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TMI Blog2008 (8) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... hereafter on 28.8.2004 after execution of the sale deed the name of the petitioner was recorded in the relevant revenue record by the order of Tehsildar. Thereafter petitioner sought to change the nature of the land from agricultural to Industrial (Commercial) and sought a declaration under Section 143 of the U.P.Z.A L.R. Act and same was allowed on 25.11.2004. On 9.10.2006 the DIG (Registration) Kanpur Nagar conducted an ex-parte inspection and submitted his report pointing out a deficiency of Rs. 8,36,300/- and recommended proceedings under Section 47-A(3) to be initiated against the petitioner. On 17.11.2006 notice was issued to petitioner to appear and submit his reply. Pursuance thereto petitioner entered appearance and filed its objection. Additional District Magistrate, (F R) Kanpur Nagar on 31.12.2007 passed order imposing stamp deficiency of Rs. 8,36,300, and interest of Rs. 5,26,869 and penalty of Rs. 6,831/- total amount of Rs. 13,70,000 as due against the petitioner. Said order was questioned by the petitioner by preferring Revision before Chief Controlling Revenue Authority, U.P. Allahabad and said Revision had also been dismissed. At this juncture present writ petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value determined in accordance with the rules made under this Act, the registering officer appointed under the Registration Act, 1908 shall, notwithstanding anything contained in the said Act, immediately after presentation of such instrument, and before accepting it for registration and taking any action under Section 52 of the said Act, require the person liable to pay stamp duty under Section 29, to pay the deficit stamp duty as computed on the basis of the minimum value determined in accordance with the said rules and return the instrument for presenting again in accordance with Section 23 of the Registration Act, 1908. (b) When the deficit stamp duty required to be paid under clause (a), is paid in respect of any instrument and the instrument is presented again for registration, the registering officer shall certify by endorsement thereon, that the deficit stamp duty has been paid in respect thereof and the name and the residence of the person pay them and register the same. (c) Notwithstanding anything contained in any other provisions of this Act, the deficit stamp duty may be paid under clause (a) in the form of impressed stamps containing such declaration as may be prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the reference; (ii) not truly set forth and the instrument not duly stamped, he shall require the payment of proper duty or the amount required to make up the deficiency in the same, together with a penalty of an amount not exceeding four times the amount of the proper duty or the deficient portion thereof. Sub-sections 4-A to 6 are not relevant. 8. Relevant portions of Rules 4, 5 and Rule 7 of U.P. Stamp (Valuation of Property) Rules, 1997 are quoted below: Rule-4. Fixation of minimum rate for valuation of land construction value of non-commercial building and minimum rate of rent of commercial building.-(1) The Collector of the district shall biennially, as far as possible, in the month of August, fix the minimum value per acre/per square meter of land, the minimum value per square meter of construction of non-commercial building and the minimum monthly rent per square meter of commercial building situated in different parts of the district taking into consideration the following facts: (a) in case of land- (i) classification of soil, (ii) availability of irrigation facility, (iii) proximity to road, market, bus, station, railway station, railway station factories, hospitals a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garden: (i) (ii) (iii). (iv) (c) in case of building: (i) Non-commercial building-Minimum value of land whether covered by the construction or not, which is subject matter of instrument, as worked out under Clause (a) building arrived at by multiplying the construction area of each floor of the building by the minimum value fixed by the Collector of the district under rule. (ii) commercial building-Minimum value of land whether covered by the construction or not, which is subject-matter of instrument as worked out under Clause (a) plus three hundred times the minimum monthly rent of the building arrived at by multiplying the constructed area of each floor of the building with the minimum rent fixed by the Collector of the district under Rule 4. Rule-7. Procedure on receipt of a reference or when suo motu action is proposed under Section 47-A.--(1) On receipt of a reference or where action is proposed to be taken suo motu under Section 47-A, the Collector shall issue notice to parties to the instrument to show cause within thirty days of the receipt of such notice as to why the market value of the property set forth in the instrument and the duty-payable thereon be not determined b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency. In case deficiency is not made good then matter will have to be referred by Registering Officer to the Collector. However, thereafter it is quite possible that Collector may hold that even though market value of the property set forth in the deed is less than minimum market value fixed under the Rules of 1997 still the market value set forth in the sale deed is correct and proper stamp has been paid. It is quite clear from section 47-A(4)(i) and Rule 7(5). 