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Issues in determining stamp duty
Source : The Hindu Property Plus Published On : 2008-02-09 City : Chennai

Stamp duty on a sale is to be assessed on the market value of the property at the time of sale, writes C.H. GOPINATHA RAO


The Supreme Court in the case of State of Rajasthan vs Khandaka Jain Jewelers, (2008 (1) CTC 60 C.A.No.5273 of 2007) has observed that the stamp duty is payable on the market value of property as on the date of execution of sale deed and not on the date of agreement for sale.

     In this case, the purchaser entered into two separate agreements with vendor in 1983 for purchase of two properties. However, the vendor failed to comply with the terms of the agreement and never executed the sale deed, Purchaser then filed a suit for specific performance which were decreed by the trial court in 1994. The purchaser filed another execution application in 1994 and the court directed the purchaser to submit stamp papers for execution of the sale deeds.

     The purchaser then submitted stamp papers based on the value as on the date of agreement for sale. The court executed the sale deeds and sent the same for registration to the Sub-Registrar of the Registration Department. However, the sub-Registrar exercising his powers assessed the value of the property as on the date of execution and found that the documents deficient in stamp duty.

     The purchaser subsequently filed a writ petition challenging the order. He argued that the pendency of litigation could not prejudice him by directing him to pay stamp duty on the date of registration of sale deed. Writ petitions were allowed and the authorities were directed to pass fresh orders regarding the levy of stamp duty.


Date of execution


     The authorities approached the Supreme Court and the case was settled in the Supreme Court where it was decided that the stamp duty is payable on the market value of property as on the date of execution of sale deed and not on the date of agreement for sale nor on the date of filling the suit for specific performance. There is a difference between an agreement to sell and a sale.


     Stamp duty on a sale is to be assessed on the market value of the property at the time of sale. Neither the date of agreement of sale nor the time of filling of the suit would matter. Act. It is true that as per section 3, of the Stamp Act, the instrument is to be registered on the basis of the valuation disclosed therein.

     But Section 47-A contemplates in case it is found that properties are undervalued then it is open for the Collector (stamps) to assess the correct market value. The Stamp Act is in nature a taxing statue and a statue taxing is not dependent on any contingency.

     It is true that no one should suffer on account of the pungency of the matter but the consideration does not affect the Principles of interpretation of a taxing statue.

     A taxing statue has to be construed as it is. All contingencies that the matter cannot be taken into account for interpreting the provisions of a taxing statue. Hence since because the matter has been in litigation for a long time, it can be taken as a consideration o accept the market value of the instrument.



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