9911796707
TMI Blog2006 (10) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Requisite permission was granted by the District Magistrate on 27th August, 1970. The owner of the aforesaid property, for one reason or the other failed to execute the sale deed in pursuance of the aforesaid agreement, which led to the filing of Suit No. 207 of 1982 in the Court of Ist Addl. Civil Judge, Kanpur, for specific performance of the aforesaid sale agreement. The suit was decreed on 14th May, 1984 directing the vendors to transfer the said property as agreed upon by the sale agreement, within three months, failing which the Court will execute the sale deed. The Court as a matter of fact on the failure of the vendor (owner), executed sale deed on 3rd January, 1985. The said sale deed/sale certificate under signature of Civil Judge Ist Kanpur was sent for its registration to the Sub Registrar Kanpur, who in turn in exercise of power conferred on its under Section 47-A (1) of the Indian Stamp Act, 1899 (hereinafter referred to as the Act), referred it to the District Stamp Officer for determination of proper stamp duty on the aforesaid sale deed. It was registered as Stamp Case No. 87 of 1986. In response to the show cause notice issued by the District Stamp Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject matter of this sale deed is to be determined? In this matter prima facie three dates appear, first is 23/5/1960 when the earnest money was accepted in part performance of the agreement by the vendor, the second date is 14/5/1984 when the vendees case of specific performance was decreed by the court of Civil Judge first Kanpur and third is 03/01/1985 when the court executed the sale deed in question on behalf of the vendors. Sri Sharad Malaviya, learned counsel for the applicant submitted that stamp duty is payable on sale consideration as mentioned in the document in question, the market value in the present case of the property in question should be market value for the purpose of payment of stamp duty as it was on the date of agreement. Elaborating the argument he submitted that the applicant should not suffer for the delay in execution of sale deed. The agreement in question was executed in the year 1960, on the basis of the then prevailing market value of the property in question and sale deed was executed by the Court in pursuance of decree passed in Suit No. 270 of 1982 in the year 1985. He submitted that the valuation of the property in question which was agreed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistrar (supra). We have given our careful consideration to the respective submissions of the learned counsel for the parties and propose to answer the questions referred to us in seriatim. Question No. 1. Suit for specific performance of contract to sell is required to be valued under the provisions of Suits Valuation Act. On the relief of specific performance to sell court fee is to be valued in accordance with the provisions of Court Fees Act. Stamp duty, on an instrument, is liable to be paid in accordance with the provisions of the Indian Stamp Act. All the three statutes referred to above have been enacted with distinct and separate ''aims and objects' contained in these Acts and operate in different fields. In U.P. the court fees in a suit for specific performance of contract is payable on the sale consideration of the property in question as disclosed in the agreement deed executed by the parties. An owner is free to sell his property at any price provided there is a willing purchaser to pay it. An owner may be willing for various good reasons in good faith to alienate his property below prevailing market rate, unless there is some restriction or prohib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, the registering officer appointed under the Indian Registration Act, 1908, shall refer the same to the Collector for determination of the market value of such property and the proper duty payable thereon on . (2) Without prejudice to the provisions of sub section (1), if such registering officer, while registering any instrument on which duty is chargeable on the market value of the property, has reason to believe that the market value of the property which is the subject of such instrument, has not been truly set forth in the instrument, he may, after registering such instrument, refer the same to the Collector for determination of the market value of such property and the proper duty payable thereon. (3) On receipt of a reference under sub section (1) or sub section (2) the Collector shall, after giving the parties a reasonable opportunity of being heard and after holding an inquiry in such manner as maybe prescribed by rules made under this Act, determine market value of the property which is the subject of the instrument and the duty as aforesaid. The difference, if any, in the amount of duty shall be payable by the person liable to pay the duty. (4) The Collector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale consideration (Rs. 1,50,000/-) as set forth in the agreement to sell or the decree of Civil Court was not relevant. . The Assistant Commissioner (Stamps), to whom the matter was ultimately referred, was of the view that the instrument was under valued inasmuch the valuation of the property as prescribed under Rule 341 of the of the Stamp Rules 1942 (as enacted in the State of U.P.), is much more. Section 47-A (1) confers power on a Registering Officer to look into the document and if it is