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Allahabad High Court · body

2017 DIGILAW 2708 (ALL)

FRIENDS BUILDERS v. STATE OF U. P.

2017-11-23

PANKAJ NAQVI

body2017
JUDGMENT Hon’ble Pankaj Naqvi, J.—Heard Sri P.C. Jain, learned counsel for the petitioner and Sri Sanjay Goswami, the learned Additional Standing Counsel. This writ petition is preferred against the orders dated 13.11.2002 and 8.9.2003, computing/levying stamp deficiency to the tune of Rs. 1,54,700/-, under Sections 33/47-A of the Stamp Act. The petitioner has also sought for declaration that Rule 5 (c)(ii) of the U.P. Stamp (Valuation of the property), Rules 1997, be declared illegal/ultra vires in so far it relates to addition of the market value of the land in the valuation of the commercial building calculated on the basis of its rental value. The petitioner has also sought for mandamus, commanding the respondents to refund Rs. 1,92,546/-, illegally realized from the petitioner under the impugned orders alongwith interest @ 1.5 % per month. A registered sale-deed dated 1.2.2002 came to be executed in favour of the petitioner in respect of property bearing the Municipal No. 1/133 and 133/1 to 133/4, situate at Civil Lines, Hariparwat Road, Agra, having an area of 143.29 sq. mtrs out of which 133.25 sq. mtrs was covered, for a sale consideration of Rs. 20 lacs which became a subject-matter of dispute under Section 47-A of the Stamp Act, on the basis of the report of the Sub-Registrar concerned, alleging deficiency, on the ground that the minimum rate fixed by the District Magistrate in respect of the land in question is Rs. 7000/- per sq. Mtr, thus recommending the market value at the circle rate of the land at Rs. 10,03,030/- and that of the covered area of 131.25 sq. mtrs (1413 sq. foot), @ Rs 6 per sq. foot per month, amounting to Rs. 25,43,400-, net amounting to Rs. 35,46,430/-, reporting a deficiency of Rs. 1,54,700/-. Upon reference, notice was issued to the petitioner who filed its objections, disputing the correctness of the recommended market value on the premise that the entire property, i.e., land + constructions have been treated as commercial. The Additional Collector (F/R), Agra under the order dated 13.11.2002 was of the view that as the property is situate on MG Marg, Civil Lines, a posh area, stamp has been paid on residential rates, whereas commercial levy is applicable, computing/levying stamp deficiency to the tune of Rs. 1,54,700/- with penalty of Rs. 27,846/- under Section 40-B of the Stamp Act and Rs. 1,54,700/- with penalty of Rs. 27,846/- under Section 40-B of the Stamp Act and Rs. 10,000/- as penalty under Section 47-A, net amounting to Rs. 1,92,546/-. The petitioner challenged the order dated 13.11.2002 in Stamp Revision No. 556 which came to be allowed on 8.9.2003 only to the extent it levied penalty of Rs. 10,000/-. 2. It is submitted by learned counsel for the petitioner that the stamp authorities while computing the market value of the property involved under the sale-deed dated 1.2.2002, proceeded to compute the market value of the land as per circle rate, i.e., @ 7000/- sq. mtr. in respect of 143.29 sq. mtrs of land, amounting to Rs. 10,03,030/- and that of the covered area, i.e., 131.25 sq. mtrs (1413 sq. foot), to be commercial, @ Rs. 6 per sq. foot, i.e., Rs. 25,43,400/-, net amounting to Rs. 35,46,430/- with deficiency of Rs. 1,54,700/-, which was in teeth of Section 47-A of the Stamp Act, wherein market value is to be ascertained in respect of the demised property by ascertaining the market value of the land + cost of construction. 3. The learned AdditionalC.S.C, has opposed the submission. 4. It is well-settled that market value under Section 47-A of the Stamp Act is to be ascertained in respect of the demised property on the date of the execution of the instrument, i.e, 1.2.2002 in the instant case. 5. In exercise of powers under Section 27/47-A/75 of the Indian Stamp Act, 1899, Governor has framed the U.P. Stamp (Valuation of property), Rules, 1997. Rule 5 (a) of the 1997 Rules (unamended) relates to calculation of minimum value of land, grove, garden and building.A perusal of Rule 5 manifest that for the purposes of payment of stamp duty, the minimum value of land forming subject of an instrument, shall be computed by multiplying the area of land with a minimum value fixed by the Collector of the district under Rule 4. The present case relates to a commercial building for which minimum value of the land is to be computed as provided under Clause (a) to Rule 5 and that of the building under sub-clause (ii) of Rule 5. 6. Rule 5(c)(ii) of the 1997 Rules (unamended) is extracted hereunder: “5. Calculation of minimum value of land, grove, garden and building.— (a)..... (b)..... (c).... (i)... 6. Rule 5(c)(ii) of the 1997 Rules (unamended) is extracted hereunder: “5. Calculation of minimum value of land, grove, garden and building.— (a)..... (b)..... (c).... (i)... (ii) Commercial building—Minimum value of land whether covered by the construction or not, which is subject-matter of the instrument, as worked out under Clause (a) plus three humdred times the minimum montly rent of the building arrived at by multiplying the constructed area of each floor of the building with the minimum rent fixed by the Collector of the district under Rule 4.” 