IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE TWENTY FIFTH DAY OF MARCH TWO THOUSAND AND NINE PRESENT THE HON'BLE MR JUSTICE G.CHANDRAIAH WRIT PETITION NO : 8761 of 2001 Between: Smt. Shrawanthi Reddy W/o C.H.Sudhakar Reddy Rep. by her G.P.A. Pramadoni Reddy, H.No.8-2-704/B/1/6, Road No.12, Banjara Hills, Hyderabad. ..... PETITIONER AND 1 The Deputy Collector Flying Squad Zone VI, 6th Floor, Chandra Vihar, M.J. Road, Nampally, Opp. Exhibition Grounds, Hyderabad. 2 The District Registrar Ranga Reddy District. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue a writ, or direction more particularly one in the nature of a Writ of Mandamus declare the action of the first Respondent in intiating proceedings in FS/105/2000 dt. 9-1-2001 followed by proceedings dt. 8-3-2001 has being illegal, arbitrary, unconstitutional and without jurisdiction and contrary to that provisions of Indian Stamp Act and set aside the same and pass Counsel for the Petitioner:MR.S.NIRANJAN REDDY Counsel for the Respondent No.: GP FOR REVENUE THE HON’BLE SRI JUSTICE G.CHANDRAIAH WRIT PETITION No.8761 of 2001 ORDER : The subject matter arises under the provisions of the Indian Stamp Act, 1899. The writ petition is filed seeking for issue of writ of mandamus declaring the action of the 1st respondent in initiating the proceedings in FS/105/2000, dated 09.01.2001 followed by the proceedings dated 08.03.2001 as being illegal, arbitrary, unconstitutional and without jurisdiction and contrary to the provisions of Indian Stamp Act and set aside the same. 2. The case of the petitioner is that by a conveyance deed dated 03.11.2000 he had purchased a plot bearing No.39, in survey No.1, 3, 41/2, 67 and 68 admeasuring 450 Sq. yds situated at Khanammet village, Seri Lingampally Mandal and Municipality for a total sale consideration of Rs.2,25,000/- at the rate of Rs.500/- per square yard. The document was duly presented for registration before the office of the District Registrar, Rangareddy District. The valuation paid by the petitioner was not acceptable to the Registering Authority, the Registering Authority insisted on an adoption of a total sale consideration of Rs.4,05,000/- at the rate of Rs.900/- per sq.yard rate which was allegedly based on the Basic Value Register, prepared by the respondent in accordance with the guidelines issued by the Government. Though the sale consideration was only Rs.500/- per sq.yard, totaling Rs.2,25,000/- the petitioner in order to avoid any delay and inconvenience, accepted the rates suggested by the Registering Authority, functioning under Section 47-A of the Indian Stamp Act. On adopting such value and paying the necessary Stamp duty thereon, the sale deed of the petitioner was duly registered as document No.8438 of 2000 of book 1 of the Registering Officer, R.R.District. The said document was then returned to the petitioner who has since been continuing as the registered owner of the property. 3. While so the first respondent issued a notice in FS/105/2000 to the petitioner stating that the prevalent market value was actually Rs.1,200/- per sq. yard and that the petitioner ought to have paid a stamp duty on a total sum of Rs.5.4 lakhs and the petitioner was directed to pay deficit stamp duty of Rs.15,525/- apart from penalty of Rs.10,000/- alleging that the petitioner violated the provisions of Section 27 and Section 64 of the Indian Stamp Act. The 1st respondent threatened to initiate prosecution against the petitioner under Section 70 of the Act. Thereafter, the petitioner was directed to appear before the first respondent on 20.01.2001 and submit her objections. It is the case of the petitioner that the said notice is without jurisdiction and without authority of law. It is also stated that the 1st respondent was also not correct in asking the petitioner to pay the stamp duty as per the basic value register in spite of the fact that the petitioner submitted her objections before the 1st respondent contending that the valuation was only Rs.500/- per sq. yard and that the rate of Rs.900/- per sq. yard was adopted as suggested by the registering officer as per the basic value register. It is also the case of the petitioner that without considering the case of the petitioner in a proper perspective and without even adverting to the same, the 1st respondent has issued the final notice in FS/105/2000, dated 08.03.2001, which was received by the petitioner on 17.04.2001, once again directing the petitioner to pay the required stamp duty on pain of prosecution. Therefore, it is his case that the said show-cause notice as well as the final notice is without jurisdiction and without authority. 