The determination of deficiency of stamp duty should be based on the market value of the property on the date of the instrument and surrounding construction activities, without relying on hypothetical factors.

JUDGMENT :

1. Heard Sri Prateek Kumar, learned counsel for petitioner and learned Standing Counsel appearing on behalf of State-respondents.

2. This is a case arising out of proceedings initiated under Section 47-A of Indian Stamp Act, 1899 as applicable in State of U.P. whereby deficiency of Stamp Duty was determined on execution of instrument in question i.e. a sale-deed.

3. The Prescribed Authority under Stamps Act took note of surroundings of land in question i.e. an agricultural land on eastern side, a non-agricultural land and an under construction building on western side, a hospital and other construction on northern side and a link road on southern side and further noted that within the radius of 50 mtrs. and 200 mtrs. of land in question, there were developed non-agricultural properties, and therefore, treated the land in question to be a non-agriculture land and accordingly deficiency of stamp duty was determined by impugned order dated 12.11.2020. An appeal thereof was also dismissed by another impugned order dated 22.03.2021.

4. Sri Prateek Kumar, learned counsel for petitioner has submitted that nature of land in question still remains to be an agricultural land. Appropriate proceedings to declare the land to be a non-agriculture land have not been undertaken till date. The petitioner has already paid additional stamp duty disclosing that within the radius of 200 meters in addition to agricultural land there were residential constructions also and for that petitioner paid 50 per cent additional stamp duty.

5. Learned counsel has further submitted that in order to determine deficiency of stamp duty, the Prescribed Authority could not take residential activities around land in question to deem it to be an agricultural land. He further placed reliance on a judgment passed by Division Bench of this Court in case of Sri Sumati Nath Jain vs. State of U.P. 2016 (2) ADJ 533 that “These propositions clearly flow from a plain reading of the definition of the words "chargeable", "executed" and "instrument" as carried in the Act. In the case of an instrument which creates rights in respect of property and upon which duty is payable on the market value of the property comprised therein, since the tax liability gets fastened immediately upon execution it must necessarily be quantified on the date of execution. The levy of tax or its quantum cannot be left to depend upon hypothetical or imponderable facets or factors. The value of the property comprised in an instrument has to be adjudged bearing in mind its character and potentiality as on the date of execution of the instrument.”

6. Per contra, learned Standing Counsel appearing on behalf of State-respondents submits that calculation of determination on deficiency of stamp duty was based on nature of construction around the land in question as well as various residential activities within the radius of 50 mtrs and 200 mtrs. Such factual aspects have not been disputed by petitioner. Only on the ground that land in question was not declared to be a non-agricultural land would not estopped the Authority to ascertain status of surrounding land in question on the date of execution of instrument to determine deficiency in stamp duty. Therefore, no illegality was committed in the determination.

7. Heard counsel for the parties and perused the record.

8. Considering the rival submissions, it would be relevant to refer few paragraphs from the judgment passed by Full Bench of this Court in the case of Smt. Pushpa Sareen vs. State of U.P., 2015 SCC Online All 2935.

“The true test for determination by the Collector is the market value of the property on the date of the instrument because, under the provisions of the Act, every instrument is required to be stamped before or at the time of execution. In making that determination, the Collector has to be mindful of the fact that the market value of the property may vary from location to location and is dependent upon a large number of circumstances