JUDGMENT : 1. Heard Shri Archit Mandhyan, learned counsel for the petitioners and Shri Awadhesh Chandra Srivastava, learned Standing Counsel appearing for the State. 2. By this writ petition, quashing of an order dated 18.02.2009 passed by the Collector, Kanpur Nagar in Case No.58 of 2008-09 under Section 47-A(3) of the Indian Stamp Act, 1899[Act] has been sought whereby deficiency of stamp duty of Rs.4,37,260/-and penalty alongwith interest have been imposed. Further challenge is to the order dated 23.11.2009 passed by the Commissioner, Kanpur Division, whereby Appeal No.52 of 2008-09 filed by the petitioners under Section 56 of the Act, has been dismissed and the order of the Collector has been upheld. 3. The facts in brief are that the petitioners purchased an area of 278.42 sq. mts. of Plot No.66 bearing House No.128/3/27, Burhbur Machhariya, District Kanpur Nagar and on that plot, 60.5 sq. mts. of constructed area was present. The stamp duty at the rate of Rs.12,000/-per sq. mtr. was paid on a sale-deed dated 14.08.2008 executed in favour of the petitioners in respect of the aforesaid property. The sale-deed was duly registered. A show cause notice dated 25.08.2008 was issued to the petitioners in which it was mentioned that there were 8 other shops over the property and as such the stamp duty paid was deficient. Objections supported by affidavit were filed by the petitioners and, thereafter, the impugned order dated 18.02.2009 was passed by the Collector. Challenge to the order of the Collector dated 18.02.2009 met with failure on 23.11.2009. 4. It is the contention of the learned counsel for the petitioners that once the sale-deed was returned to the petitioners after registration, that reflected the satisfaction of the Sub-Registrar with regard to the amount of stamp duty paid and hence the proceedings that were initiated under Section 47-A(3) of the Act, were unwarranted. It is stated that the alleged inspection made on 08.09.2008 was an ex-parte inspection without giving notice to the petitioners and was made after 28 days of the execution of the sale-deed. Further, it has been stated that the so-called shops in question were constructed after the execution of the sale-deed and as such the finding recorded by the Collector regarding the existence of the shops cannot be sustained. Further, it has been stated that the so-called shops in question were constructed after the execution of the sale-deed and as such the finding recorded by the Collector regarding the existence of the shops cannot be sustained. It is stated that once the objections and affidavit were filed by the petitioners, the Collector was required to call for a fresh report or personally conduct a spot inspection of the property in question as mandated under Rule 7(3)(c) of the U.P. Stamp (Valuation of Property) Rules, 1997[Rules]. It has further been contended that the Collector totally overlooked the objections of the petitioners that the shops stated to be built over the property in question were made after the execution of the sale-deed which could have been duly verified by a spot inspection in the presence of the petitioners. Also is the contention that the valuation made by the Collector is based on an ex-parte report of the Sub-Registrar dated 23.09.2008 on the basis of the minimum rates fixed, whereas the Collector was required to make the valuation on the basis of the market rate. 5. Learned Standing Counsel has opposed the writ petition and has referred to the contents of the counter affidavit filed on behalf of the respondents. It is stated that the spot inspection was done by the Sub-Registrar only 24 days after the execution of the sale-deed wherein the existence of 8 shops was specifically noticed and recorded, but, it is contended, there was no mention of those shops in the sale-deed and, therefore, the property in question was required to be valued on the basis of its being a commercial premises and not residential. 6. Having heard the learned counsel for the parties and perused the record, it appears that an agreement to sell was executed on 15.07.2008. Thereafter, a sale-deed was executed on 14.08.2008 in respect of the property in question and the usage of the property was shown as residential. Annexure-4 to the writ petition is the report of the inspection carried out on 08.09.2008. The report itself reveals that a secret inspection was done in which it is stated that on the property sold, 8 shops were constructed having a covered area of about 175 sq. mts. The deficiency of stamp duty was also computed in that report. Annexure-4 to the writ petition is the report of the inspection carried out on 08.09.2008. The report itself reveals that a secret inspection was done in which it is stated that on the property sold, 8 shops were constructed having a covered area of about 175 sq. mts. The deficiency of stamp duty was also computed in that report. The impugned order dated 18.02.2009 passed by the Collector reflects that at the time of arguments, the petitioners were not present and the orders were passed after hearing the counsel appearing for the State. The Collector noticed that in the report of the Sub-Registrar, an area 175 sq. mts. of the property has been shown to have commercial buildings constructed which is not reflected in the sale-deed. It was noticed that in the objections filed by the petitioners, the shops were stated to be constructed after the execution of the sale-deed but, it was stated that no reliable evidence could be produced by the petitioners in that regard. Accordingly, evasion of stamp duty was recorded and deficiency of stamp duty with penalty was imposed. The order of the Commissioner dated 23.11.2009 also iterates the findings recorded by the Collector and dismisses the appeal of the petitioners. 