The Stamp Act is a fiscal measure enacted with an object to secure revenue for the State on certain classes of instruments. It is not enacted to arm a litigant with a weapon of technicality to meet the case of his opponent. The stringent provisions of the Act are conceived in the interest of the revenue. Once that object is secured according to law, the party staking his claim on the instrument will not be defeated on the ground of initial defect in the instrument. The sole object of Stamp Act under its various provisions is to require the parties concerned to set forth correct market value of the property at which the transaction has taken place so that appropriate duty in accordance with the Act is paid by them to avoid large scale evasion of stamp duty. It also mandates that while setting forth the correct market value of the property in dispute the competent authority must not apply their mind in a fact fashion and in a haphazard way.
The facts shorn of details are that the petitioner purchased 0.222 hectare of agricultural land through a registered sale deed dated 18.5.2004 executed by one Ashok Kumar Mishra son of Sri Gokul Prasad Mishra, who was holding Power of Attorney of the erstwhile holders. Accordingly a sum of Rs. 3,64000/- was paid by the petitioner as a sale consideration. Proceedings were initiated against the petitioner for determining the market value of the property under Section 47 A of the Indian Stamp Act which was contested by the petitioner. By an order dated 29.1.2006, A.D.M.(F&R) Allahabd had held that the market value has not been properly assessed with a view to evade the stamp duty and thereby had directed that the stamp duty payable was Rs. 4,07,500/- and directed the payment of the difference by the petitioner and had also imposed penalty of Rs. 5000/- with default stipulation. Petitioner preferred a civil revision before the Commissioner, Allahabad Division, Allahabd which was numbered as 12/2006-07 and the same was also dismissed. It is this order which is subject matter of challenge before this Court.
Petitioner assailed the impugned orders on the ground that there is no declaration under Section 143 of the U.P. Z.A. and L.R. Act of the land purchased by the petitioner as such unless there is any declaration the nature and character of the land cannot be treated to be Aabadi for the purpose of payment of stamp duty. Therefore, the observation of the authorities that it was not the agricultural land on the date of transfer effected rather it is treated to be of the Aabadi land. It is contended by learned counsel for the petitioner that no future potential of the land can be taken into consideration as at that point of time when the transfer was effected no such constructions were raised on the adjoining plots of the petitioner and hence the impugned orders are wholly erroneous and misconceived and therefore cannot be sustained in the eyes of law.
Learned Counsel for the petitioners vehemently contended that the demand of alleged deficiency in stamp duty has been raised only on the ground that the land has immediate potential though it is not in dispute that the land in question has not been declared as Abadi under Section 143 of U.P. Z.A. & L.R. Act, 1951 (hereinafter referred to as the "1951 Act"). He further contended that at the time of the execution of the land, the land in dispute has been shown as agricultural land in the sale deed and, therefore, the stamp duty imposed upon the petitioner is wholly illegal, based on conjectures and surmises, and even otherwise contrary to law.
Learned Standing Counsel on the contrary submitted that it has rightly been found by the authorities concerned that the land has higher market value and stamp duty was payable at the rate applicable to Abadi land and not to agricultural land. He, thus, submitted that there is no error apparent on the face of record committed by the respondents and the writ petition, therefore, is liable to be dismissed.
Heard learned counsel for the parties and perused the material on record.
The question that arise for consideration is as to whether any declaration as stipulated under Section 143 of the UPZA & LR Act has been made before execution of the Sale deed or thereafter.
Section 143 of the UPZA & LR Act mandates as under:-
"Use of holding for industrial or residential purpose:-
1. Where a Bhumidhar with transferable rights uses his holding or part thereof for a purpose not connected with agriculture, horticulture or animal husbandry which includes pisciculture and poultry farming, the Assistant Collector-in-charge of sub-division may, suo motu or on an application, after making such enquiry as may be prescribed, make a declaration to that effect.
(1-A) Where declaration under sub-section (1) has to be made in respect of a part of the holding, the Assistant Collector-in-charge of the sub-division may, in the manner prescribed, demarcate such part for the purposes of such declaration.
2. Upon the grant of the declaration mentioned in sub-section (1), the provision of this Chapter (other than this section) shall cease to apply to the Bhumidhar with transferable rights with respect to such land and he shall thereupon be governed in the matter of devolution of the land by personal law to which he is subject.
3. Where a bhumidhar with transferable rights has been granted, before or after the commencement of the Uttar Pradesh Land Laws (Amendment) Act 1978, any loan by the Uttar Pradesh Financial Corporation or by any other corporation owned or controlled by the State Government, on the security of any land held by such Bhumidhar, the provisions of this Chapter (other than this section) shall cease to apply to such Bhumidhar with respect to such land and he shall thereupon be governed in the matter of devolution of the land by personal law to which he is subject."
