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Gujarat High Court
Judgename :K.R.VYAS, M.B.SHAH, R.A.MEHTA
GORVA VIBHAG CO-OPERATIVE HOUSING SOCIETIES association - Appellant
Versus
STATE - Respondent
Miscellaneous Criminal Application 2823 of 1984
Decided On : 05/05/1992
After enactment of Bombay Stamp Act, 1958 for which the assent of the President is obtained, the Indian Stamp Act insofar as it deals with the subject-matter for which provision prescribing rates of stamp duties for the instruments mentioned in the Bombay Stamp Act is made, would not be applicable within territories of the State of Bombay and after bifurcation within the State of Gujarat. Indian Stamp Act would be applicable only with regard to those subjects which are covered by Entry 91 and for the said subjects undisputedly no provision is made in the Bombay Stamp Act. The Bombay Stamp Act, 1958 deals with the subject-matter which is within the competence of the State Legislature and prevails under Entry 63 of the State List so far as rates of stamp duties are concerned and under Entry 44 of the Concurrent List insofar as subjects and other aspects of the stamp duties are concerned because of the express and implied repeal of the Indian Stamp Act with the a‚v‚vent of the President. Hence, Section 76 is neither illegal nor ultra vires the provisions of the Constitution.
[Para 17]
Bombay Stamp Act, 1958 - Secs. 32, 32A, 32B - First schedule, Arts. 20(a) & (b) - Determination of Market duty - Constitution of India, 1950 - VII schedule - List II, Entry 63, List III, Entry 44 - Rates of Stamp duty - Held, provisions of State Act providing for charging of stamp duty on the basis of market value of the property is within the competence of State legislature.
Once it is held that it was within the competence of the State Legislature to enact the Bombay Stamp Act which is repugnant to the provisions made in the Indian Stamp Act so far as it does not relate to the subject-matter provided in Entry 91 of List I, no question of repugnancy under Article 254 of the Constitution would arise. Therefore, the provision made under the State Legislation determining the basis for valuation, that is, market value, would prevail. The Legislature may fix such rate as it thinks fit; it may adopt the basis of evaluation either annual rental value or capital value or any other method of evaluation in its wisdom; the Legislature need not necessarily provide a uniform measure of tax for all units of lands and buildings; it can make rational classification and provide different measures of tax for different classes of units by prescribing different basis of valuation and/or different rates of tax. So rates of stamp duty would mean basis of evaluation and to prescribe rate. The expression `rate is used in the sense of a standard or measure.
[Paras 36 & 38]
Bombay Stamp Act, 1958 - Secs. 2 (na), 32A & 32B - Bombay Stamp (Determination of Market Value of Property) Rules, 1984 - Rules 3, 4, 5, 6 & 8 - Constitution of India, 1950 - Art. 14 - Method of determining market value - Reasonableness - Elaborate procedure and reasonable opportunity of hearing provided - Held, the impugned procedure is reasonable.
The Legislature has wisely used the phrase price which such property would have fetched if sold in open market on the date of execution of such instrument. If the property is encumbered or charged or there are tenants over it, then it would not fetch the same market price as the property which is free from any such encumbrances. Hence, it cannot be said that Section 2(na) is in any manner illegal, arbitrary or irrational.
[Para 44]
Administrative Law - Hearing - Notice - Issued under Rule 3(2) of Bombay Stamp (Determination of Market Value of Property) Rules, 1984 - Notice must be issued within a reasonable period of 3 months - Delay if caused must be justified.