4. The 1st respondent filed a counter and stated in the counter affidavit that he was appointed as an authorized officer to conduct the Post Facto Inspection of the property registered. After the inspection of the property, it was noticed that the property in question is on the prime locality, situated on the main road which having commercial potentiality and the market value per square yard is at the rate of Rs.1,200/- and the total market value of the property was arrived at Rs.5,40,000/-. Therefore, a notice was given to the petitioner as required under Rule 4(B) of Andhra Pradesh Stamps (Prevention of Under Valuation) Rules, 1998. As the property was under-valued, the Authorized Officer is empowered to deal the matter as required under Sections 27, 41 and 64 of the Indian Stamp Act II of 1899. It is also stated that by virtue of G.O.Ms. No.34, Revenue (Registration) Department, dated 08.01.1999 the Government made the Rules for conducting of spot inspection of the properties, called “The Andhra Pradesh Stamps (Inspection of Properties) Rules, 1998”. As per Rule 2 of the said rules, the Inspector General of Stamps and Registration is competent to authorize any officer under his control to conduct Spot Inspection of any property registered under the provisions of the Registration Act, 1908 for the purpose of ensuing compliance with the provisions of Section 27 of the Indian Stamp Act and to assess the value of the property. In the instant case, the Inspector General of Registration and Stamps has authorized the 1st respondent vide his circular Memo No.MV2/22407/1998, dated 22.11.1999 to conduct the Post Fact Inspection of the properties registered at Joint Sub-Registrar-I, RO (OB), Rangareddy District in the month of November, 2000 and accordingly the 1st respondent who is a competent authority had conducted the inspection and consequently, issued the impugned notice. In the counter affidavit that the averments made by the petitioner in questioning the validity of the impugned notice were denied and further stated that the impugned notices have been issued by a competent authority, after due inspection of the site in question and after noticing that it was under- valued and that the Government is put to loss financially. Therefore, the action initiated against the petitioner is in accordance with law and the writ petition is liable to be dismissed. 5. The learned Counsel for the petitioner submits that the impugned notice as well as the final notice stated to have been issued while exercising the powers under Section 47 A of the Act is contrary to the very same provision, because the procedure contemplated in the said provision and the relevant rules have not been followed by the authority. Therefore, the final notice is illegal. He also submits that the authorities though mentioned in the final notice that there was a spot inspection before initiation of the proceedings, no such spot inspection was done and the petitioner had no knowledge and therefore, the impugned notice is contrary to the statutory and mandatory provisions and rules made thereunder. He also submits that for issuing the initial notice as well as the final notice, the basic value register has been taken into consideration, which does not have a legal sanctity. Therefore, the whole initiation of the proceedings is misconceived and without jurisdiction. He also submits that assuming for a moment that the values mentioned in the basic value register is correct and once the petitioner paid the stamp duty more than the 50% of the value mentioned in the basic value register, it is not permissible for the authorities to issue impugned notice on the ground that the transaction is undervalued. Therefore, it does not constitute an offence under Section 64 of the Indian Stamp Act. 6. In support of his contention, he relied upon the Judgment referred in M/s.Sagar Cements Ltd., Mattampalle, represented by its Managing Director, V.Butchaiah Chowdary, Vs. State of Andhra Pradesh represented by its Secretary, G.A.D and others[1], Jawajee nagnatham, Appellant, Vs. Revenue Divisional Officer, Adilabad, A.P and others, Respondents[2] a n d State of Punjab and others, Appellants, Vs. Mohabir Singh and others, Respondents[3] 7. He also submits that though under the provisions of the Act an alternative remedy is provided by way of filing an appeal against the impugned notices to the Collector, as the authorities did not follow the relevant provision as provided under the statute, the Writ Petition is filed. He further submits that after filing writ petition, since so much of time has been elapsed, again driving the petitioner to the appellate authority on the ground that the statute provides the alternate remedy is not justifiable. Therefore, he submits that the writ petition is maintainable and the same is to be allowed and the impugned order is liable to be set aside. 