provisions of Section 2(d) of the said Act to determine the
date on which the instrument in question became chargeable
under the said Act. The provisions of Section 2(d) of the said
Act are clear inasmuch as the relevant date when the
instrument becomes chargeable is the date of its execution.
In ITC Limited & another (supra), the learned Single Judge
while considering the provisions of Section 2(d) of the said
Act in para 10 held as under :-
“10. From the aforesaid two definitions of the
expression, ‘chargeable’ and ‘duly stamped’, it
is clear that the stamp duty chargeable on an
instrument is the duty chargeable in
accordance with law in force in the State at the
time of execution of such instrument. The
chargeability of instrument starts at the time of
its execution in the State.”
In the case in hand, the document was executed on
27-03-1981 and registered on 30-03-1981. Thus, in terms of
provisions of Section 2(d) of the said Act the deed of
conveyance became 'chargeable’ on 27-03-1981. It will,
therefore, have to be determined as to whether the said
instrument was ‘chargeable' under the provisions of Section
25 of the said Act as it stood on 27-03-1981.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH NAGPUR.
WRIT PETITION NO.6069 OF 2005
Universal Ferro & Allied Chemicals Limited, Vs The Deputy InspectorGeneral of Registration & Deputy Controller of Stamps
Nagpur.
CORAM: A. S. CHANDURKAR J.
Dated : SEPTEMBER 24 & 25, 2014.
Citation;2015(2) MHLJ 152
the Constitution of India challenges the order dated
09.09.2005 passed by the Appellate Authority-respondent No.
1 in proceedings under Section 32B of the Bombay Stamp
Act, 1948 (for short the said Act) By aforesaid order the
appeal filed by the petitioner came to be partly allowed but
the petitioner was directed to pay deficit stamp duty of
Rs. 11,64,180/-.
2] The petitioner is a company incorporated under the
Companies Act, 1956. On 27.03.1981 a Deed of Conveyance
was entered into between Uniferro International Limited and
the petitioner company. As per aforesaid deed, various lands
mentioned in Schedule to said deed of conveyance were
transferred by way of sale to the petitioner company. In the
deed of conveyance it was mentioned that the vendors-
Uniferro International Limited had created a mortgage/charge
on the lands described in First Schedule in favour of various
nationalised banks. The said deed of conveyance was duly
registered on 30.03.1981. The value of the properties that
where subject matter of said deed of conveyance was shown
to be Rs. 68,40,328.16. On 03.07.1985 a notice was issued
by the Collector of Stamps, Bhandara to the vendors in which
it was stated that there was deficit stamp duty for amount of
Rs.11,63,580/- in relation to the aforesaid deed of
conveyance. Thereafter, on 15.07.1985 another notice was
issued in which it was stated that the instrument in question
was chargeable with duty under Section 25 of the said Act. It
was stated that the party should appear before the Collector
of Stamps Bhandara in that regard. The vendor replied to
aforesaid notice by communication dated 23.08.1985 and
pointed out that provisions of Section 25 of the said Act were
not attracted to the facts of the case as the properties in
question were not transferred to a mortgagee. An additional
reply dated 10.10.1985 was also submitted to the Collector of
Stamps, Bhandara giving various details to demonstrate that
liability under Section 25 of the said Act was not attracted.
3] It appears that there after on 14.03.1989 the
Collector of Stamps, Bhandara issued a communication to the
petitioner calling upon it to furnish copies of its balance
sheets for the years 1980-81 to 1984-85. On 14.03.1989, a
notice was issued to the petitioner-Company as regards
hearing of the proceedings on 27.03.1989. Hearing as
scheduled did not take place on said date. On 05.02.1992
another notice was issued by the Collector of Stamps to the
petitioner stating therein that in the Local Audit Report for
the year 1982, it was noticed that the deed of conveyance
executed on 27.03.1981 had been deficiently stamped. The
petitioner was therefore again called upon to submit its say in
the matter. Reply thereto was submitted on 18.02.1992. It
appears that without adjudicating the issue, the Collector of
Stamps had made a demand for a sum of Rs. 11,63,580/-
from the petitioner. The aforesaid action was challenged by
the petitioner in Writ Petition no. 3188 of 1995. By judgment
dated 09.02.1998, the demand notices were set aside and
the Collector of Stamps was directed to proceed on the basis
of show cause notice dated 05.02.1992.