It is a settled law that the powers under the statutory provisions are to be exercised within the reasonable period. The reasonable period varies in the facts and circumstances of each case and various provisions of the Act. It should be noted that under S. 32A(4) the Legislature has prescribed maximum period of two years from the date of registration of any instrument for initiating suo motu proceedings by the Collector for examining the instrument for the purpose of satisfying himself as to the correctness of the consideration or the market value of the property which is subject-matter of the conveyance and the duty payable thereon. Therefore, in no set of circumstances the registering officer can exercise his power of referring the instrument to the Collector beyond the reasonable period (under Sec. 32A). Three months period can be considered to be the reasonable period for issuance of notice by the registering officer under Sec. 32A(1) read with Rule 3 clause (2) of the Bombay Stamp (Determination of Market Value of Property) Rules, 1984. If the power is exercised beyond that period, then the order can be set aside unless the facts justifying delay are pointed out.
[Para 47]
( 1 ) IN this group of petitions, the validity of Sec. 76 of the Bombay stamp Act, 1958, which is enacted after obtaining the Presidents assent on june 1958, and Sees. 32a and 32b read with Art. 20 (a) and (b) of Schedule i to the Act as amended by the Gujarat Act 21 of 1982, is challenged on various grounds. By amendment of Art. 20 (a) and (b), it is provided that the stamp Duty on conveyance is to be charged on the basis of the consideration for such conveyance or, as the case may be, the market value of the property which is the subject-matter of such conveyance whichever is greater.
( 2 ) THE learned Advocate for the petitioners raised the following contentions at the time of hearing of these matters : i. Section 76 of the Bombay Stamp Act read with Schedule II insofar as it repeals the Central Act (Indian Stamp Act, 1899) is beyond the legislative competence of the State Legislature. II (a) It is beyond the legislative competence of the State Legislature to amend Sees. 32, 32a and 32b and Art. 20 (a) and (b) of the First schedule to the Bombay Stamp Act, 1958. (b) Notwithstanding the amendment in the aforesaid Section and Art. 20 (a) and (b), the provisions of the Indian Stamp Act would prevail because different heads for which stamp duty can be recovered are provided in Schedule I to the Indian Stamp Act and the Parliament is competent to prescribe for it in view of Entry 44 of Concurrent list III of Seventh Schedule. Ill (a) Method of valuation of property is unreasonable, arbitrary and irrational- (b) Section 2 (na) which defines the market value is on the face of it illegal and arbitrary because it prescribes that, for determining the market value, date of execution of such instrument is to be taken into consideration and not the other relevant date which would have material bearing on the execution of the instrument for transferring the property. First, we will deal with the contention of the learned Advocates for the petitioners that Sec. 76 of the Bombay Stamp Act, 1958, read with Schedule ii insofar as it repeals the Central Act (Indian Stamp Act) is beyond the legislative competence of the State Legislature. It is the contention of learned advocate Mr. Desai that the State Legislature has no jurisdiction or authority to repeal any Central Statute. For this purpose, he placed reliance upon Art. 254 of the Constitution of India and the decision of the Supreme Court in the case of Zaverbhai v. State of Bombay, AIR 1954 SC 752.
( 3 ) BEFORE appreciating the contention of learned Advocate Mr. Desai, it would be necessary to refer to Preamble, Sees. 74 and 76 of the Bombay stamp Act, 1958, which are as under : preamble "whereas it is expedient to consolidate and amend the law relating to stamps and raws of stamp duties other than those in respect of documents specified in Entry 91 List I in the Seventh Schedule to the Constitution of India in the State of Bombay; r is hereby enacted in the Ninth year of the Republic of India as follows. ""section 74. For the avoidance of doubt, it is hereby declared that nothing in this act shall apply 10 rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts. ""section 76. Repeal of enactments : (1) The enactments specified in Column 3 of Schedule II thereto annexed shall be repealed in the manner and to the extent specified in Column 4 thereof: provided that the repeal hereby made shall not affect (i) any right, title obligation, or liability already acquired, accrued or incurred or anything done or suffered, (ii) any legal proceeding or remedy in respect of any such right, title obligation or liability, under the provisions of the enactments hereby repealed and any such proceeding may be instituted, continued and disposed of and any such remedy may be enforced as if this Act had not been passed. (2) Any appointment, notification, noti
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