IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 11.11.2008 CORAM THE HON'BLE MR.JUSTICE M.JAICHANDREN W.P.No.709 of 2003 Bagawan Jumani .. Petitioner vs. 1. State of Tamil Nadu rep. by the Secretary to Government Revenue Department Secretariat, Fort St. George Chennai-600 009 2. The Inspector General of Registration (Tamil Nadu) Santhome, Chennai-600 004 3. The District Revenue officer (Stamps) Collectorate, Rajaji Salai Chennai-600 001 4. The Sub Registrar Periamet, Chennai-600 003 5. The Chief Commissioner of Income Tax (II) 121, Uthamar Gandhi Salai Nungambakkam, Chennai-600 034 6. The Assistant Commissioner (HQ)(Tech) 121, Uthamar Gandhi Salai Nungambakkam, Chennai-600 034 .. Respondents This writ petition is filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorarified Mandamus to call for the records of the third respondent comprised in his notice Tha.Ka.No.322/2002, dated 20.12.2002, and quash the same and consequently direct the fourth respondent to register the sale deed, dated 22.11.2002, pertaining to the property situated at No.18, (Old No.58), Monteith Lane, Egmore, Chennai-8, in favour of the petitioner and release the same to the petitioner. https://hcservices.ecourts.gov.in/hcservices/ For petitioner : Mr.Rahul Balaji For Respondents : Mr.P.Muthukumar Government Advocate O R D E R This writ petition has been filed by the petitioner challenging the notice issued by the third respondent in Tha.Ka.No.322/2002, dated 20.12.2002, issued under Section 47-A of the Indian Stamp Act, calling for an explanation from the petitioner as to why the additional stamp duty should not be levied in respect of the instrument, dated 22.11.2002, relating to the property situated at No.18, (Old No.58), Monteith Lane, Egmore, Chennai, which was conveyed to the petitioner by the Central Board of Direct Taxes, under Chapter 20(C) of the Income Tax Act. 2. The learned counsel appearing for the petitioner had contended that the letter issued by the third respondent, calling upon the petitioner to submit his explanation as to why he should not be charged with the deficit stamp duty, under Section 47-A of the Indian Stamp Act, as applicable to the State of Tamil Nadu, on the ground that the value declared in the sale deed is not the true and correct market value of the property, is arbitrary and illegal. 3. It has also been contended that the value of the property shown in the instrument is fraudulent and that it has been done only with the intention of evading the payment of stamp duty. The said notice issued by the third respondent is arbitrary, illegal and without application of mind and offending Article 14 of the Constitution of India. 4. It has also been contended that the third respondent has failed to appreciate that the vendor in the present case is the Government of India, represented by its duly authorised officer of the Central Board of Direct Taxes, Ministry of Finance and therefore, there is no reason as to why a doubt should be raised about the genuineness of the transaction. Further, the third respondent has failed to appreciate that the petitioner and three other persons were successful bidders in an auction held, on 10.12.1991, by the Income Tax Department for the sale of the property and that they had paid the entire sale consideration of Rs.45,25,000/-, on 8.1.1992 and that they were put in possession of the property, on 11.5.1992. https://hcservices.ecourts.gov.in/hcservices/ 5. It has also been contended that the execution and registration of the sale deed, is only a formality, when the sale of the property had been confirmed in favour of the petitioner and three other persons and when the possession of the said property had also been handed over to them. The delay in execution of the sale deed would not, ipso facto, be sufficient to invoke the proviso to Section 47-A of the Indian Stamp Act, as applicable to the State of Tamil Nadu, unless there is a fraudulent attempt on the part of the petitioner to under value of the property with a view to evade the stamp duty. The delay in execution and registration of the sale deed cannot be the sole determining factor for holding an enquiry, under Section 47-A of the Indian Stamp Act. The third respondent had failed to appreciate that there was no reason for the petitioner to have any wrongful intention of committing fraud by evading the payment of stamp duty. The third respondent had failed to apply his mind to the facts of the case and to appreciate that the authority seeking to conduct the enquiry, under Section 47-A of the Indian Stamp Act, must be prima facie satisfied that there is a reason to believe that the instrument has been undervalued, intentionally. There is nothing in the impugned notice to show that such an enquiry had taken place on application of mind, by the third respondent, to the facts and circumstances of the matter, before the impugned notice had been issued. 6. It has also been contended that the third respondent had erred in relying entirely on the guideline value of the property as on the date of the execution of the sale deed, even though the sale had been confirmed in favour of the petitioner and three other persons, on 18.12.1991 and the entire sale consideration had been paid, on 8.1.1992, and the said property had been put in joint possession of the petitioner and others, on 11.5.1992. Though the sale was initially confirmed by the sixth respondent in favour of the petitioner and three others, they had relinquished their rights in the property in favour of the petitioner. 