8. The learned Assistant Government pleader appearing for the respondent, reiterating the stand taken by the 1st respondent in its counter, submitted that the writ petition is not maintainable for the reason that the Act contemplates the alternative remedy. He submits that in the instant case, the impugned final notice has been issued by the Deputy Collector and aggrieved by which the appeal lies to the City Civil Court as contemplated under Sub-Section 4 of Section 47-A of the Act. He further submits that the 1st respondent pursuant to the inspection done by him had detected that stamp duty paid by the petitioner is lesser than the value mentioned in basic value register. For which the petitioner was put to notice asking him to pay the required stamp duty, but the petitioner did not comply with the said notice. Therefore, the value determined by the 1st respondent has become final and the same is a question of fact, cannot be gone into by this Court under Article 226 of Constitution of India. Therefore, the writ petition is not maintainable and liable to be dismissed. In support of his contention, he relied a judgment made in between K.Upender and another Vs. State of A.P and others[4]. 9. Further in support of his contention that, the writ petition is not maintainable on the ground that, the writ petition is filed against the notice, he relied in Special Director and another, appellants, Vs.Mohd. Ghulam Ghouse and another, Respondents[5]. 10. Having regard to the facts and circumstances of the case and the averments made in the counter affidavit filed by the respondent and also the submissions made by the learned Counsel for the petitioner as well as the Assistant Government Pleader for the respondent, what is to be determined is whether the impugned final show-cause notice dated 08.03.2001 issued by the 1st respondent is legal and in accordance with law or not. 11. The petitioner had purchased a house site by way of a conveyance deed dated 03.11.2000 in respect of plot bearing No.39 in Survey No.1, 3, 41/2, 67 and 68 admeasuring 450 sq. yards situated at Khanammet village, Serilingampally Mandal and Municipality for a total sale consideration of Rs.4,05,000/- at the rate of Rs.900/- per sq. yard. The contention of the respondent is that the prevailing market value was actually Rs.1,200/- per sq. yard and therefore, the petitioner ought to have paid the stamp duty on the total sum of Rs.5,40,000/- which he could not pay. Therefore, he was asked to pay the deficit stamp duty of Rs.15,525/- apart from the penalty of Rs.10,000/- as he violated the provisions under Section 27 of the Indian Stamp Act. Section 47-A of the Act deals with the Instruments of conveyance etc., under-valued. It says that where the Registering Officer appointed under the Registration Act, 1908(Central Act 16 of 1908), will registering any instrument of conveyance, exchange, gift, partition, settlement, release, agreement relating to construction, development or sale of any immoveable property or power of attorney given for sale, development of immoveable property has reason to believe that the market value of the property which is the subject matter of such instrument has not been truly setforth in the instrument, or that the value arrived at by him as per the guidelines prepared or caused to be prepared by the Government from time to time has not been adopted by the parties, he may keep pending such instrument and refer the matter to the Collector for determination of the market value of the property and the proper duty payable thereon. Provided that no reference shall be made by the registering officer unless an amount equivalent to 50% of the deficit duty arrived at by him is deposited by the party concerned. 12. Sub-Section 3 of the said Section contemplates that the Collector may suo motu within two years from the date of registration of such instrument, not already referred to him under Sub-Section(1), 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 matter of such instrument and the 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 as aforesaid in accordance with the procedure provided for in sub-section(2). The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty. 13. Therefore, as per Section 47-A, if the registering officer has reason to believe that the market value is not correctly set forth in the instrument, he may refer the matter to the Collector for determination and as per Sub-Section 3 of Section 47-A, the Collector suo motu by following the procedure contemplated under Sub-Section 2, determine the market value and duty. Then, the party shall pay the difference amount of duty. 14. In the instant case, the alleged under-valuation came to the light on inspection. 