IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE TWENTY SEVENTH DAY OF JANUARY, TWO THOUSAND TEN PRESENT: THE HON’BLE MR. JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.7022 of 2002 Between: M/s. Surya Tejus Real Estates, Doddipatla Village, Palakol Mandal, West Godavari District. … Petitioner And Commissioner & Inspector General of Registration and Stamps, N.B.K. Estate, Musheerabad, Hyderabad & others. … Respondents Counsel for the petitioner : Sri O. Manohar Reddy Counsel for the respondents: AGP for Revenue This Court made the following: THE HON’BLE MR. JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.7022 of 2002 ORDER:- This writ petition is filed for a Mandamus to set aside order dated 23.03.2002 passed by respondent No.2, whereby the petitioner has been asked to pay a sum of Rs.4,21,800/- towards deficit stamp duty. Heard Sri O. Manohar Reddy, learned counsel for the petitioner and the learned Assistant Government Pleader for Revenue. The petitioner is a partnership firm involved in real estate business. Originally there were 12 partners. Each partner has contributed certain immovable property towards his capital. This arrangement was made prior to coming into force of amendment to Section 2(10) of the Indian Stamp Act, 1899 (for short, “the Act”) under which it was made obligatory to a person to pay stamp duty even with respect to the property, which is shown as investment in the firm by treating the said transaction as conveyance. After the said amendment, which came into force on 01.05.1998, some of the partners, who have contributed their immovable property as capital to the firm, have retired from partnership firm. At that time, the petitioner firm has paid the stamp duty on the share of the retiring partners @ 11%. Respondent No.2 through the impugned proceedings called upon the petitioner to pay a sum of Rs.4,21,800/- towards unpaid stamp duty in respect of sale deed Nos.450, 451, 452 and 453 of 2000, which was submitted to the Sub-Registrar Office, Palakol. This proceeding is assailed in this writ petition. Respondent No.2 filed a counter affidavit wherein he has sought to explain the reasons for issuing the impugned proceedings. At the hearing, the learned counsel for the petitioner advanced two contentions, namely, i) that the impugned proceedings are in violation of Section 41 (A) of the Act, as no show cause notice was issued before the impugned proceedings were passed and ii) that while in the impugned proceedings the sum of Rs.4,21,800/- was shown as the short fall in the stamp duty in respect of the 4 sale deeds executed by the firm in favour of third parties, in the counter affidavit a totally different basis is shown for the demand. The learned counsel explained that as per the averments in the counter affidavit the said amount of Rs.4,21,800/- is demanded as short fall in stamp duty in respect of the immovable property brought into the partnership by the partners towards their respective capital. The learned Assistant Government Pleader sought to justify the impugned proceedings with reference to the reasons contained in the counter affidavit. With regard to the first contention of the learned counsel for the petitioner, issuance of a show cause notice before passing an order demanding for payment of stamp duty is mandatory under Section 47(A) of the Act. The learned Assistant Government Pleader does not dispute this position in law. Curiously, in paragraph 5 of the counter affidavit, it has been stated that respondent No.2 has issued a show cause notice on 23.03.2002 and that the petitioner has not preferred an appeal to the appellate authority against the said notice. Respondent No.2 seems to be under a misapprehension that the impugned proceedings are in the nature of a show cause notice. By the said proceedings, respondent No.2 has called upon the petitioner to pay the stamp duty. In the counter affidavit it has been stated that the petitioner should have filed an appeal before the appellate authority against the impugned proceedings. If the impugned proceedings are termed as a show cause notice, the question of the petitioner having to file an appeal before the appellate authority does not arise. The abovementioned stand taken by respondent No.2 in the counter affidavit is evidently owing to his improper understanding of the provisions of Section 47(A), which mandates that before making a demand towards short fall in the stamp duty, a show cause notice is required to be given calling upon the person concerned to submit his explanation and thereafter an order shall be passed after considering the contents of the explanation. The impugned proceedings therefore are not in conformity with the provisions of Section 47(A) of the Act and are liable to be set aside. The learned counsel for the petitioner submitted that the impugned proceedings do not contain the grounds on which respondent No.2 has proposed to recover the sum of Rs.4,21,800/-. As the counter affidavit filed by respondent No.2 contains the basis on which the demand was made, the petitioner can treat those reasons mentioned in the counter affidavit as part of the impugned proceedings and can accordingly submit its explanation. Having regard to the view taken by this Court on the first contention of the learned counsel for the petitioner, it is not necessary for this Court to give any finding on the second contention. The petitioner is permitted to file his explanation within four weeks from today wherein it can raise all the pleas, which are legally sustainable, before respondent No.2. Respondent No.2 shall apply his mind to the explanation to be submitted by the petitioner and pass appropriate order by giving detailed reasons, in case, he does not accept the explanation of the petitioner. For the abovementioned reasons, the impugned order is set aside and the writ petition is accordingly allowed subject to the observations made hereinabove. As a sequel to disposal of the writ petition in the manner indicated above, WPMP.Nos.8804 and 8805 of 2002 are disposed of as infructuous. _____________________________ C.V. NAGARJUNA REDDY, J Date: 27.01.2010 ES