Research › Search › Judgment

Allahabad High Court · body

2017 DIGILAW 2186 (ALL)

Harish Chandra Maurya v. State of U. P.

2017-09-15

B.AMIT STHALEKAR

body2017
JUDGMENT : B. Amit Sthalekar, J. Heard Sri Abhishek Kumar, learned counsel for the petitioners and the learned Standing Counsel for the respondents. 2. The petitioners in the writ petition are seeking quashing of the order dated 10.09.2008 passed by respondent no. 3, Commissioner Varanasi Mandal and the order dated 30.12.2006 passed by respondent no. 2, Collector Stamp arising out of proceedings under section 47A of the Indian Stamp Act, 1899 (the Act, 1899). 3. Briefly stated the facts of the case are that the petitioners purchased the land in dispute being part of Araji No. 276 measuring 546.1 square meters through a registered sale deed dated 08.04.2005. The land was expressly purchased for residential purposes and stamp duty was paid at Rs. 87,440/- by the petitioners at rates applicable to residential area. On an allegation that there was deficiency of stamp duty, proceedings under the Act, 1899 were initiated against the petitioners. Petitioners filed their objections. The Collector Stamp, however, by his order dated 30.12.2006 has held that the property in dispute has commercial value and, therefore, determining its market value at commercial rates has held deficiency of stamp duty at Rs. 43,680/- on which he has imposed penalty of Rs. 10,000/- + interest. 4. Aggrieved by the order of the Collector Stamp dated 30.12.2006, the petitioners preferred a stamp revision, which has also been dismissed by the Commissioner Varanasi Division, Varanasi vide his order dated 10.09.2008. 5. Submission of learned counsel for the petitioners is that the land in dispute was being expressly purchased for residential purposes and stamp duty had also been paid at rates as applicable to residential area but the Collector Stamp has determined its market value at commercial rates relying upon the report of Tehsildar in which he has stated that the land in question has commercial value and it has a potential for commercial purposes. Learned counsel for the petitioners submits that the future potentiality of the land for commercial purposes cannot be a ground for determining its market value and the consequent stamp duty. 6. Learned standing counsel on the other hand has justified the order of the stamp authorities on the ground that the Tehsildar in his report has mentioned that the land had a value for commercial use and, therefore, its market value and consequential stamp duty was rightly determined at rates as applicable to commercial area. 7. 6. Learned standing counsel on the other hand has justified the order of the stamp authorities on the ground that the Tehsildar in his report has mentioned that the land had a value for commercial use and, therefore, its market value and consequential stamp duty was rightly determined at rates as applicable to commercial area. 7. I have heard learned counsel for the parties and perused the documents on record. 8. From the order of Collector Stamp, it is clear that it does not disclose anywhere that on the plot in dispute there was any commercial activity going on. The entire foundation of the order of Collector Stamp is the report of the Tehsildar that the land in dispute is of commercial value. 9. In my opinion, it is no more than a hypothetical assumption that the land in dispute has commercial value although the petitioners have expressly stated that the said land was purchased for residential purposes. Neither has any exemplar been referred to to show that in the area any land has been sold out at commercial rate. There is not a single piece of evidence to show that there was commercial activity in the area or on the land in dispute. 10. The Commissioner in his order has also not taken into consideration these factors and but for the report of the Tehsildar, there was absolutely no other evidence on record to show that on the land in dispute any commercial activity was going on or that the area had been declared to be commercial area. 11. The Commissioner also approved the order of the Collector Stamp merely on the potential value of the land for future use for commercial purposes. 12. 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 criteria 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. 13. 13. 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 relatable 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 judgement 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." 14. 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." 14. 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. " 15. For the reasons aforesaid and in view of law laid down by the Supreme Court and by this Court the impugned orders dated 10.09.2008 passed by respondent no. 3, Commissioner Varanasi Mandal and the order dated 30.12.2006 passed by respondent no. 2, Collector Stamp are wholly illegal and arbitrary and are accordingly quashed. 16. The writ petition is allowed. 17. In case any amount has been deposited by the petitioners towards deficiency of stamp duty under the interim orders of this court, the same shall be refunded to them by the respondents within a period of two months from the date of receipt of a certified copy of this order.