15. At this juncture, it is necessary to see the G.O.Ms. No.34 Revenue (Registration) Department, dated 08.01.1999, which contemplates the rules known as The Andhra Pradesh Stamps (Inspection of Properties) Rules, 1998. Rule-2 of the said rules contemplate that the Inspector General of Stamps and Registration may, by order, authorize any officer under his control to conduct inspection of any property, or a class or category of properties registered under the provisions of the Registration Act, 1908 for the purpose of ensuing compliance with provisions of Section 27 of the said Act and to assess the value of the property. Rule 3 contemplates that the officer so authorized shall complete the inspections entrusted to him within such period as may be specified and assess the value of the properties with reference to the market value prevailing and the construction rates prescribed in accordance with the Andhra Pradesh Revision of Market Value Guidelines Rules, 1998. Rule-4 contemplates that the action to be taken, due to wrong assessment and suppression of facts. If the authorized officer detects any deficit duty payable in respect of any instrument, a) Due to wrong assessment either the value or the duty payable, by the Registering Officer, he shall deal with such cases under the provisions of Section 41-A of the Indian Stamp Act, 1899, b) Due to suppression of facts affecting the chargeability of the instrument, the authorized officer shall issue notice, in such form as may be prescribed to the person concerned within fifteen(15) days from the date of inspection giving an opportunity to explain the reasons for the variation. 16. Section 5 contemplates the compounding of offence. (1) If the person to whom a notice has been issued under Rule 4(b) gives a consent in writing to get the offence compounded, the authorized officer shall levy and collect compounding fee, which shall, in no case, be less than the loss of revenue involved, within three months from the date of inspection and make necessary endorsement on the original instrument in such form as may be prescribed. The authorized officer shall forward a copy of the proceedings determining the value of the property and levying compounding fee to the registering officer concerned for making necessary entries in the relevant registers and records. (2) If compounding fee levied under Sub-Rule 5(1) is not paid within the stipulated period, it shall be recovered under the provisions of Section 48 of Indian Stamp Act, 1899, (3) If the person to whom notice has been issued under Rule 4(b), does not respond or agree to the assessment of the value and the deficit amount determined by the authorized officer, the authorized officer shall launch prosecution under the provisions of Section 64 based on the facts and circumstances required under Section 27 of the Indian Stamp Act, 1899. 17. Further the Government also issued rules relating to the cases of under-valuation of the instruments which are called as the A.P. Stamp (Prevention of Under-valuation of Instruments) Rules, 1975 which have been framed under G.O.Ms.No.1031, Revenue(U-2), dated 31st July, 1975. Wherein Rule-4 contemplates the procedure to be adopted by the competent authority on receipt of a reference under Sub Section (1) of Section 47-A of the Act. Rule-5 contemplates the principles for the determination of the market value or consideration. Rule 5 (b) (i) to (viii) contemplates the elements to be taken into consideration for arriving at the determination of the market value. It contemplates that in the case of house sites the following aspects have to be taken into consideration. i) The general value of house sites in the locality; ii) Nearness of roads, railway station, bus route; iii) Nearness to market, shops and the like; iv) Amenities available in the place like public offices, hospitals and educational institutions; v) Development activities, industrial improvements in the activity; vi) Land tax and valuation of sites with reference to taxation record of the local authorities concerned; vii) Any other features having a special bearing on the valuation of the site; and viii) Any special features of the case represented by the parties. 18. In the instant case, the main contention of the petitioner is that i) the procedure contemplated under the provisions of law and rules made thereunder has not been followed, ii) the determination of the value of the site based on the basic value register is not proper iii) the authority has registered the instrument without any objection since the petitioner has agreed to adopt the value fixed by the officer concerned, iv) the transaction had become final and there was no reason why for initiating further proceedings in him by exercising the power under Section 47-A of the Act. v) Therefore, the whole exercise being done by the authorities is illegal and without jurisdiction. 