2007 (11) TMI 617 - SC - Indian Laws

Whether the valuation should be assessed on the market rate prevailing at the time of registration of the sale deed or when the parties entered into agreement to sell?

Summary

Issues Involved:
1. Whether the valuation for stamp duty should be assessed based on the market rate at the time of registration of the sale deed or at the time of the agreement to sell.
2. Interpretation of relevant provisions of the Stamp Act, including Sections 2(12), 3, 17, 27, and 47-A.
3. Whether considerations of hardship or equity should influence the interpretation of a taxing statute.

Issue-Wise Detailed Analysis:

1. Valuation for Stamp Duty:
The primary issue was whether the valuation for stamp duty should be assessed based on the market rate prevailing at the time of registration of the sale deed or at the time when the agreement to sell was entered into. The Court concluded that the market value of the property at the time of the execution of the sale deed is relevant. The Court emphasized that an agreement to sell is not equivalent to a sale, and the stamp duty should be assessed on the market value at the time of the actual sale, not at the time of the agreement or the filing of the suit.

2. Interpretation of the Stamp Act:
The Court analyzed various sections of the Stamp Act to resolve the issue:
- Section 2(12) defines "execution" as "signed" and "signature".
- Section 3 is the charging section, stating that instruments are chargeable with duty as indicated in the Schedule.
- Section 17 mandates that all instruments chargeable with duty and executed in India must be stamped before or at the time of execution.
- Section 27 requires that all facts affecting the chargeability of any instrument with duty must be fully and truly set forth in the instrument.
- Section 47-A allows the registering officer to refer an instrument to the Collector if he believes the market value has not been truly set forth, enabling the Collector to determine the correct market value and assess the duty accordingly.

The Court concluded that the valuation should be based on the market value at the time of the sale deed's execution. The interpretation of "execution" in Section 2(12) and its application in Section 17 supports this conclusion. The Court emphasized that the Stamp Act, being a taxing statute, must be construed strictly without considerations of equity or hardship.

3. Considerations of Hardship or Equity:
The respondent argued that the valuation should be based on the time of the agreement to sell due to the long litigation period, invoking the principle "Actus curie neminem gravabit" (no person shall suffer on account of litigation). However, the Court rejected this argument, stating that a taxing statute must be construed strictly. The Court cited precedents emphasizing that equitable considerations are irrelevant in interpreting taxing statutes. The literal rule of interpretation applies, and the valuation must be based on the market value at the time of the sale deed's execution.

Conclusion:
The Supreme Court set aside the judgments of the learned Single Judge and the Division Bench, holding that the correct market value for stamp duty assessment is the value at the time of the sale deed's execution. The Collector is directed to determine the market value of the property at the date of the document's registration and assess the stamp duty and surcharge accordingly. The appeal by the State was allowed, with no order as to costs.