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TMI Blog2023 (9) TMI 1544X X X X Extracts X X X X X X X X Extracts X X X X ..... for commercial purpose. The deficiency of stamp can neither be determined on the value of future use of the property nor it can be levied on the ground that property can fetch good market value nor in the absence of any declaration made by the State Government changing the nature of the land from industrial to commercial. The judgement referred by the counsel for the petitioner clearly indicates for determination the stamp duty only on the date of execution of deed. This Court in the case of Sunny Motors [ 2008 (8) TMI 1030 - ALLAHABAD HIGH COURT] has held that proceedings can be initiated on the basis of report but decision cannot be relied upon on the basis of said report until and unless the Collector has made the inspection himself or through some authorized person. Further the Court has observed that until and unless area in question has been declared as commercial by the State Government, the land use cannot be changed from industrial to commercial and no stamp deficiency can be levied. The case in hand, the property in question was purchased as vacant industrial plot and no material has been brought on record to treat the same as commercial plot. The authorities below have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een dismissed by the impugned order dated 28.7.2010 confirming the stamp deficiency as well as levy of penalty. Hence the present petition. 4. Learned Senior Counsel appearing on behalf of petitioner has submitted that admittedly the land in question was purchased as totally vacant industrial land. In the master plan also it was declared as industrial land. He submitted that the due stamp duty was paid for the land in question treating the same as industrial land however notice dated 15.2.2006 was issued by the Assistant Commissioner (Stamp) for appearing on 28.2.2006 in pursuance thereof, the petitioner appeared and filed his objection specifically denying the fact that any inspection of the land in question was ever made and report of auditor declaring the land in question to be commercial is illegal. 5. He further submitted that in the impugned order dated 27.11.2007, the Assistant Commissioner (Stamp) has recorded finding of fact in favour of the petitioner accepting the fact that land in question has been purchased as vacant industrial land and no construction was standing thereon and further the land in question is used for industrial purpose but still holds that land in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Revenue,UP at Allahabad 1996 (4) SCC 637. 9. In the alternative, learned counsel for the petitioner has further submitted that after purchase of land, the petitioner has moved an application for sanction of map before the Ghaziabad Development Authority in respect of construction of multiplex and same was also to be treated as industrial activity as such there was no change in land use as commercial, therefore, the authorities were not justified in treating the land in question as commercial in nature. He prays for allowing the writ petition. 10. Per contra, learned Standing Counsel supported the impugned orders and submitted that land in question was purchased for construction of multiplex in which various commercial activities are being undertaken and therefore, the authorities below have rightly initiated the proceedings under Section 33/47 A of Stamp Act and imposed the deficiency of stamp as well as penalty upon the petitioner. He prays for dismissal of this writ petition. 11. After hearing learned counsel for the parties, the Court has perused the records. 12. It is not in dispute that the petitioner had purchased vacant plot and paid the stamp duty thereof. The plot in qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le in the State of U.P. and relevant provision of U.P. Stamp (Valuation of Property) Rules, 1997 are being quoted below: Section 47-A :under-valuation of instrument. [(1). (a) If the market value of any property, which is the subject of any instrument, on which duty is chargeable on market value of the property as set forth in such instrument is less than even the minimum 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot prevent the Collector from initiating proceedings on any instrument under subsection( 3)]. (4) If on enquiry under sub-section (2) and examination under sub-section (3), the Collector finds the market value of the property (i) truly set forth and, the instrument duly stamped, he shall certify by endorsement that it is duly stamped and returned it to the person who made 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. 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 mont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty, the minimum value of immovable property forming the subject of an instrument shall be deemed to be such as may be arrived at as follows: (a) In case of land Minimum value. Whether agriculture or non-agriculture Area of land multiplied by minimum value fixed by Collector of the district under rule. (b) in case of grove of 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 at 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 receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et forth in the sale deed is less than minimum market value fixed under the said Rules then Registering Officer cannot register the deed and it will have to refer the same to the Collector unless on being asked by him to make good the deficiency in stamp duty, parties to the sale deed make good the requisite deficiency. 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, Subsection (2) of section 47-A of Stamp Act obliges the Collector fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. It has further been held that the purpose of entire exercise under section 47-A as supplemented by the relevant rules is to see as to whether the parties to the conveyance or instrument have deliberately under valued it for the purpose of deceitful gain. In a case where it is found that the value of the 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 corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated as residential plot unless declaration under section 143 of U.P.Z.A. L.R. Act is made and that market value of land is to be determined on the basis of the character of the land and its user. In para-21 of the said authority i??? 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd for Lucknow Development Authority for Gomti Nagar Extension Scheme has paid the compensation 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 semiurban 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Prakashwati ( supra ) has held as under :- 4. We have carefully examined the orders of the first respondent. Noticeably the house is built on a very small area i.e. 68.84 sq. yards only in a town which is not a metropolis. Presumably the smallness of the area would not suggest the same by itself to be a costly property or be situated in a prestigious or posh locality, where the upper classes would rub shoulders to acquire it. Secondly, it (sic) being situated in an area which is close to Samrat Vikram Colony, said to be a decent locality, where people of high income group reside, does not by itself make it a part thereof. We are doubtful whether the said factum of closeness by itself would cast any reflection on the price of property in question. Seemingly, influenced by the factor of the close proximity of Samrat Vikram Colony, the Assistant Commissioner, Stamps, for one does not know how, determined the monthly rental value of the property at Rs. 1500/- per mensem and worked out the price of the house on that basis. Despite that the Tehsildar at a subsequent stage reported that the annual rental value of the house was Rs. 1200/- per annum, where as for house tax purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose and . a third person may intend to dedicate it for charitable purposes like leaving it open as pasture ground or a cremation ground or a playground. These different Intentions may affect the price that each of them may be willing to pay for the property and such prices have wide variations but the market value is not what each such individual may offer for the property. The market value is what a general buyer may offer and what the owner may reasonably expect. In determining the market value., the potential of the land as on the date of sale alone can be taken into account and not what potential it may have in the distant future. 20. This Court in the case of Gopi Cold Storage Private Limited ( supra ) has held as under:- 4. Having heard the learned Counsel for the petitioner and, having perused the impugned orders, the Court finds that the impugned orders cannot be sustained and are liable to be quashed. The sole basis for the imposition of the deficiency of stamp duty is the audit report submitted by the Deputy Registrar. A perusal of the report indicates that the purchaser is a Cold Storage and had purchased an agricultural land and that the said land could be used in fut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the aforesaid, the impugned orders cannot be sustained and are quashed. The writ petition is allowed. 8. This Court finds that based on the imposition of deficiency of stamp duty by the impugned orders, the petitioner was required to deposit 40% of the amount. Since the impugned orders have been quashed, the authorities are obliged to refund the amount within two months from the date of the production of a certified copy of this order. 22. In view of aforesaid law laid down, it is clear that deficiency of stamp can neither be determined on the value of future use of the property nor it can be levied on the ground that property can fetch good market value nor in the absence of any declaration made by the State Government changing the nature of the land from industrial to commercial. The judgement referred by the counsel for the petitioner clearly indicates for determination the stamp duty only on the date of execution of deed. 23. The case in hand, the property in question was purchased as vacant industrial plot and no material has been brought on record to treat the same as commercial plot. The authorities below have failed to bring on record that nature of the land in question h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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