19. The respondents submitted in their counter that the petitioner has purchased the site for a total consideration of Rs.2,25,000/- at the rate of Rs.500/- per sq. yard and the registering authorities have registered the sale deed for a total consideration of Rs.4,05,000/- i.e., at the rate of Rs.900/- per sq. yard, instead of Rs.1,200/- per sq. yard. The 1st respondent, having regard to the facts and circumstances of the case and after noticing the fact that the transaction was undervalued, was appointed as an authorized officer to conduct the Post Facto inspection of the property registered and after inspection of the property, it was noticed that the property in question is in a prime locality, situated on the main road, which is having a commercial potentiality and the market value is Rs.1,200/- per sq. yard. The total market value of the property is arrived at Rs.5,40,000/-. Therefore, the notice was given to the petitioner as required under Section 4(b) of the A.P. Stamp (Prevention of undervaluation of Instruments) Rules, 1975, as the property was undervalued and the authorized officer is empowered to deal with the matter under Section 27, 41 and 64 of the Indian Stamp Act, 1899. 20. The above provisions and G.Os are referred to, to note that a statute procedure has been prescribed for collection of deficit stamp duty. Therefore, it is necessary to examine whether such procedure has been followed. The impugned notice reads as follows: “The market value of the above property basing on the facts and circumstances of the case revealed during the inspection works out to Rs.5.40 lakhs (Rupees Five lakhs forty thousand only). Hence, there is a deficit stamp duty in respect of the above said document which was provisionally determined as Rs.4,05 lakhs the deficit stamp duty determined as Rs.15,525/- apart from penalty upto Rs.10,000/-. You have not set forth the facts and circumstances effecting chargeability of the instrument as required under section 27 of Indian Stamp Act 1899. Thus, you have committed the offence of under- valuation by suppression of facts which is punishable under Section 64 of Indian Stamp Act. You are hereby required to appear before the undersigned on 20.01.2001 at 11.00 A.M. to putforth your objections if any in this regard. You are also informed that you may give your consent in writing (in the proforma enclosed) to pay a compounding fee as determined by the undersigned to get offence compounded under section 70(2) of Indian Stamp Act and stay prosecution under section 70(1) of Indian Stamp Act, in the matter”. 21. Further, the final notice No.FS/105/2000, dated 08.03.2001, which reads as under. “Please take the notice that during the course of spot Inspection of the property dealt with in document No.8438/2000 of Book-I of registered at Sub-Registrar, certain variations were noticed. Therefore, a notice dated 09.01.2001 has been issued under Section 27 of Indian Stamp Act furnishing the details of certain variations and the Market value worked out along with the loss of revenue to the Government was sent to you with a request that you may get the offence of under-valuation compounded by paying the Compounding Fee as determined by the undersigned, for suppression of facts which is punishable under Section 64 of Indian Stamp Act and you were given time upto 20.01.2001 to appear before the undersigned to putforth your objections if any or to deposit the deficit stamp duty, registration fee and the penalty as shown in the notice. But till today you have not turned up and you have not given your consent for payment of the compounding fee and penalty or otherwise. Further you are informed that under section 82(a) of Indian Stamp Act, whoever intentionally makes any false statement is punishable with imprisonment for a term which may extent to seven(7) years or with a fine or both. The filing of false Annexure-1A, form duly signed by both the executant and the claimant comes under purview of this section including witnesses of the document. Objection petition dt.12.02.2001 is considered and rejected as there are no cogent reasons to accept the same. Therefore, you are once again given another last chance i.e., further time of one week to appear before the undersigned and get the offence compounded by paying the deficit Stamp duty together with compounding fee and penalty, otherwise prosecution will be launched against you and all other concerned persons under Section 64 of Indian Stamp Act.” 22. From a reading of the above notices, it could be seen that the petitioner is informed that during the course of spot inspection of the properties dealt with in document No.8438 of 2000 of Book-I, certain variations were noticed. Therefore a notice