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Allahabad High Court · body

2025 DIGILAW 690 (ALL)

SDS Infracon Pvt. Ltd. v. State of U. P.

2025-04-28

PIYUSH AGRAWAL

body2025
JUDGMENT : PIYUSH AGRAWAL, J. 1. Heard Mr. C.B. Yadav, learned Senior Counsel assisted by Mr. Nisheeth Yadav for the petitioner and Mr. Siddharth Singh, learned Standing Counsel for the respondents. 2. Writ C No. 1920 of 2018 has been filed for quashing the reference dated 18.10.2012 in Stamp Suit No. 119/2012-13 and Writ C No. 30283 of 2018 has been filed for quashing the order dated 30.5.2018 and 21.7.2018 as well as recovery citation dated 28.8.2018. 3. Learned Senior counsel for the petitioner submits that the impugned reference dated 18.10.2012 as well as consequential notices are without jurisdiction and during pendency of present Writ C No. 1920 of 2018, the impugned orders have been passed, which are under challenge in the subsequent Writ C No. 30283 of 2018. He submits that when the reference itself is without authority of law as per Section 23 of Stamp Act and the present writ petition may be allowed, then all consequential action and orders automatically goes. 4. Brief facts of the case as stated in the writ petitions are that the petitioner is private limited company incorporated under the provisions of ‘The Indian Companies Act, 1956’ having its business of infrastructure development. Yamuna Express Way Development Authority has been constituted under Section 3 of the UP Industrial Development Act, 1976 in District Gautam Buddha Nagar. The State Government in exercise of its power under the Land Acquisition Act has acquired the land of village Jaganpur and handed over the same to the authorities for planned development and in pursuance thereof a scheme was floated for allotment of Residential Township bearing YEA-RT-01 to which the petitioner’s company has applied. After scrutiny a letter dated 14.6.2010 was issued whereby Plot No. TS-01 in Sector 26 A was allotted to the petitioner. As per Clause 6 of the authority letter dated 20.7.2010, the payment of stamp duty @ 5 % of the total premium has been computed by the development authority and in pursuance thereof the petitioner paid the premium amount. Thereafter the lease deed was executed on 31.7.2010 but subsequent thereto a reference was made by Sub Registrar to the Collector Stamp on 18.10.2012, wherein it has been stated that the petitioner has paid the stamp duty upon actual total premium of the land and not over the interest, which has been paid to the authority in 20 equal installments. Thereafter the lease deed was executed on 31.7.2010 but subsequent thereto a reference was made by Sub Registrar to the Collector Stamp on 18.10.2012, wherein it has been stated that the petitioner has paid the stamp duty upon actual total premium of the land and not over the interest, which has been paid to the authority in 20 equal installments. On the said reference, Stamp Suit No. 119/2012-13 was registered and notices were issued to the petitioner alleging deficiency of stamp duty, on the ground that amount of interest were not included while paying stamp duty. Thereafter the petitioner has challenged the said reference before this Court by means of Writ C No. 1920 of 2018. 5. Learned Senior counsel for the petitioner submits that the reference dated 18.10.2012 itself is bad and without authority of law, which is in the teeth of Section 23 of UP Stamp Act. He submits that the Development Authority as per scheme has contemplated for payment of 5 % of stamp duty on the total premium fixed, while allotting the land. The said fact has been mentioned in Annexure No. 5 of the writ petition. Further, the proceedings have been initiated on the alleged ground that apart from the total premium, the petitioner has paid interest to which the amount of premium has been enhanced against which no stamp duty has been paid. He submits that any payment of interest cannot be calculated and added to the premium amount for payment of stamp duty. 6. He further raises alternative argument that it is a lease of the property, which may not be treated as sale of the property, therefore, the proceedings itself is bad on this ground alone. 7. Per contra, learned Standing Counsel supports the impugned proceedings as well as the impugned orders and submits that land has been given on lease for more than 30 years, therefore, the stamp duty is liable to be paid. He further submits that the plot in question has been given over and above the premium amount in which 20 equal instalments have been fixed to which the interest has been charged by the development authority but the same has not been calculated towards the payment of stamp duty, therefore, the proceedings has rightly been initiated. 8. After hearing learned counsel for the parties, the Court has perused the records. 9. 8. After hearing learned counsel for the parties, the Court has perused the records. 9. The record shows that the land in question was allotted to the petitioner for development of residential township vide letter dated 14.6.2010 and as per clause 6 of the letter dated 20.7.2010, the stamp duty @ 5% as computed (on total premium) i.e. Rs. 9,86,00,715/- was required to be paid by the petitioner and on payment of stamp duty as well as 30% (of total premium), i.e. Rs. 1,77,65,895/- which was a condition precedent, the lease deed has been executed. 10. In exercise of powers conferred under Rule 4 UP Stamp (Valuation of Property) Rules 1997 the District Magistrate has floated minimum value of the land, over which the stamp duty was calculated keeping in view the provisions laid down under UP Stamp (Valuation of Property) Rules 1997 and minimum value has been fixed in respect of allotted land was @ Rs. 5000/-. The said provision as required under the Act has been complied with by the petitioner. 