found that the market value of any property has not been correctly set forth in the instrument mentioned in this Section, he may refer the same to the Collector for determination of the market value of such property and the proper duty payable thereon. The Stamp Act does not provide for a separate treatment when an instrument is executed by a court. A Division Bench of this Court in the case of Kaka Singh Vs. Additional Collector and District Magistrate (supra) has held that Section 47-A empowers the Collector to deal with those cases where the parties by arrangement deliberately under valued the property by setting forth the market value less than the minimum determined under Rule 341 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test prima facie whether the instrument has properly described the value of the property. The circle rate under this Rule is neither final for the authority nor to one subjected to pay the stamp duty. So far sub sections (1) and (2) it is very limited in its application as it only directs the Registering Authority to refer to the Collector for determination in case property is under valued in such instrument. The circle rate does not take away the right of such person to show that the property in question is correctly valued as he gets an opportunity in case of under valuation to prove it before the Collector after reference is made. This also marks the dividing line for the exercise of power between the Registering Authority and the Collector. In case the valuation in the instrument is same as recorded in the circle rate or is truly described it could be registered by Registering Authority but in case it is under valued in terms of sub section (1) or sub section (2), it has to be referred and decided by the Collector. Thus, the circle rate, as aforesaid, is merely a guideline and is also indicative of division of exercise of power between the Registering Authority and the Collect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed' as applied to an instrument, means that the instrument bears an adhesive or impressed stamp of not less than the proper amount and that such stamp has been affixed or used in accordance with the law for the time being in force in India : Section 2 (12) - Executed and Execution Executed and Execution, used with reference to instrument, means ''signed' and signature ; Section 2 (14)- Instrument Instrument includes every document by which any right, or liability, is or purports to be created transferred, limited, extended, extinguished or recorded. It is not in dispute that the Act is a Taxing Statute. The Apex Court in the case of District Registrar Collector, Hyderabad another Vs..Canara Bank etc. JT 2004 (9) SC 379 has observed as follows :- Stamp Act is a piece of fiscal legislation. Remedial statutes which have come to be enacted on demand of the permanent public policy generally receive a liberal interpretation. However, fiscal statutes cannot be classed as such, operating as they do to impose burdens upon the public and are, therefore, construed strictly. A few principles are well settled while interpreting a fiscal law. There is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of the immovable property which is the subject of such conveyance, whichever is greater does not exceed ₹ 500/-Where it exceeds ₹ 500/- but does not exceed ₹ 1000/- and for every ₹ 1000/- or part thereof in excess of ₹ 1000/- (b) if relating to movable property where the amount or value of the consideration of such conveyance as set forth therein does not exceed ₹ 1000/-and for every ₹ 1000/- or part thereof in excess of ₹ 1000/- Sixty rupeesOne hundred and twenty five rupees.One hundred that the duty payable shall be rounded off to the next multiple of ten rupees. Twenty rupees.Twenty rupees. A close reading of aforesaid section 3 would clearly show that on every instrument mentioned in Schedule I-A or I-B executed by any person in U.P., liability to pay duty is there as soon as soon as it is executed. The contention of the applicant is that word ''executed' with reference to a date of conveyance which has been followed in pursuance of the agreement of sale, refers execution of date of execution of the sale agreement, requires examination in the light of the definition of the word executed as defined under the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. The learned Advocate General has rightly placed reliance upon the then Rules 340 341 of the Stamp Rules framed by the State Government. The relevant portion of the said Rules is reproduced below :- 340. In the case of an instrument of conveyance, exchange, gift, settlement, award or trust relating to immovable property chargeable with an ad valorem duty on the market value of the property, the following particulars shall also be fully and truly given in the instrument in addition to the market value of the property in compliance with sub section (2) of section 27 of the Indian Stamp Act as amended in its application to Uttar Pradesh :- (1) In case of land : (a) ........... (b) ............ (c) being non agricultural land situate within the limits of any local body constituted under the U.P. Nagar Mahapalika Adhiniyam, 1939, U.P. Municiplaities Act, 1916, or U.P. Town Areas Act 1914, as the case may be, the arera of the land in square meters with the average price per square metre prevailing in the locality in which the land is situate on the date of the instrument. (2).............. (3)............. 