16. However, if deed has been registered then action may be taken only under Section 47-A (3) of the Stamp Act. Rule 7 of the Rules of 1997 prescribes the procedure for determining market value of the subject matter of the instrument. This Rule nowhere refers to the minimum value of the property fixed in accordance with Rule 4 of the said Rules. Sub-section (2) of Section 47-A of Stamp Act obliges the Collector for the purpose of determining of the market value of the property which is the subject of instrument presented for registration after holding inquiry in such manner as may be prescribed by Rules made under the said Act. This clearly refers to Rule 7 of Rules of 1997. However, sub-section (3) of the said section only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he conveyance was fraudulently made although more has passed on it, Section 47-A would come into play (para-10). In the said authority the following observation of AIR 1974 Mad 117 was quoted: 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, as a changing factor and will depend on various circumstances and matters relevant to the consideration. No exactitude is in the nature of things possible. 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 taken to be correct unless circumstances exist which suggest fraudulent evasion. 18. The Supreme Court in R.C. Bansal v. D.M., A.I.R. 1999 S.C. 2126 has held that circle rates under Rule 340-A (since repealed and substituted by Rule 4 of Rules of 1997) is merely a guideline and at best prima facie rate of the area concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e character of the land and its user. In para-21 of the said authority it has also been held that valuation cannot be determined on the basis of its future potential. 24. In H.L. Sahu v. State of U.P. AIR 2004 All 190 a Single Judge of this Court struck down Note-2 of order dated 3.8.1997 prescribing circle rate of District Kaushambi under Rule 4 of the Rules of 1997 which provided that in case agricultural land is not transferred in favour of a co-tenure holder or a person having adjoining agricultural plot then the same shall be valued on the basis of per Sq. Meter in case area of the land sold is less than 1500 Sq. Meter. 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 47-A 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the land owner at the rate of Rs. 23/- per Sq. Ft. and for sale after development they have valued the same land for residential purposes about Rs. 400/- per Sq. Ft. and for commercial purposes about Rs. 600/- per Sq. Ft. in a most arbitrary and illegal manner. The artificial increase of the price of such land is not in the interest of public at large. While fixing the rates of the agricultural, residential and commercial land for the purposes of stamp duty under the provisions of the U.P. Stamp (Valuation of Property) Rules, 1997, the provisions of Sections 48 and 50-C of the Income Tax Act should also be kept in mind. 27. The Collector/District Magistrate, Lucknow under the provisions of the U.P. Stamp (Valuation of Property) Rules, 1997 has no jurisdiction to say that the stamp duty in respect of the agricultural land situate in semi-urban area or country side area shall be charged treating the land as commercial. The Collector/District Magistrate, Lucknow while issuing the rate list under the provisions of Rule, 1997 has no authority to declare the agricultural land as residential or commercial for the purposes of realisation of stamp duty as the authority to declare a parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of proper stamp duty. 12. The other phrase used in sub-section (3) of Section 47-A is 'market value'. The 'market value' means what is willing purchaser would pay to a willing seller for the property having regard to the advantages available the land and the development activities which may be going in the vicinity and potentiality of the land and as such an offer to sale of land to an industrialist on concessional rate with a view to induce him to set up industry in a particular area is not market value. [See Mahabir Prasad v. Collector, Cuttack, AIR 1987 SC 720]. 13. The 'market value' of land means a price at which both buyers and sellers are willing to do business; the market or current price. 16. The sole basis of the impugned orders holding that proper stamp duty has not been paid by the petitioners is the report of the Sub-Registrar, reporting the matter to the ADM (F R) that proper stamp duty has not been paid. Except the said report, there is no material on record to show that the petitioners by arrangement deliberately under-valued the property while setting forth the market value in the instrument. 20. There is another aspect of the case. The si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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