7. It has also been contended that even though the fourth respondent had not released the document concerned, after duly registering the same, the third respondent is seeking to conduct an enquiry, under Section 47-A of the Indian Stamp Act, without following the procedures established thereunder and contrary to the various decisions of this Court, as well as the Supreme Court. In fact, Section 47-A of the Indian Stamp Act, contemplates the procedures wherein reasonable opportunity of being heard is to be granted to the concerned party before determining the market value of the property in question. It would be erroneous on the part of the third respondent to determine the market value of the property based on the prevailing guideline value and thereafter, to issue https://hcservices.ecourts.gov.in/hcservices/ notice asking the petitioner to pay the differential stamp duty, along with the interest thereon. Since the impugned notice is infringing the constitutional rights of the petitioner, guaranteed under Section 300(A) of the Constitution of India, the impugned notice is bad in law. 8. In the counter affidavit filed on behalf of the fourth respondent, it has been stated that Form I notice was issued to the petitioner by the Special Deputy Collector (Stamps), Chennai, under Section 47-A of the Indian Stamp Act, demanding the deficit stamp duty of Rs.12,82,814/-. The property in question is situated at No.18 (old No.58), Montieth Lane, Egmore, Chennai, and it was conveyed to the petitioner by the Central Board of Direct Taxes, under Chapter 20(C) of the Income Tax Act. The sale deed was presented before the Sub Registrar, Periamet, on 22.11.2002, and the same was registered after collecting the stamp duty of Rs.5,88,240/- and the sum of Rs.45,410/-, towards the registration charges. The sale consideration that was fixed in the year, 1991, by way of an auction sale, conducted by the Income Tax Department, on 10.12.1991, was Rs.45,45,000/-. Even though the auction was concluded, on 10.12.1991, the sale deed was executed by the Income Tax Department only on 22.11.2002, after a lapse of 10 years. As per the explanation to Section 47-A of the Indian Stamp Act, the stamp duty has to be charged on the market value prevailing on the date of the execution of the sale deed. Therefore, the sale consideration as fixed on the date of the auction, on 10.12.1991, cannot be considered as the market value on the date of the execution of the sale deed, which is on 22.11.2002. Therefore, Form I notice, under Section 47-A of the Indian Stamp Act, has been issued to the petitioner demanding the deficit stamp duty of Rs.12,82,814/-. 9. It has been further stated that the petitioner was also asked to submit his explanation to the Form-I notice, within 21 days from the date of the issue of the notice. The petitioner cannot claim exemption, under Section 47-A of the Indian Stamp Act, on the ground that the auction sale had been concluded 10 years back and that the sale consideration, as per the auction sale, should be taken as the market value of the property to determine the stamp duty. 10. The learned counsel appearing for the petitioner had relied on the decision of this Court in KRISHNAN M. Vs. THE DISTRICT COLLECTOR, ERODE DISTRICT (1998(III)CTC 366), wherein it has been held that the registering authority is a quasi judicial authority. It is the duty of the said authority to hold an enquiry to find out the correct valuation of the property sought to be registered. Such enquiry is to be completed before registering the instrument. The registering authority shall record reasons https://hcservices.ecourts.gov.in/hcservices/ following the enquiry and to refer the instrument to the Collector for determining the market value, if so warranted. The reasons should be recorded by the registering officer for believing that such instrument does not reflect the true market value. 11. The learned counsel appearing for the petitioner had also relied on the decision of the Division Bench of this Court in DISTRICT COLLECTOR, ERODE Vs. M.PONNUSAMY (2001 (2) CTC 449), wherein it was held that a document presented for registration should be registered after enquiring about the valuation of the property to be registered and if the Registering Officer has reason to believe that the document is undervalued, it shall be referred to the Collector for adjudication immediately after registration. 12. Per contra, the learned counsel appearing for the respondents had submitted that the stamp duty is payable on the market value of the property, as on the date of the execution of the sale deed and not on the market value, as on the date of the agreement of sale, relying on the decision of the Supreme Court in STATE OF RAJASTHAN Vs. KHANDAKA JAIN JEWELLERS (2008 (1) CTC 60). 13. In view of the submissions made by the learned counsels appearing for the parties concerned, this Court finds that there is no legal infirmity in the impugned notice, dated 20.12.2002, issued by the third respondent. The petitioner has not shown sufficient cause or reason for this Court to interfere with the impugned notice, at this stage. 14. From the decision cited by the learned counsel appearing for the respondents, it is clear that the market value of the property in question is to be determined as on the date of the registration of the sale deed and not as on the date of the agreement of sale. Even though the property in question might have been conveyed to the petitioner by the Central Board of Direct Taxes, under Chapter 20(C) of the Income Tax Act, the stamp duty would be calculated only on the market value of the property, as on the date of the registration of the sale deed, in accordance with Section 47-A of the Indian Stamp Act. However, it would be open to the petitioner to approach the third respondent with his objections, within four weeks from the date of receipt of a copy of this order. On such objections being made, the third respondent is to pass appropriate orders thereon, on merits and in accordance with law, within a period of eight weeks thereafter. https://hcservices.ecourts.gov.in/hcservices/ 15. With the above directions, the writ petition stands disposed of. Consequently, connected W.M.P.No.15530 of 2003, is closed. No costs. lan Sd/- Assistant Registrar / True Copy / Sub. Assistant Registrar To: 1. The Secretary to Government State of Tamil Nadu Revenue Department Secretariat, Fort St. George Chennai-600 009 2. The Inspector General of Registration (Tamil Nadu) Santhome, Chennai-600 004 3. The District Revenue officer (Stamps) Collectorate, Rajaji Salai Chennai-600 001 4. The Sub Registrar Periamet, Chennai-600 003 5. The Chief Commissioner of Income Tax (II) 121, Uthamar Gandhi Salai Nungambakkam, Chennai-600 034 6. The Assistant Commissioner (HQ)(Tech) 121, Uthamar Gandhi Salai Nungambakkam, Chennai-600 034 nsm (co) dv/11.12. W.P.No.709 of 2003 https://hcservices.ecourts.gov.in/hcservices/