341. For the purpose of payment of stamp d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ascertained as per Rule 341 (i) (d), wherein it has been provided for as on the date of the instrument . The argument is that although under the Act it is provided that the stamp duty is payable on the market value of the subject matter of instrument of conveyance but the Act is silent and does not speak about the date in respect of which the market value of the subject matter of instrument of conveyance is to be looked into for the purpose of determination of the stamp duty. He submitted that in the present case the instrument of conveyance is chargeable to the market value of the subject matter of the instrument as it was on 5th May, 1960, viz the date on which the agreement to sell was executed between the parties. It is difficult to accept the aforesaid submission. It may be that the Act does not specifically say so, about the date in respect of which the market value of the instrument is to be determined but it is also equally evident that on plain reading of the various Sections of the Act and giving them harmonious construction, the market value of instrument of conveyance is referable to only one date i.e. the date of execution of the instrument. Article 23 Schedule 1-B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ursuance of the powers conferred by the notification of the Government of India Finance Department (Central Revenues) no. 9/Stamps, dated November 13, 1937, and in supersession of all previous notifications of the Government of India and the Provincial Government on this behalf; and in exercise of the powers conferred by Section 21 of the United Provinces Court- Fees (Amendment) Act, 1938 (XIX of 1938), and in pursuance of the power conferred by the notification of the Government of India Department no. 158/38, dated February 15, 1939, and in supersession of all previous notifications of the Government of India and that Provincial Government on this behalf, with the concurrence of the Hon'ble Chief Justice of the High Court of Judicature at Allahabad and the Hon'ble Chief Judge of the Chief Court of Oudh at Lucknow, where such concurrence is necessary, the Governor is pleased to make the following rules, namely : At this juncture it is apt to note the observations of the Apex Court made in the case of New Central Jute Mills Company Ltd. Vs.. State of West Bengal others AIR 1963 SC 1307. The Supreme Court was examining the question of sufficiency of Stamp Duty with refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a view to evade payment of proper stamp duty . The Madras High Court proceeded to decide the controversy on the basis of that Section 18 of the Stamp Act also does not suggest that the market value on the date of execution, alone be the basis for stamp duty' after referring Clause (12) of Section 2 of the Act, which defines words executed and execution means signed and signature proceeded to hold that it is not possible to hold that only inference possible from this provisions that its market value of the property on the date of execution of sale deed alone should be basis for stamp duty. It then proceeded to hold that in the absence of finding that there was lack of bona fide or any reason to believe that there was no valuation it reached to the conclusion as quoted above. We regret that we are unable to agree with the aforesaid approach of Madras High Court. Indisputably the Stamp Act is to be interpreted like any other taxing statute. In taxing statute lack of bona fides or mala fides unless so provided is wholly irrelevant for the construction of the statutory provision. Lack of bona fide no where finds place under Section 47-A of the Act specially as inse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Co. AIR 1954 SC 44, which is reproduced below :- According to Indian Law which has embodied in Section 54 of the T.P. Act, a contract for sale of land does not of itself create any interest in the property which is subject matter for the contract, the obligation of the parties to contract for sale of land are, therefore, the same as in other ordinary contracts........ This Court in Inayat Ullah Vs.. Khalil Ullah AIR 1938 Allahabad 432 has held that (i) that decree for specific performance only declares rights of the decree holder to have a transfer of property covered by decree executed in his favour (ii) that a decree by itself does not transfer the title (iii) the decree gives rights to have the decree executed (iv) that on his failure to have a sale deed executed on behalf of the judgment debtor. The relevant passage is reproduced below ;- A decree for specific performance only declares right of decree holder to have a transfer of property covered by the decree executed in his favour. The decree by itself does not transfer the title. That themselves so is apparent from the fact that in order to get the title of the property the decree holder is to proceed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 341 reproduced above, the date of the execution of the sale deed is the relevant date for determining the market value covered under the instrument of conveyance. We find, the view we are taking has been taken by the learned Single Judge in the case of Ram Govind Misra and others Vs.. CCRA (supra) and D.B. in the case of Smt. Har Pyari and others Vs.. State of U.P. (supra). We find no reason to disagree with the above view taken by the learned Single Judge as well as Division Bench of this Court. We would further