7. A perusal of Rule 5(c)(ii) provides that the minimum value of the commercial building shall be computed as minimum value of land (with or without constructions), involved in the instrument as determined under Clause (a) + 300 times the minimum monthly rent of the building arrived at by multiplying the constructed area of each floor of the building with minimum rent fixed by the Collector of the district under Rule 4. 8. There is a fundamental difference between the computation of the minimum value commonly known as circle rate as determined under Rule-4 and the determination of the market value of the property involved in the instrument as determined under Section 47-A(2) or (3) read with Rule 7. 9. Section 47-A(1)(a) of the Stamp Act enables the Sub-Registrar to only ensure that the stamp payable of the propety involved in the instrument is not less than the minimum value determined uner the rules. If the market value disclosed is less than the minimum value, the Sub-Registrar shall call upon the person concerned to pay the deficient stamp on the minimum value before accepting the instrument for registration, else he shall make an endorsement of deficiency, but before registering the instrument shall refer the same to the Collector for determination of the market value of the property and stamp payable thereon as provided under Section 47-A (1)(d). Once the Collector receives a reference under sub-section (2) or the Collector acts suo motu or on a reference from any Court or from the authorities specified therein under sub-section (3) of Section 47-A, he shall determine the market value of the property involved in the instrument, subject to evidence.The minimum value/circle rate is only in the nature of a guideline/indicator, relevant to the extent provided under Section 47-A (1) (a), but the same would not be binding upon the Collector, when he proceeds to determine the market value of the property either under sub-section (2) or (3) of Section 47-A, which determination is independent and quasi judicial, subject to Rule-7. 10. Prior to the amendment of 2005 in Rule 5 (c) (ii) in respect of a commercial building, minimum value of the land was to be determined as per Rule 5(a) as it then stood plus 300 times the minimum monthly rent of the building to be computed by multiplying the constructed area of each floor of the building with a minimum rent fixed by the Collector. This meant that minimum value of a commercial building would be 300 times of the minimum monthlly rent of the building arrived at by multiplying the constructed area of each floor of the building with the minimum rent fixed by the collector under Rule 4. Thus once minimum value of the covered area is computed by multiplying the minimum monthly rent 300 times, on a floor basis, minimum value of the land was already inclusive in the computation of the minimum value of the constructed/covered area. As otherwise under Rule 5 (c) (ii) (unamended) it amounted to double levy i.e. one on the land and the other on the covered area, on a per square foot basis, which was inclusive of the land. This was an apparent anomaly under Rule 5 (c)(ii) (unamended) which stood rectified with the amendment of Rule 5(c)(ii) vide notification dated 30.5.2005 wherein now the minimum value of the land has been excluded i.e.after the amendment of 2005 minimum value of the commercial building is to be computed only on a rental basis to which no cost of the land is to be separately added. Notwithstanding the aforesaid anomoly, same may or may not affect the determination of the market value of the property involved in the instrument under Section 47 A (2) or (3) as the same is an independent exercise, not controlled by the minimum value/circle rate as determined by the collector. It be clarified that it be not construed that under no circumstance, could a market value be either less than the minimum value or equivalent to the minimum value. It would all depend on the facts and circumstances of each case. But one thing is certain that the determination of the market value of the property involved in the instrument, is an independent exercise, subject to evidence. Therefore notwithstanding the aforesaid anomolous position, Rule 5(c)(ii) as it stood at the relevant time is not liable to be declared ultra vires. 11. The impugned orders reflect that while computing the market value of the land (commercial) and the construction the collector ipso facto relied upon the circle rate (commercial), when it proceeded to determine the market value of the property by treating the minimum value of the land (commercial) @ of Rs. 7000/- per sq. Mtr, and that of the constructed area also commercial @ Rs. 6/- per sq. ft. which was in teeth of Section 47 A. 12. In view of the above discussion, the orders dated 13.11.2002 and 8.9.2003 cannot be sustained, are liable to be quashed. 13. The writ petition succeeds and is allowed. The orders dated 13.11.2002 and 8.9.2003 are set aside/quashed. The matter is remanded to the Additional Collector (F/R), Agra or any other competent authority, as the case may be, to decide the issue afresh, in the light of observation made above. Petitioner to appear before the competent authority on 5.2.2018 alongwith a certified copy of this order.