Research › Search › Judgment

Rajasthan High Court · body

2018 DIGILAW 1279 (RAJ)

Indian Oil Corporation Ltd. v. State of Rajasthan

2018-05-15

SANDEEP MEHTA

body2018
JUDGMENT Sandeep Mehta, J. -The instant bunch of writ petitions filed under Article 226 of the Constitution of India involve identical questions of facts and were and were thus being decided by this common order. 2. Acting on a reference made from the office of the Auditor General on the basis of some audit objections, the following orders were passed by the Collector (Stamps), Pali demanding additional stamp duty and the notices were issued in furtherance thereof for recovery of the said amount from the petitioner S.No. S.B.C.W.P No. Demand Order Notice Demand Amount 1. 2055/2008 Dated 13.12.2007 Annex.3 Dated 17.12.2007 Annex.4 Rs.3,41,500/- 2. 2054/2008 Dated 13.12.2007 Annex.3 Dated 17.12.2007 Annex.4 Rs.1,94,000/- 3. 1270/2008 Dated 25.07.2007 Annex.4 Dated 28.12.2007 Annex.5 Rs.3,73,249/- 3. All the three demands were raised by the Collector (Stamps), Pali on references made to him in furtherance of audit objections raised by the Office of the Auditor General. The references involved a common question of law " as to whether the documents executed between the petitioner and the land owner concerned for setting up the company owned and company operated retail outlet for a period of 19 years 11 months could be termed as a simple lease deed or that the same should be considered to be a conveyance requiring stamp duty on the full value of the land in question". Based on renewal clause in the lease deeds, the Collector (Stamps), passed the impugned orders holding that the document in question was though executed only for a period of 19 years 11 months, but the original lease deed contained a clause v(n) that the lease would be automatically renewable after expiry of the first tenure of 19 years and 11 months, thus, the lease deeds were valid for 39 years and 10 months. It was further held that the non-alienation clause v(a) of the deeds conveyed that the lessor could not sell, transfer or mortgage the property for a period of 3 months from the expiry of original lease period or the renewed lease period, as the case may be. It was further held that the non-alienation clause v(a) of the deeds conveyed that the lessor could not sell, transfer or mortgage the property for a period of 3 months from the expiry of original lease period or the renewed lease period, as the case may be. Thus, as per the Collector (Stamps), the said moratorium period of 3 months was required to be added in the lease period, which took the duration of the lease to beyond 20 years and hence, the same was covered within the definition of "conveyance" and thus, the petitioner was liable to pay the duty chargeable on conveyance at commercial rate. The said stamp duty was quantified in the above terms vide the impugned orders, which are assailed by the petitioner in the writ petitions. 4. Mr. O.P. Mehta, learned counsel representing the petitioner, drew the court's attention to the registered correction deeds executed by the petitioner soon after execution of the original deeds, whereunder the automatic renewal clause for the second term of 19 years 11 months after expiry of the first period as incorporated in the original lease deeds was deleted. He, thus, submits that the Collector (Stamps) was unjustified in relying upon the said clause of automatic renewal in the lease deed because the same stood expressly deleted. He further relied upon an order dated 08.09.2016 passed by the Rajasthan Tax Board, whereby an exactly identical order passed by the Collector concerned on facts identical to ones at hand was quashed. He further relied upon the Supreme Court decision in the case of Hardesh Ores Pvt. Ltd. Vs. M/s Hade and Company [ 2007 (2) WLN 95 (SC)] and urged that even if there is a renewal clause in the contract, there is no concept of automatic renewal of lease by mere exercise of option by the lessee. He, thus, urged that even if the renewal clause had been invoked, the petitioner could not have got the lease extend by mere exercise of option and that an express consent of the lessor was required for the renewal to be effected. On these grounds, he implored the court to exercise its supervisory writ jurisdiction and quash the impugned orders as being perverse and illegal. 5. Per contra, learned Additional Advocate General Mr. K.L. Thakur, assisted by Mr. Narendra Singh Rajpurohit, vehemently opposed the submissions advanced by petitioner's counsel. On these grounds, he implored the court to exercise its supervisory writ jurisdiction and quash the impugned orders as being perverse and illegal. 