11. Thereafter the impugned reference has been made by the Sub Registrar to the Collector, Gautam Buddha Nagar alleging therein that the petitioner has only paid the stamp duty on actual premium amount in respect of the allotted land to it. However on payment of interest, no stamp duty has been paid on 20 equal instalments, as mentioned in the instrument, therefore, the proceedings have been initiated against the petitioner. 12. It is admitted between the parties that the proceedings have only been initiated against the petitioner on the alleged ground that on the actual premium amount, the stamp duty was paid, but for payment in 20 equal instalments along with interest, the stamp duty was also required to be paid on interest, but the same has neither been calculated nor has been paid by the petitioner. 13. To decide the issue in hand, it is relevant to quote Section 23 of the Stamp Act :- “23. Instruments reserving interest. — Where interest is expressly made payable by the terms of an instrument, such instrument shall not be chargeable with duty higher than that with which it would have been chargeable had not mention of interest been made therein.” 14. On perusal of aforesaid Section, the payment of interest in an instrument does not operate to make it chargeable with higher duty. On perusal of aforesaid Section, the payment of interest in an instrument does not operate to make it chargeable with higher duty. The duty will only be chargeable on principal sum and not to be based on the principal sum plus interest. In other words, it specifically prohibits for charging stamp duty on interest mentioned in the instrument. But in the present case, the respondent authorities have chosen in their wisdom to proceed for charging deficit of stamp duty on the interest as mentioned in the lease deed, which were required to be paid in 20 equal instalments. 15. The issue in hand has already been decided by Patna High Court in the case of Atma Ram Shah Vs. The Bihar State Housing Board and others , 1992 SCC Online Pat 13. The relevant part of the judgement is quoted hereunder:- “Originally in the writ petition the petitioner had prayed for a direction on the respondents to transfer House No. M/2 (double storied) under the Middle Income Group Housing Scheme situated at Argora Housing Colony, Ranchi, in the name of the petitioner by executing proper instrument. During the pendency of this application, the respondents issued Annexure 12 by which the petitioner was informed that as he has paid a total sum of Rs. 60,357/- which includes principal and interest, he should send to the Board typed copy of the sale deed on the stamp paper by valuing the same at Rs. 60,357/-. By Annexure 13, Annexure 12 was referred to and a request was made to the petitioner to send the sale deed drawn on stamp paper a draft of which was sent by Annexure 13 which has been marked as Annexure 14 to the writ petition. In view of this development, the petitioner filed an application for amendment of the writ petition for challenging that part of Annexures 12, 13 and 14 by which the petitioner was requested to value the sale deed at Rs.60,357/- and put stamp duty on the same. 2. The question which arises in this case is what should be the value of the sale deed to be executed by the respondents in favour of the petitioner with regard to the house in question. 3. 2. The question which arises in this case is what should be the value of the sale deed to be executed by the respondents in favour of the petitioner with regard to the house in question. 3. The petitioner has filed a copy of the agreement as contained in Annexure 2 to the writ petition entered into by and between the parties on 15th February, 1967 relating to the house in question. It was agreed between the parties that the total sale price of the house would be Rs. 34,500/-. Out of this, the petitioner had already paid Rs. 14,500/- and balance amount of Rs. 20,000/- would be payable by him with interest in 282 monthly instalments. 4. It is thus clear from Annexure 2 that the parties agreed that the value of the house is Rs. 34,500/- notwithstanding the fact that balance of the sale price would be paid by the petitioner with interest in 282 monthly instalments. The parties never agreed that the interest should also be added in the sale price of the house in question. That being the position, I am of the opinion that the value of the sale deed to be executed by the respondents in favour of the petitioner with regard to this house in question will be Rs. 34,500/-. 5. The petitioner will draw a sale deed on the requisite stamp paper, draft of which is Annexure 14 to the writ petition. The respondents- Board shall execute and register the sale deed within thirty days from the date of receipt of the sale deed drawn on the requisite stamp paper from the petitioner. 6. The application is disposed of with the aforesaid observation and direction.” 16. The aforesaid judgement was challenged by the Bihar State Housing Board and others before the Apex Court in Civil Appeal No. 1713 of 1993 ( Bihar State Housing Board and others Vs. Atma Ram Shah , MANU/SC/2185/1995 which was dismissed vide order dated 6.8.1995 passed by the Bench of Hon’ble Mr. Justice M.M. Punchhi and Hon’ble Mr. Justice J.K. Venkataswami. The relevant part of the judgement is quoted hereunder:- “Mr. M.M. Punchhi, J. - The Appellant Bihar State Housing Board and its officers-required of the Respondent to pay a figure of stamp duty chargeable not only on the original price of Rs. Justice M.M. Punchhi and Hon’ble Mr. Justice J.K. Venkataswami. The relevant part of the judgement is quoted hereunder:- “Mr. M.M. Punchhi, J. - The Appellant Bihar State Housing Board and its officers-required of the Respondent to pay a figure of stamp duty chargeable not only on the original price of Rs. 34,500/- as fixed but also on the interest paid from time to time on deferred payment of installments. Its attempt was scuttled by a Division Bench of the Patna High Court, forbidding it to charge stamp-duty relatable to the interest but only to charge stamp-duty on the sale price of Rs.34,500/-. 