The facts which are not in dispute are that the land in question is an agricultural land, registered as such in the revenue records and there was no declaration under Section 143 of 1951 Act, of the said land as Abadi either on the date of execution of sale deed or even thereafter and even till the date of filing of writ petition. It is an admitted position that the land in dispute involved in the present case is a Bhumidhari land which means agricultural land. There are no pleadings or material on record to show that the said land or any part thereof has been declared to be non agricultural in nature under Section 143 of the U.P.Z.A. & L.R. Act. It is settled position that an agricultural land would continue to be an agricultural in nature unless notified to be non agricultural in nature under Section 143 of the U.P.Z.A. & L.R. Act. Therefore, even though part of it may have been put to Abadi use, it shall remain to be an agricultural land in the absence of a notification under Section 143 of the U.P.Z.A. & L.R. Act.
In these circumstances it has to be seen as to whether a person can be required to pay additional stamp duty on the ground that the valuation on which he has paid stamp duty is not correct. From both the orders passed by the respondents authorities, it is evident that the sole reason assigned by them for determining market value of the land in question as 'residential land' is that it is adjacent to Abadi and has immediate potential of user as residential land. The learned Standing Counsel could not point out as to whether any declaration has been made before execution of the sale deed or not.
In view of aforesaid further question which arise for consideration is as to whether the Collector has rightly determined market value as required under Section 47-A of the Act of the land in question and whether demand for additional stamp duty, penalty etc. is valid or not. The Section 47-A of the Act is reproduced as below :
"47A. Instruments of conveyance etc., if undervalued, how to be dealt with.--(1) if the market value of any property which is the subject of any instrument (on which duty is chargeable on the market value of the property), as set forth in such instrument (is less than even the minimum value determined in accordance with any rules made under this 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.
(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) of 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 may be prescribed by rules made under this Act, determine the 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 may, suo motu, (or on a reference from any Court or from the (Commissioner of Stamps or an Additional Commissioner of Stamps of a Deputy Commissioner of Stamps or an Assistant Commissioner of Stamps or any officer authorized by the Board of Revenue in that behalf) Inspector of Stamps, Uttar Pradesh, within (four years) from the date of registration of any Instrument (on which duty is chargeable on the market value of the property) not already referred to him under sub-section (1) of sub-section (2), call for and examine the Instrument for the purpose of satisfying himself as to the correctness of the market value of the property which is the subject (of such Instrument) and duty payable thereon, and if after such examination he has reason to believe that the market value of such property has not been truly set forth in the instrument, he may determine the market value of such property and the duty payable thereon in accordance with the procedure provided for in sub-section (3). The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty."
Article 23 Schedule 1-B of the Act provides for stamp duty payable on 'conveyance' as defined under Section 2(10) of the Act. According to which the duty has to be paid on the market value of the property or the consideration set forth in the conveyance whichever is higher. Therefore, if the consideration set forth in the instrument is less than the market value the duty is payable on the market value otherwise it is the consideration which would attract the amount of duty payable under the Act.
Wherever it appears to a registering authority that the consideration set forth in the instrument is less than the correct market value, he may refer the matter to Collector under Sub-section 3 of Section 47-A of the Act and then it is the duty of a Collector to examine the instrument and satisfy himself as to the correctness of the market value of the property and only when he has reason to believe that the market value of the property has not been truly set forth in the instrument, he may determine the market value of such property and duty payable thereafter. Therefore, the obligation cast by Section 47-A of the Act on the Collector is first to find out that the correct market value of the property which has not been mentioned in the instrument and thereafter himself he has to determine the market value of such property and then to proceed to decide the duty payable thereon and also as to whether the person concerned is liable to pay penalty or not. For the purpose of determining market value there is no machinery or statutory provisions laying down specifically as to what shall be a market value but laying guidelines, a procedure has been provided under Rule 7 of U.P. Stamp (Valuation of Property) Rules, 1997 (hereinafter referred to as the "1997 Rules") in accordance thereof the Collector would determine market value. Rule 7 reads as under:
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 by him.
(2) The Collector may admit oral or documentary evidence, if any, produced by the parties to the instrument and call for and examine the original instrument to satisfy himself as to the correctness of the market value of the subject-matter of the instrument and for determining the duty payable thereon.
(3) The Collector may:
(a) call for any information or record from any public office, officer or authority under the government or local authority;
(b) examine and record the statement of any public officer or authority under the Government or local authority;
(c) inspect the property after due notice to the parties to the instrument.
(4) After considering the representation of the parties, if any, and examining the records and other evidence, the Collector shall determine the market value of the subject matter of the instrument and the duty payable thereon.
(5)If, as a result of such inquiry, the market value is found to be fully and truly set forth and the instrument duly stamped according to such value, it shall be returned to the person who made the reference with a certificate to that effect. A copy of such certificate shall also be sent to the Registering officer concerned.
(6) If as a result of such inquiry, the market value is found to be undervalued and not duly stamped, necessary action shall be taken in respect of it according to relevant provisions of the Act.