4] Thereafter, the petitioner filed additional reply
raising various grounds including the grounds as regards nonapplicability
of Section 25 of the said Act, that the
proceedings were barred by limitation as well as the validity
of exercise of power under Section 33 of the said Act. On
06.06.1998 the Collector of Stamps passed an order holding
that the petitioner was liable to pay a sum of Rs.61,69,090/-
towards stamp duty and registration fee. The aforesaid order
was challenged by the petitioner in Writ Petition No. 1826 of
1999. On 09.07.2001 the Writ Petition came to be dismissed
as the petitioner sought to prefer appeal under Section 32B
of the said Act.
Thereafter, the petitioner filed appeal under Section
32(D) of the said Act challenging the order dated 06.06.1998.
It is in said appeal that the respondent no.1 held that the
petitioner was liable to pay an amount of Rs. 11,64,180.00
towards deficit duty. As stated above, the said order has been
challenged in the present Writ Petition.
5] Shri A.S. Jaiswal, learned Senior Counsel with Shri
H.N. Verma, learned counsel appearing for the petitioner
submitted that provisions of Section 25 as they stood on the
date when the deed of conveyance was executed were not at
all attracted in the facts of the present case. It was submitted
that the provisions of Section 25 have been amended by
Maharashtra Act No. XXVII of 1985 and the impugned demand
was made under the amended provisions of Section 25.
Relying upon the provisions of Section 2(d) of the said Act, it
was urged that the liability to pay stamp duty would arise on
the date when such instrument or document was executed.
He, therefore, submitted that the provisions of Section 25 as
were prevailing on 27.03.1981 ought to have been taken into
account by the authorities. He submitted that this ground was
specifically raised in the reply to the show cause notice as
well as in the appeal preferred by petitioner before
respondent no.1. However, the consideration thereof was
contrary to law. It was further submitted that even if it was
assumed that the instrument in question was chargeable and
stamp duty in terms of Section 25 of the said Act was
payable, in view of provisions of Section 32-A(5) of the said
Act, the limitation prescribed was 6 years and as the show
cause notice was issued on 05.06.1992, the jurisdiction in
that regard had been exercised beyond the prescribed
period of time. It was then submitted that on the basis of an
audit objection, the demand for deficit stamp duty had been
raised. He submitted that such course was not permissible in
view of provisions of Section 33 of the said Act. As said
instrument was not produced before any authority that could
receive evidence, the issue as regards deficiency of stamp
duty could not have been gone into by seeking to impound
the document. The learned Senior Counsel relied upon the
decision of learned Single judge in ITC Limited & another Vs.
The State of Maharashtra & others 1997(4) Bom. C. R. 536, for
the proposition that the time of execution of a document was
relevant in the context of its chargeability. Reliance was also
placed upon the judgment of the Division Bench in the case
of Nirmala Manherlal Shah Vs. State of Maharashtra and
others reported in 2005(3) Maharashtra Law Journal 829, as
regards scope of jurisdiction under Section 33 of the said Act.
It was, therefore, submitted that the impugned order passed
by respondent no.1 was required to be set aside as same was
not in accordance with provisions of the said Act.