2. The main obligation incurred by the Respondent subject is embodied in paragraph 2 of the deed executed before hand. It mentions that the total sale price of the house was Rs. 34,500/- the possession of the house having already been delivered to the Respondent. It was admitted that the Respondents had paid a sum of Rs. 14,500/- by that time and the balance of Rs. 20,000/- would be treated as loan amount in his hands, payable by him with interest in as many as 282 monthly instalments in the manner stipulated. Steps and action were envisaged in the event of failure to make timely payments with which we are not concerned for the present. All what needs emphasis is that a fiction apparently had been created, whereby the price, which was/otherwise payable had been left with the purchaser as a loan which would fetch interest at the rates stipulated. section 23 of the Indian Stamp Act, 1899 specifically states that where interest is expressly made payable by the terms of an instrument, such instrument shall not be chargeable with duty higher than that with which it would have been chargeable had no mention of interest been made therein. The law envisaged the consideration for an instrument and the interest accruing thereon in a given situation to be treated separately Section 24 of the Act provides the method as to how stamp duty is chargeable in consideration of debt or subject to future payment, etc. The provision as pressed by learned Counsel for the Appellant would have no applicability to the present set of facts. Interest chargeable on loan cannot be put at par with encumbrances; it remaining a liability though. The provision as pressed by learned Counsel for the Appellant would have no applicability to the present set of facts. Interest chargeable on loan cannot be put at par with encumbrances; it remaining a liability though. Thus, in our view, the High Court was right in Intervening In the matter and forbidding the Appellant to charge stamp duty beyond the consideration of Rs. 34,500/- and not on the sum total of interest paid by the transferee by adding it to the sale consideration. 3. We therefore find no merit in this appeal and the same is dismissed. There shall be no costs, there being no opposition.” 17. The record shows that the proceedings have been initiated on the premise of deficit of stamp duty on the interest paid by the petitioner. Section 23 of the Stamp Act specifically prohibits for charging stamp duty on payment of interest. 18. It is not in dispute that the petitioner has paid stamp duty on amount of actual premium on which the land has been allotted. The deficit of stamp duty by making reference is proposed to be charged on the interest paid in 20 equal instalments. Though Section 23 envisaged that if the instrument categorically provides that interest needs to be paid on actual amount, the stamp duty for that instrument would not be more than it would have been if interest was not at all mentioned therein. The payment of interest on the instrument does not empower the authorities for charging higher stamp duty on the instrument. If the interest is paid on and above the amount payable by the purchaser, the same can be considered in accordance with law but higher rate of stamp duty cannot be charged as contemplated under Section 23 of the Indian Stamp Act. 19. Further Hon’ble the Apex Court in the case of Bihar State Housing Board (supra) had an occasion to consider the issue which is similar to the issue in hand and after detailed discussion, Hon’ble the Apex Court has held that the stamp duty cannot be charged on the amount of interest paid under the Indian Stamp Act. 20. 19. Further Hon’ble the Apex Court in the case of Bihar State Housing Board (supra) had an occasion to consider the issue which is similar to the issue in hand and after detailed discussion, Hon’ble the Apex Court has held that the stamp duty cannot be charged on the amount of interest paid under the Indian Stamp Act. 20. Once Section 23 of the Indian Stamp Act prohibits for charging higher stamp duty on such instrument where interest is expressly made payable as well as the law is very clear on this subject as held by Hon’ble the Apex Court in the case of Bihar State Housing Board (supra) , the proceedings initiated against the petitioner by making impugned reference for charging deficit of stamp duty on the basis of interest paid by the petitioner, is not justified. 21. In view of aforesaid discussion as well as law laid down by Hon’ble the Apex Court, the impugned reference dated 18.10.2012 in Stamp Suit No. 119 /2012-13 cannot be justified in the eyes of law and same is hereby quashed. 22. As the impugned reference itself is quashed, all consequential proceedings as well as the impugned orders dated 30.5.2018, 21.7.2018 and recovery citation dated 28.8.2018 are also hereby quashed. 23. Accordingly, both the writ petitions are allowed. 24. The authority concerned is directed to refund any amount deposited by the petitioner along with interest @ 4% per annum from the date of its deposit till the date of refund, within a period of two months from the date of production of a certified copy of this order.