly quashed. 13. The writ petition is allowed. 14. In case any amount has been deposited by the petitioner in terms of the interim order of this Court dated 24.3.2006, the same shall be refunded to the petitioner by the respondents positively within two months from the date of receipt of the certified copy of this order.