6] Shri H.D. Dubey, the learned Assistant Government
Pleader appearing for the respondents on the other hand
opposed the petition and submitted that the respondent no.2
had rightly initiated aforesaid proceedings by relying upon
provisions of Section 25 of the said Act. He submitted that
under Section 25 of the said Act, only certain concession was
granted in case any property subject to mortgage was
transferred to the mortgagee. In the present case as there
was transfer in favour of third party i.e. the petitioner, it was
liable to pay stamp duty. Hence the proceedings initiated in
that regard were in accordance with law. It was further
submitted that during the course of audit when it was
noticed that there was deficiency in the amount of stamp
duty paid, necessary steps in terms of Section 33 of the said
Act were taken. He submitted that all the grounds raised by
the petitioner in its appeal were duly considered by the
respondent no.1 and accordingly the petitioner had been
called upon to pay deficit stamp duty. He, therefore,
submitted that there was no merit in the Writ petition and the
same was liable to be dismissed.
7] The basic issue that arises for consideration is
whether the petitioner was liable to pay stamp duty under
Section 25 of the said Act as it stood on 27.03.1981. The
proceedings in that regard were initiated on the basis of the
notice dated 03.07.1985 and 15.07.1985. In aforesaid notices,
it has been mentioned that the deed of conveyance was
chargeable with stamp duty under Section 25 of the said Act.
The provisions of Section 25 of the said Act as were on the
statute when the deed of conveyance was executed on
27.03.1981 read as under:
“25. Where any property subject to a
mortgage is transferred to the mortgagee, he
shall be entitled to deduct from the duty
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9 wp6069.05
payable on the transfer, the amount of any
duty already paid in respect of the
mortgage.”
It may be noted that aforesaid Section 25 was brought on the
statute book in view of its amendment by Maharashtra Act
No. XVI of 1979. It may also be noted that provisions of
Section 25 were thereafter again amended by Maharashtra
Act No. XXVII of 1985 and provisions of said Section as
amended read as under:
“25. Where any property is
transferred to any person-
(a) in consideration, wholly or in part,
of any debt due to him; or
(b) subject either certainly or
contingently to the payment or transfer (to him
or any other person) of any money or stock,
whether being or constituting a charge or
incumbrance upon the property or not,
such debt, money or stock; shall be deemed to
be the whole or part, as the case may be, of
the consideration in respect whereof the
transfer is chargeable with ad valorem duty:
Provided that, nothing in this section shall
apply to any such certificate of sale as is
mentioned in Article 16 of Schedule I. “
8] Thus, on perusal of provision of Section 25 of the
said Act as were prevailing when the deed of conveyance was
executed on 27.03.1981 indicate that where a property
subject to mortgage is transferred to the mortgagee, then the
mortgagee shall be entitled to deduct from the duty payable
on said transfer the amount of duty already paid in respect of
the mortgage. Section 25 as amended by Maharashtra Act
No. 27 of 1985 provides that where property is transferred to
the person in consideration of any debt due to him or subject
to any other contingency then such debt, money or stock
shall be deemed to be the whole or part of the consideration
and the transfer would be chargeable with ad valorem duty.
9] In this regard, it would be necessary to refer to the
provisions of Section 2(d) of the said Act to determine the
date on which the instrument in question became chargeable
under the said Act. The provisions of Section 2(d) of the said
Act are clear inasmuch as the relevant date when the
instrument becomes chargeable is the date of its execution.
In ITC Limited & another (supra), the learned Single Judge
while considering the provisions of Section 2(d) of the said
Act in para 10 held as under :-
“10. From the aforesaid two definitions of the
expression, ‘chargeable’ and ‘duly stamped’, it
is clear that the stamp duty chargeable on an
instrument is the duty chargeable in
accordance with law in force in the State at the
time of execution of such instrument. The
chargeability of instrument starts at the time of
its execution in the State.”
In the case in hand, the document was executed on
27-03-1981 and registered on 30-03-1981. Thus, in terms of
provisions of Section 2(d) of the said Act the deed of
conveyance became 'chargeable’ on 27-03-1981. It will,
therefore, have to be determined as to whether the said
instrument was ‘chargeable' under the provisions of Section
25 of the said Act as it stood on 27-03-1981.