The term "market value" has not been defined under the Act. However there are some precedents laying down certain guidelines as to how and in what manner a market value would be determined. The consensus opinion is that the market value of any property is the price which the property would fetch or would have fetched if sold in the open market, if sold by a willing seller, unaffected by the special need of a particular purchaser. It is interesting to note that the Act provides first for determination of minimum value of the property and further says that if the market value of the property set forth in the instrument is less than the minimum value determined under the Act, in such case before registering the instrument the registering authority shall refer the instrument to Collector for determination of market value of the property and the proper duty payable thereon and when the Collector determines market value of the property thereafter the parties shall proceed accordingly. Therefore, a market value of the property in all cases cannot be said to be higher than the alleged minimum value determined under the rule by the concerned authority, inasmuch as, it is only a kind of guideline provided to the authorities for the purpose of considering as to whether the proper stamp duty is being paid by setting forth true market value of the property in question in the instrument. The various provisions with respect to minimum value etc. are only in aid and assistance of the authorities to find out the true amount of consideration on which the parties have entered into transaction so that the correct duty is collected therefrom.
A Division Bench of this Court, considering the provisions of the Act, in Kaka Singh v. Additional Collector & District Magistrate (F & R) AIR 1986 All 107 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, 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.
The minimum value determined by the authorities under Rule 4 or 5 of 1997 Rules is only indicative of the fact that if the value set forth in the sale deed is less than such minimum value then Registering Officer before registering the instrument shall make a reference to the Collector and get the market value determined therefrom. The Collector being under an obligation to determine market value under Section 47-A(3) of the Act read with Rule 7 of 1997 Rules thereafter would make inquiry in accordance with procedure prescribed thereunder and find out the correct market value which may be the same which is stated in the instrument or may be higher or lesser as the case may be. But there is no rule of thumb that it will always be higher than the value determined by the competent authority under Rule 4 or 5 of 1997 Rules. After considering 1997 Rules this Court in Ram Khelawan v. State of U.P. and Anr. 2005 (98) RD 511 has also taken the same view and has said:
"It is quite possible that even in the first instance the instrument/deed may show the valuation of the property to be less than the minimum value determined in accordance with Rules of 1997 (popularly known as circle rate) still purchaser or seller may not be required to pay more stamp duty. The only purpose of the minimum market value fixed and circulated under Rule 4 of the Rules of 1997 is that in case on the face of it the market value of the property set-forth in the sale deed is less than minimum market value fixed under the said Rules than 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)."
Rule 7 of 1997 Rules while providing for determination of market value nowhere refers to either minimum value fixed under Rule 4 or 5 of 1997 Rules or provides that the market value shall be determined by the Collector which must be in all cases higher than the value set forth in the instrument by the parties concerned. The question as to how and what manner market value would have to be determined by the Collector has been discussed in detail and various aspects have been considered by this Court in Ram Khelawan (Supra). Thus, the Collector is under a statutory obligation before holding that an instrument does not set forth correct market value, to determine as to what is the market value of the property in question. The contention as raised by learned Standing Counsel that immediate potential user of the land is relevant for the purpose of determining market value, cannot be disputed but that is one of the relevant consideration and can not be the sole basis for holding that the value of the property as set forth in the instrument is not correct and it must be higher than that. Learned Standing Counsel also failed to point out as to which kind of land has no potential at all for user as residential purposes in future. The nature and character of land can always be changed subject to its use by its inhabitants in future. Hence future potential of the land for residential user by itself would not be a sole determinative factor for determining market value though, of course, it may be one of the relevant consideration for the same. The Collector however has to examine all relevant aspects in the matter and thereafter to find out what is the correct market value of the property in question. He cannot proceed merely by saying that since the land is adjacent to Abadi, therefore, it must be valued at the rate of residential land and duty must be charged accordingly.
In Aniruddha Kumar and Ashwini Kumar Vs. Chief Controlling Revenue Authority U.P. Alld. and another 2000(3) AWC 2587 this Court has clearly laid down that where in respect of agricultural land there is no declaration under Section 143 of the U.P. Z.A.and LR Act its nature would not change and its market value for the purposes of payment of stamp duty would be determined on the basis of the agricultural character of the land not on the future potentiality.
In M/s. Maya Food and Vanaspati Ltd. Co. Vs. Chief Controlling Revenue Authority (Board of Revenue ) Allahabad, 1990 (90) RD 57 this Court has held that market value of the land for the purposes of payment of stamp duty can not be determined with reference to its future use or the intended use to which it is likely to be put by the purchaser.
In view of the aforesaid legal position and the facts and circumstances of the case, as the land in dispute is of agricultural nature, in the absence of any declaration under Section 143 of the U.P. Z.A. and LR Act coupled with the fact that its potential use is of no relevance, the authorities below has manifestly erred in law in treating it to be an abadi land and applying the circle rate prescribed for abadi land for the area.
In view of the aforesaid discussion, the writ petition is allowed. The impugned orders are hereby set aside. The matter is remitted back to the competent authority to redetermine the market value of the property in question in accordance with law as discussed above and to pass a fresh order in accordance with law after giving due opportunity to the parties concerned.
Dated: 2.3.2012 RKS/