5. Per contra, learned Additional Advocate General Mr. K.L. Thakur, assisted by Mr. Narendra Singh Rajpurohit, vehemently opposed the submissions advanced by petitioner's counsel. They contended that the Collector (Stamps) exercised jurisdiction in an absolutely correct perspective while passing the impugned orders. They contended that the original lease deeds executed between the lessee and the petitioner contained a renewal clause, under which, the lease was automatically renewable for a period of 19 years 11 months. They further urged that the clause No. v(a) contained in the lease deeds which operated as a moratorium period of three months against transfer, alienation etc. of the property, clearly indicates that the period of lease deed was beyond 20 years and thus, the Collector (Stamps) was absolutely justified in holding that the documents executed between the lessor petitioner and the lessee were conveyances. 6. I have given my thoughtful consideration to the arguments advanced at bar and gone through the material available on record including the impugned orders. 7. A controversy exactly identical to the one at hand was examined in detail by this court in the case of the The State of Rajasthan Vs. Shri Sunder Lai & Ors. [S.B. Civil Writ Petition No.8734/2008] decided on 23.09.2016 and it was held as under:- "9. It is true that as per Article 33 (a)(iii) of the Schedule appended to the Act of 1998, the stamp duty on the lease deed executed for a term exceeding 20 years, the stamp duty is payable on the market value of the property, treating the instrument of the lease deed as conveyance. But then for levying the stamp duty treating the lease to be a conveyance, from perusal of the lease deed, it must clearly appear that it is executed for a term in excess of 20 years. In the instant case, a bare look at the lease deed makes it abundantly clear that it was intended for the term 19 years and 11 months only. In the instant case, a bare look at the lease deed makes it abundantly clear that it was intended for the term 19 years and 11 months only. Of course, there is a condition incorporated for automatic renewal of lease after expiry of term of 19 years and 11 months, but at the same time, either of the parties is given liberty to give a three months' previous notice to the other party expressing its intention not to further renew the lease. Thus obviously, the renewal of lease after expiry of the term is at the will of the parties to the lease deed. That apart, it is specifically mentioned in the lease deed that on expiry of period of 19 years and 11 months, a fresh lease deed would be executed between the parties. In this view of the matter, in the considered opinion of this Court, the Collector (Stamp) had apparently erred in presuming the term of the lease as 39 years and 10 months by giving extended meaning to the clause 3(b) of the lease deed and ignoring the specific condition incorporated therein giving liberty to the parties to the lease to express their intention not to renew the lease after expiration of the term of the lease by giving a three months' previous notice to other party. 10. For the aforementioned reasons, the Tax Board has committed no error in setting aside the order passed by the Collector (Stamp), Bikaner, assessing the stamp duty payable treating the lease deed to be a conveyance by virtue of Article 33(a)(iii) of Schedule appended to the Act of 1998." 8. It is manifest that this court has conclusively laid down in the above judgment that merely from the condition of automatic renewal of the lease after expiry of the term of 19 years 11 months, the document cannot be treated to be a conveyance within the meaning of Article 33 (a)(iii) of the Schedule appended to the Rajasthan Stamp Act, 1998. The Tax Board, in the case of Indian Oil Corporation Vs. State of Rajasthan decided on 08.09.2016 has taken the very same view. The Collector (Stamps), while deciding the matters failed to consider the registered correction deed executed between the lessor and the lessee, i.e. the petitioner herein, whereby the clause regarding automatic renewal of the lease deeds for the second term was deleted. State of Rajasthan decided on 08.09.2016 has taken the very same view. The Collector (Stamps), while deciding the matters failed to consider the registered correction deed executed between the lessor and the lessee, i.e. the petitioner herein, whereby the clause regarding automatic renewal of the lease deeds for the second term was deleted. Furthermore, this court in the case of State of Rajasthan Vs. Shri Sunder Lal (supra) considered the import of the 3 months' notice period incorporated in the lease deed and held that the said condition does not give rise to an inference that the period of lease deed would be extended for the said term unilaterally, unconditionally and without consent of the lessor. 9. In view of this settled legal position, this court is of the firm opinion that the orders under challenge do not stand to scrutiny and cannot be sustained as they were passed in total contravention of the admitted factual position that the lease deeds in questioned were valid of a period of 19 years 11 months only and thus, could not be treated to be conveyances. 10. As a result of the above discussion, the writ petitions deserve to be and are hereby allowed. The impugned demand orders passed by the Collector (Stamps), Pali and the consequent recovery notices, as detailed in the opening para of this order, are hereby quashed and struck down. The stay petitions are also disposed of. 11. No order as to costs.