add, for future guidance, as to when ''penalty' can be imposed under Section 47-A of the Act. In the instant case, the Assistant Commissioner (Stamps), Kanpur , on receiving the file from District Stamp Officer, apart from determining deficiency in stamp duty to the tune of ₹ 4,96,887-50 P., also imposed ''penalty' to the tune of ₹ 2,02,142.50 P. It is true that the question relating to ''imposition of penalty', in the admitted facts and circumstances of the case, has not been referred but it is appropriate that this Court should deal with this question which is not only inherent but also incidentally covered under q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he property which is the subject matter of an ''instrument' and the duty payable thereon. It further provides that the differences, if any, in the amount of duty disclosed in the instrument visa vis the amount determined under Section 47-A (3) read with Section 47A (1) shall be payable by the person liable to pay duty. Sub-section (4) of Section 47-A refers to a case and empowers ''Collector' on reference being made by a Registering Authority under Section 47-A (2) of the Act to examine the instrument for the purpose of correctness of the market value of the property and after examination if he finds that the market value was not truly set forth, he may determine the market value and duty payable thereon in accordance with procedure provided in Sub-section (3). Sub-sections (3) and (4), as they stood prior to U.P. Amendment Act 38 of 2001, made no reference to payment of ''penalty'. In the case of Kaka Singh Vs. The Additional Collector and District Magistrate (Finance and Revenue), Bulandshahr and another, AIR 1986 Allahabad 107 (DB) this Court considered scope of Section 47-A and its view was duly approved in Full Bench decision of this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. The purpose of S. 47-A is only to avoid evasion of the stamp duty. 12. In sub-sec. (2) of S. 47-A the words important for consideration of its scope are ''truly' and ''set forth'. The word ''truly' would empower the Collector to examine whether the market value stated in the document is not in conformity with the fact. If a party has agreed to pay more and mentions less in the conveyance of which one of the purposes could be evasion of stamp duty, the Collector would be entitled to find the real value for which the property had been sold in that case and after determining the correct value for which the property has been sold, to make a demand of the difference of the amount of duty payable as such. 13. In State of Tamil Nadu Vs. Chandrasekharan, AIR 1974 Mad 117, while dealing with the object of S. 47-A, the Madras High Court held: We are inclined to think that the object of the Amending Act being to avoid large scale evasion of stamp duty, it is not meant to be applied in a matter of fact fashion and in a haphazard way. Market value itself as we already mentioned, is a changing factor and will depend on various circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int, out of Five Points noted by the Court, in this judgment, reads: Can penalty be imposed under Section 47-A? and vide para-9 of the judgment, Court held: .......No penalty can be imposed in proceedings under Section 47-A of the Act. This is so held by a full bench decision of this Court..... In the case of S.P. Padmavathi Vs.State of Tamil Nadu, AIR 1997 Madras 296 (DB), the Court considered and interpreted Section 47-A(3) (as inserted by Tamil Nadu Amendment Act 24 of 1967). While considering the scope of Section 47-A (as in force in State of Madras), their Lordships referred to Section 47-A(1) of the said Act which is pari materia to Section 47-A(2) of the Indian Stamp Act (as in force in State of U.P.). In para-9 and 12 of the said decision, while answering point no. 1 viz. (''what is scope of Section 47-A of the Act?'), their Lordships observed: Pr.9.......In working the Act, great caution should be taken in order that it may not work as an engine of oppression. Having regard to the object of the Act, we are inclined to think that normally the consideration stated as the market value in a given instrument brought for registration should be tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where ''market value is not truly set forth' whereas ''interest' accrues or payable in a case where market value is truly set forth. A conjoint reading of aforesaid provisions clearly indicates that Section 47-A has differently treated a case where market value has been truly set forth and, on the other hand, a case where market value is not truly set forth. In this view of the matter, it is abundantly clear that imposition of ''penalty' by the Assistant Commissioner (Stamps) is wholly uncalled for and without jurisdiction. Accordingly it is held that the order imposing penalty is arbitrary, without jurisdiction and no penalty can be imposed in the facts of the present case. ANSWER In view of the above discussion we answer the second question by holding that the relevant date for determining the market value of the property for being subject matter of the sale deed is the third i.e. January 3, 1985 when the Court executed the sale deed in question on behalf of the vendors. The Registrar General is directed to send a copy of this judgment to the Chief Controlling Revenue Authority in accordance with Section 59 of the Stamp Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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