7. What is important to note is that after the objections were filed on behalf of the petitioners in which it was categorically stated that the commercial constructions were made after the execution of the sale-deed, no steps were taken by the Collector to make a fresh spot inspection of the property in question after giving due notice and in the presence of the petitioners. The mandate of Rule 7(3)(c) of the Rules clearly provides for such a notice and the method of inspection. The ex-parte report of the Sub-Registrar, which is stated to be based on a secret inspection, cannot be relied upon by the Collector for examining the instrument in question under the provisions of Section 47-A(3) of the Act, as held in the judgment of Ram Khelawan alias Bachcha v. State of U.P. and another, 2005 (2) AWC 1087 as follows:- “25. It has been found in several cases like the present one that the entire basis of determination of market value for the purpose of stamp duty is ex-parte report of Tehsildar or other officer. Ex-parte inspection report may be relevant for initiating the proceedings under Section 47A of Stamp Act. It has been found in several cases like the present one that the entire basis of determination of market value for the purpose of stamp duty is ex-parte report of Tehsildar or other officer. Ex-parte inspection report may be relevant for initiating the proceedings under Section 47A of Stamp Act. However, for deciding the case no reliance can be placed upon the said report. After initiation of the case inspection is to be made by the Collector or authority hearing the case after due notice to the parties to the instrument as provided under Rule-7(3) (c ) of the Rules of 1997. Moreover in the inspection report distance of the property from other residential or commercial properties and road must be shown and wherever possible sketch map must also be annexed alongwith the report so that correct valuation may be ascertained with reasonable certainty.” 8. Moreover, the valuation as done by the Collector is evidently based on the minimum rates fixed by the Collector and there is nothing on the record to show that any attempt was made by the Collector to determine the valuation on the basis of the market value of the property. 9. The determination of a property on the basis of the market value is a sine qua non under the provisions of Section 47-A(3) of the Act. The issue with regard to such an assessment has been dealt with at length in the case of Ram Khelawan (supra) and has been elaborated further in the decision of a three Judge Bench of this Court in the case of Smt. Pushpa Sareen vs. State of U.P., 2015 (3) ADJ 136 . wherein it has been held as under:- "26. The true test for determination by the Collector is the market value of the property on the date of the instrument because, under the provisions of the Act, every instrument is required to be stamped before or at the time of execution. In making that determination, the Collector has to be mindful of the fact that the market value of the property may vary from location to location and is dependent upon a large number of circumstances having a bearing on the comparative advantages or disadvantages of the land as well as the use to which the land can be put on the date of the execution of the instrument. 27. 27. Undoubtedly, the Collector is not permitted to launch upon a speculative inquiry about the prospective use to which a land may be put to use at an uncertain future date. The market value of the property has to be determined with reference to the use to which the land is capable reasonably of being put to immediately or in the proximate future. The possibility of the land becoming available in the immediate or near future for better use and enjoyment reflects upon the potentiality of the land. This potential has to be assessed with reference to the date of the execution of the instrument. In other words, the power of the Collector cannot be unduly circumscribed by ruling out the potential to which the land can be advantageously deployed at the time of the execution of the instrument or a period reasonably proximate thereto. Again the use to which land in the area had been put is a material consideration. If the land surrounding the property in question has been put to commercial use, it would be improper to hold that this is a circumstance which should not weigh with the Collector as a factor which influences the market value of the land. 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 relateable 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 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." 10. The order of the Commissioner too suffers from want of application of mind to the issues at hand that were raised by the petitioners in their memorandum of appeal. 11. In view of the aforesaid, neither the order dated 18.02.2009 passed by the Collector nor the order dated 23.11.2009 passed by the Commissioner can be sustained. They are hereby quashed. 12. This writ petition is, accordingly, allowed. 13. Any amount deposited by the petitioners after the execution of the sale-deed in pursuance of the aforesaid impugned orders, shall be refunded to the petitioners within a period of two months from today alongwith simple rate of interest at the rate of 8% per annum.