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High Court Of Madhya Pradesh
N. D. OJHA, K. K. ADHIKARI
RAMKISHORI - Appellant
Versus
STATE OF M.P. - Respondents
MISC. PETN. 1769 Of 1986
Decided On : 08/14/1987
STAMP ACT - AMENDMENTS - VALIDITY - MARKET VALUE OF PROPERTY AS BASIS FOR COMPUTATION OF STAMP DUTY - CONSTITUTIONAL COMPETENCE OF STATE LEGISLATURE - INTERPRETATION OF ENTRIES IN LISTS II AND III OF SEVENTH SCHEDULE TO CONSTITUTION - SCOPE OF S. 3 AND SCHEDULE I OF STAMP ACT - DETERMINATION OF MARKET VALUE - PRINCIPLES AND PROCEDURE - LIST PREPARED BY STATE GOVERNMENT - GUIDELINES - DISCRETION OF COLLECTOR - ALTERNATIVE REMEDY OF APPEAL - LIMITATION - CONDONATION OF DELAY - RE-DETERMINATION OF STAMP DUTY BEYOND FIVE YEARS - BAR OF LIMITATION.
Fact of the Case:
Writ petitions challenging the validity of certain amendments made in the Stamp Act, 1958 (M.P. Act No. 2 of 1958) by M.P. Act No. 8 of 1975. The amendments introduced market value of the property as the basis for computation of stamp duty instead of the amount or value of consideration as set forth in the instrument. Petitioners contended that the amendments were ultra vires the State Legislature and that the charging Section in the Act was S. 3 minus the Schedule.
Finding of the Court:
1. The amendments made in the Stamp Act by M.P. Act No. 8 of 1975 were within the legislative competence of the State Legislature and were not ultra vires. 2. Entry 63 of List II and Entry 44 of List III of the Seventh Schedule to the Constitution confer power on the State Legislature to make amendments in the Act not only in regard to the rates of stamp duty but also in regard to the mode of computation of stamp duty. 3. S. 3 of the Act, which is the charging Section, is to be read with the Schedule. The amendment in the Schedule, which changed the basis for computation of stamp duty, amounted to an amendment in the charging Section. 4. The concept of market value as the basis for computation of stamp duty was not ultra vires the State Legislature. 5. The State Legislature had the power to prescribe the mode of computation of stamp duty and to lay down that the basis for computing stamp duty shall be the market value of the property which is the subject matter of conveyance. 6. The provisions of S. 47-A, inserted in the Act by M.P. Act No. 8 of 1975, provided a comprehensive mechanism for determination of market value, including principles for determination, opportunity of hearing, and right of appeal. 7. The list prepared by the State Government containing guidelines for determination of market value was not conclusive and could only be considered as one of the guidelines. 8. The Collector was required to follow the principles contained in S. 47-A and R. 5 of the Indian Stamp (Madhya Pradesh Prevention of Under valuation of Instruments) Rules, 1975, while determining the market value. 9. Petitioners who had not yet received a determination of the amount of stamp duty were required to appear before the Collector and pursue the matter or take recourse to other available remedies under the Act. 10. Petitioners who had received a determination of stamp duty were required to exhaust the alternative remedy of appeal before approaching the Court. 11. Delay in filing an appeal due to the pendency of the writ petition could be condoned by the appellate authority. 12. Re-determination of stamp duty in respect of sale-deeds registered more than five years prior to the initiation of proceedings under S. 47-A(3) of the Act was barred by limitation and the orders passed in such cases were quashed.
Issues: 1. Whether the amendments made in the Stamp Act by M.P. Act No. 8 of 1975 were ultra vires the State Legislature? 2. Whether the State Legislature had the power to prescribe the mode of computation of stamp duty and to lay down that the basis for computing stamp duty shall be the market value of the property which is the subject matter of conveyance? 3. Whether the provisions of S. 47-A, inserted in the Act by M.P. Act No. 8 of 1975, provided a comprehensive mechanism for determination of market value? 4. Whether the list prepared by the State Government containing guidelines for determination of market value was conclusive? 5. Whether the Collector was required to follow the principles contained in S. 47-A and R. 5 of the Indian Stamp (Madhya Pradesh Prevention of Under valuation of Instruments) Rules, 1975, while determining the market value? 6. Whether petitioners who had not yet received a determination of the amount of stamp duty were required to appear before the Collector and pursue the matter or take recourse to other available remedies under the Act? 7. Whether petitioners who had received a determination of stamp duty were required to exhaust the alternative remedy of appeal before approaching the Court? 8. Whether delay in filing an appeal due to the pendency of the writ petition could be condoned by the appellate authority? 9. Whether re-determination of stamp duty in respect of sale-deeds registered more than five years prior to the initiation of proceedings under S. 47-A(3) of the Act was barred by limitation?