10] As stated above, the respondents have proceeded to
initiate action against the petitioner on the ground that the
instrument in question was not sufficiently stamped in terms
of Section 25 of the said Act. This is clear on perusal of
notice dated 15-07-1985 issued by the Collector of Stamps.
The impugned order passed by respondent no.1 specifically
refers to the liability of the petitioner to pay deficit stamp
duty in terms of Section 25 of the said Act. Thus, once it is
clear that the proceedings have been initiated on account of
the instrument in question being deficiently stamped under
Section 25 of the said Act, it would be necessary to examine
whether the provisions of Section 25 of the said Act were
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attracted or not when the said instrument was executed on
27-03-1981.
11] It is not in dispute that the deed of conveyance seeks
transfer by way of sale various lands referred to in the
Schedule to the petitioner. It is further not in dispute that
said lands were subject matter of mortgage created in
favour of various nationalized banks. It is further not in
dispute that the petitioner was not the mortgagee in respect
of the said lands. In this background, if the provisions of
Section 25 of the said Act as it stood on the date when the
deed of conveyance was chargeable, it is clear that the
provisions of Section 25 of the said Act would not be
attracted in the facts of the present case. There being no
transfer in favour of a mortgagee, the question of the
instrument being deficiently stamped in terms of Section 25
would not arise. Perusal of the impugned order reveals that
the authorities have proceeded to hold the instrument in
question to be deficiently stamped while taking into
consideration the provisions of Section 25 of the said Act as
was amended by Maharashtra Act No.XXVII of 1985. It may
be noted that aforesaid section underwent changed by virtue
of provisions of Maharashtra Act No. XXVII of 1985 w.e.f.
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22-11-1985. However, in view of the clear provisions of
Section 2(d) of the said Act, the deed of conveyance having
been executed on 27-03-1981, the same was chargeable in
terms of the provisions of the said Act that were prevailing
on said date. As observed above, provisions of Section 25 of
the said Act as on the date of execution of the instrument did
not attract any duty in terms of said Section.
12] From the above, it is therefore, clear that the
respondent no.2 proceeded on the wrong premise that
provisions of Section 25 of the said Act as amended by
Maharashtra Act No. XXVII of 1985 were applicable and hence
the instrument in question was deficiently stamped. A
specific plea raised by the petitioners in that regard that the
date of execution of the instrument was the material date
has been lost sight by the Collector of Stamps. Similar error
has been committed by the appellate Authority by
proceeding to adjudicate the liability of the petitioners in
terms of provisions of Section 25 as amended by Maharashtra
Act No.XXVII of 1985 though the deed of conveyance was
chargeable in terms of Section 2(d) of the said Act on
27-03-1981. In view of aforesaid, it is clear that the
authorities misdirected themselves in coming to the
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conclusion that the deed of conveyance was insufficiently
stamped under Section 25 of the said Act.
13] In view of aforesaid finding, it is not necessary to go
into other aspects of the matter as to whether the authorities
were justified in relying upon the provisions of Section 32A
while seeking to fasten liability on the petitioner for paying
deficit stamp duty. Similarly, it is also not necessary to go
into the question as to whether the Authorities were justified
in initiating proceedings on the basis of audit objections
raised in that regard. As it has been found that the
instrument in question was not chargeable under Section 25
of the said Act as it stood on 27-03-1981, the entire exercise
initiated on the basis of notices dated 03-07-1985 and
15-07-1985 would fall to the ground.
14] Hence, in view of aforesaid conclusion the following
order is passed. The judgment dated 09-09-2005 passed by
the respondent no.1 in Revenue Appeal No.257 of 2001 is set
aside. As a consequence thereof, it is held that the demand
for deficit stamp duty under Section 25 of the said Act as it
stood on 27-03-1981 is not in accordance with law.
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15] Writ petition is allowed by making rule absolute in
aforesaid terms with no order as to costs.
JUDGE
Khot / Deshmukh
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