Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2011 Supreme(Mad) 4446

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE R. SUBBIAH
M/s. Kumararaja Paper Mills (P) Ltd., Rep.by its Director N.S. Balasubramanian
Versus
Tamilnadu Principal Revenue Control Officer-cum-The Inspector, Chennai & Others
Civil Miscellaneous Appeal No. 2405 of 2011 & M.P.Nos. 1 & 2 of 2011
Decided On :Decided on : 12-11-2011

Advocates Appeared:
For the Petitioner - P. Valliappan, Advocate.
For the Respondents - S. Pattabiraman, G.A.,(C.S.).

The main legal point established in the judgment is the classification of plant and machinery as immovable properties and the relevance of the market value of the property and the intention of the parties in determining this classification.

Headnote:
Stamp Duty - Sale Certificate - Section 47-A of the Stamp Act - [Stamp Duty] - [Sale Certificate] - [Section 29 of the State Financial Corporation Act, 1951, Section 47-A of the Stamp Act, 1951, Section 17(2)(xii) of the Registration Act, 1908] - The court discussed the applicability of stamp duty on the sale certificate issued by the Authorised Officer of a Government Corporation, the time limit for referring the document to the Collector, and the classification of plant and machinery as immovable properties. The court held that the sale certificate issued by the Authorised Officer of the Government Corporation does not need compulsory registration, the delay in passing the final order was not a valid ground for appeal, and the plant and machinery sold by the Government Corporation can be construed as immovable properties. The court also emphasized the relevance of the market value of the property and the intention of the parties in determining the classification of plant and machinery as immovable property.
Fact of the Case:

The appellant challenged the order of the 1st respondent confirming the demand notice issued by the 2nd respondent for payment of stamp duty on the purchase of machinery. The appellant argued that the demand notice was time-barred, there was no fraudulent evasion of stamp duty, and the plant and machinery purchased cannot be construed as immovable properties.
Finding of the Court:

The court found that the sale certificate issued by the Authorised Officer of the Government Corporation does not need compulsory registration, the delay in passing the final order was not a valid ground for appeal, and the plant and machinery sold by the Government Corporation can be construed as immovable properties. The court also emphasized the relevance of the market value of the property and the intention of the parties in determining the classification of plant and machinery as immovable property.
Issues: The issues involved in the case were the timeliness of the demand notice, fraudulent evasion of stamp duty, and the classification of plant and machinery as immovable properties.
Ratio Decidendi: The court held that the sale certificate issued by the Authorised Officer of the Government Corporation does not need compulsory registration, the delay in passing the final order was not a valid ground for appeal, and the plant and machinery sold by the Government Corporation can be construed as immovable properties. The court also emphasized the relevance of the market value of the property and the intention of the parties in determining the classification of plant and machinery as immovable property.
Final Decision: The civil miscellaneous appeal was dismissed, and the court found no infirmity in the order passed by the respondents.

Judgment :-

1. This appeal is filed against the Proceedings of the 1st respondent dated 24.06.2011 in g/K/vz;.14918/N2/2008, whereby the order passed by the 2nd respondent in rp/g/vz;/ 95/03/TGE dated 19.11.2007, directing the appellant to pay a sum of Rs.10,52,606/- as deficit stamp duty, was confirmed.

2. The facts, which are necessary to decide the issue involved in the appeal, are as follows:

(a) One M/s.Sankar Paper and Board Mills Private Limited had borrowed a loan from the State Industries Promotion Corporation of Tamilnadu Limited (SIPCOT), by creating an equitable mortgage by deposit of title deeds on 18.03.1994 in respect of a property situated in S.No.135/1A measuring 4.20 acres, S.No.263/1A measuring 3.00 acres and S.No.264/1 measuring 2.95 acres with buildings, other structures, fixtures, fittings and machineries thereon in A.Erayamangalam Village. Subsequently, the said Sankar Paper and Board Mills Private Limited committed a default in payment of the loan amount and the SIPCOT, by resorting to Section 29 of the State Financial Corporation Act, 1951, took possession of the mortgaged assets on 16.07.1998 and called for tenders in public auction through advertisements/limited sealed offers. In the said public auction, the appellant herein offered a highest bid of Rs.1,12,00,752/- for the buildings, land and machinery. The offer made by the appellant was accepted by SIPCOT and on 07.06.2002 itself, the appellant company paid the entire bid amount and the authorised officer of SIPCOT had executed a sale deed on that day itself in respect of the building and the land for a sum of Rs.39,33,000/- in favour of the appellant company. So far as the machinery in the said property is concerned, as the same being movables, a separate sale note/sale certificate was issued on the very same date i.e.on 07.06.2002 for Rs.72,67,752/- by the said authorised officer in favour of the appellant. The appellant presented the sale deed in respect of the building and the land before the 3rd respondent for registration on 07.06.2002 and paid the necessary stamp duty of Rs.4,72,000/- towards the sale consideration of Rs.39,33,000/-.

(b) Since the sale deed was executed by SIPCOT in favour of the appellant conveying the land and building without mentioning the plant and machinery, the 3rd respondent registered the same as pending document and referred it to the 2nd respondent, who served a demand notice directing the appellant to pay a stamp duty of Rs.10,52,606/-towards the purchase of machinery.

3. Aggrieved over the said order, the appellant herein filed an appeal before the 1st respondent, who confirmed the order of the 2nd respondent by his Proceedings dated 24.06.2011. Challenging the same, the present appeal has been filed.

4. Learned counsel appearing for the appellant submitted that though the document was registered on 07.06.2002, the demand notice under Form-II was issued only on 05.12.2007 under Rule 7 of the Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968 i.e.after a lapse of nearly 5½ years and hence, the demand notice is time barred. Therefore, on this ground alone, the order is liable to be set aside. In this regard, the learned counsel has relied on the decisions reported in THE DISTRICT COLLECTOR, ERODE DISTRICT, ERODE AND OTHERS .vs. M.PONNUSAMY (2001(2) M.L.J.458) and S.R.SEBGOTAVELU, SERVAMPATTI ..vs.. THE DISTRICT COLLECTOR, NAMAKKAL AND OTHERS ((2003) 3 M.L.J.625).

5. The learned counsel for the appellant further submitted that the proceedings under section 47-A of the Stamp Act can be initiated only when there is a suspicion of fraudulent evasion of stamp duty. But in the instant case, the proceedings were initiated by the respondents mainly on the ground that the value of the movables was not mentioned in the sale deed and as such, the appellant is liable to pay the stamp duty for the movables purchased under a sale note. Since there is no fraudulent evasion of stamp duty, the proceedi

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