Allahabad High Court: According interpretation to the term “true market value” of property under Indian Stamp Act, 1899 (Act) read with U.P. Stamp (Valuation of property) Rules, 1997 (Rules) for the purpose of levy of stamp duty, the Court held that market value is the price which a property would fetch or would have fetched if sold in an open market, by a willing seller, uninfluenced by the needs of the buyer. Court further held that under Section 47-A of the Act, it is the statutory duty of the collector to determine the correct market value of the property on receipt of a reference by registering authority when the minimum value of the property set by the authorities is more than the value of the property provided in the sale deed or suo moto and Rule 7 of the Rules provide the procedure for the same. In the instant case, Assistant Commissioner marked the petitioner’s land as ‘residential’ on the date of execution of sale deed and according to the applicable circle rate mechanically determined the stamp duty payable without actually calculating its true market value of the property, on this issue Court held that circle rate does not constitute the conclusive evidence of true market value of the property and it is only a guiding factor.
ALLAHABAD HIGH COURT
Decided on April 29th, 2014
Case :- WRIT - C No. - 24290 of 2014
Shyan Ali v State Of U.P. And 3 Ors.
Hon'ble Sudhir Agarwal,J.
1. With the consent of learned counsel for the parties, I proceed to decide this matter, finally, at this stage, under the Rules of the Court since the respondents do not propose to file any counter affidavit and have made their oral submissions.
2. It is contended that there is no exercise of power of determination of "true market value" by Assistant Commissioner and there is complete defiance of procedure laid down under Section 47-A of Indian Stamp Act, 1899 (hereinafter referred to as "Act, 1899) read with U.P. Stamp (Valuation of Property) Rules, 1997 (hereinafter referred to as "Rules, 1997") therefore, impugned orders are patently illegal.
3. A bare perusal of order passed by Assistant Commissioner shows that after referring to stipulations made in sale deed as also reference order of Sub-Registrar, he has simply recorded a conclusion that land in dispute was 'residential' on the date of execution of sale deed and therefore, as per circle rate applicable to residential land, stamp duty is payable and in a mechanical way has determined stamp duty and its deficiency and imposed penalty also. A copy of Khasra is on record showing that land in question is recorded therein as an agricultural land and not residential, as stated by Assistant Commissioner. Even otherwise, it has not considered question as to what should be "true market value" in accordance with procedure laid down in Section 47-A read with Rules, 1997 and virtually, impugned order is wholly unreasoned and non speaking order.
4. Learned Standing Counsel when required to show as to in which part of impugned order the authority concerned has determined "true market value" of the property in question, he failed to point out and said that in the order, no such finding has been recorded.
5. The question, as to what would be a market value came to be considered by a Division Bench of this Court in Kaka Singh Vs. Additional Collector & District Magistrate (F & R), AIR 1986 All. 107 and it 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, is 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."
6. With regard to procedure for determining market value and the relevant provisions the situation was slightly different upto 1997 but thereafter the legislature has made certain attempt to lay down guidelines for Revenue to determine market value.
7. Under Section 47-A of the Act the obligation is on Collector to find out correct market value of property which is alleged to have not been mentioned in the instrument. For the purpose of determining market value no machinery as such is provided in statutory provisions. However, a procedure has now been provided vide Rules, 1997 in accordance whereto the Collector would determine market value. Rule 7 thereof reads as under:
"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."
8. 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, 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. It further says, 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 instrument, the registering authority shall refer instrument to Collector for determination of market value of the property and the proper duty payable thereon and when Collector determines market value of the property, thereafter the parties shall proceed accordingly. A market value of the property, in all cases not necessarily be higher than the alleged minimum value determined under the rules by the concerned authority. However, circle rate is only a kind of guideline provided for the purpose of considering whether the proper stamp duty is paid by setting forth true market value of property in question, in the instrument. The entire object of legislature, evident from various provisions of the Act, is to require parties concerned to set forth correct market value of property, at which transaction has taken place, so that appropriate duty in accordance with the Act is paid by them. The duty is chargeable with reference to "market value". A vigilant vendor, in normal circumstances, would part away his immovable property on a consideration which would fetch him the best available price in the market and that is the concept of "market value". The various provisions with respect to minimum value etc. are only in aid and assistance of authorities to find out the true amount of consideration on which parties have entered into transaction so that the correct duty is collected therefrom.
9. 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. It is not necessary that when such a reference is made, necessarily and in all cases, the value set forth in the instrument would not be a market value of the property in question. 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 Vs. State of U.P. and another, 2005(98) RD 511 has also taken the same view and has said:
"15. 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)."
10. 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) with which I entirely agree and, therefore, is of the view that 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. This is what has been said in Hajari Lal Sahu Vs. State of U.P. and others, 2004 (96) RD 368 and Aniruddha Kumar and another Vs. C.C.R.A., U.P. and another, 2000(91) 566 with which also this Court is in entire agreement.
11. A perusal of Rule 7 would show that it does not talk of the circle rate so as to constitute a conclusive evidence of correct market value. In fact under Rule 7 there is no reference of circle rate at all. At the best it may be an indicator but not the sole basis so as to conclude on the question of market value. This Court also having considered the above aspects and 1997 Rules in Civil Misc. Writ Petition No. 1637 of 2005, Anil Kumar and another Vs. State of U.P. and others, decided on 22.02.2008 observed as under:
"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."
12. It is thus clear that circle rate by itself does not provide a true market value of the property, which is subject matter of instrument. It is only a guiding factor. In the present case impugned orders have been passed only referring to the circle rate treating the market value at par with circle rate. Proceedings in question show a complete non-application of mind on the part of authorities. Such proceedings are nothing but amounts to a sheer harassment to public at large and in particular the person who actually suffers due to such whimsical orders passed by authorities. A serious statutory duty has been cast upon respondents but instead of doing justice with their statutory requirement, in a totally indiscreet, left or right manner, the authorities are passing unmindful, arbitrary orders, whereby not only large public is being harassed but it also results in burdening the Courts though such litigation otherwise could have been avoided.
13. In view of above, I am clearly of the view that the orders impugned in this writ petition deserves to be quashed.
14. The writ petition is allowed. Impugned orders dated 09.05.2013 and 27.12.2013 are hereby quashed. The matter is remanded to the respondent no.4 to pass a fresh order in the light of the observations made above and in accordance with law.
Order Date :- 29.4.2014
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