Ratio Decidendi: 1. The State Legislature had the power to make amendments in the Stamp Act not only in regard to the rates of stamp duty but also in regard to the mode of computation of stamp duty. 2. The concept of market value as the basis for computation of stamp duty was not ultra vires the State Legislature. 3. The provisions of S. 47-A, inserted in the Act by M.P. Act No. 8 of 1975, provided a comprehensive mechanism for determination of market value, including principles for determination, opportunity of hearing, and right of appeal. 4. The list prepared by the State Government containing guidelines for determination of market value was not conclusive and could only be considered as one of the guidelines. 5. The Collector was required to follow the principles contained in S. 47-A and R. 5 of the Indian Stamp (Madhya Pradesh Prevention of Under valuation of Instruments) Rules, 1975, while determining the market value. 6. Petitioners who had not yet received a determination of the amount of stamp duty were required to appear before the Collector and pursue the matter or take recourse to other available remedies under the Act. 7. Petitioners who had received a determination of stamp duty were required to exhaust the alternative remedy of appeal before approaching the Court. 8. Delay in filing an appeal due to the pendency of the writ petition could be condoned by the appellate authority. 9. Re-determination of stamp duty in respect of sale-deeds registered more than five years prior to the initiation of proceedings under S. 47-A(3) of the Act was barred by limitation.
Final Decision: 1. Writ Petition No. 3637 of 1986 was allowed in part to the extent that the orders re-determining the stamp duty in regard to sale-deeds dt. 13-5-1981, 4-7-1981, 10-8-1981 and 7-8-1981 were quashed. The writ petition in so far as the remaining reliefs were concerned was dismissed. 2. The other three writ petitions were dismissed in their entirety. 3. The dismissal of these writ petitions, however, was subject to the observations made in regard to the alternative remedies to be pursued by the petitioners. 4. There was no order as to costs in any of these writ petitions.
( 1 ) THIS order shall govern the disposal of Misc. Petition No. 3390 of 1986, Misc. Petition No. 3521 of 1986 and Misc. Petition 3637 of 1986 also. In all these writ petitions the validity of certain amendments made in the Stamp Act (hereinafter referred to as the Act) by M. P. Act No. 8 of 1975 has been challenged. To be specific, the amendments that have been made in S. 27 and schedule I of the Act and S. 47-A as inserted in the Act by the aforesaid amendment Act No. 8 of 1975 are sought to be declared ultra vires. Section 27 of the Act after its amendment by M. P. Act No. 8 of 1975 reads as hereunder :"27. Facts affecting duty to be set forth in instrument - (1) The consideration, if any, the market value of the property and all other facts and circumstances affecting the chargeability of any instrument with duty pr the amount of the duty with which it is chargeable, shall be fully and truly set forth therein. (2) In the case of instruments relating to immovable property chargeable with an ad valorem duty on the market value of the property, and not on the value set forth, the instrument shall fully and truly set forth the annual land revenue in the case of other immovable property, the local rates, municipal or other taxes, if any, to which such property may be subject, and any other particulars which may be prescribed by rules made under this Act. "s. 47-A, on the other hand, which has been inserted by M. P. Act No. 8 1975 is to the following effect :"47-A. Instruments undervalued how to be dealt with - (1) If the registering officers appointed under the Registration Act, 1908 (No. XVI of 1908) while registering any instrument has reason to believe that the market value of the property which is the subject matter of such instrument has not been truly set forth in the instrument, he may, after registering such instrument, refer the same to the Collector for determination of market value of such property and the proper duty payable thereon. (2) On receipt of a reference under Sub-Sec. (1), the Collector shall, after giving the parties a reasonable opportunity of being heard and after holding an enquiry in such manner, as may be prescribed, determine the market value of the property which is the subject matter of such instrument and the duty as aforesaid. The difference, if any, in the amount of duty shall be payable by the person liable to pay the duty. (3) The Collector may suo motu, within five years from the date of registration of any instrument not already referred to him under Sub-S. (1), call for and examine the instrument for the purpose of satisfying himself as to the correctness of the market value of the property which is the subject matter of any such instrument and the duty payable thereon and if after such examination, he has reason to believe that the market value of such property has not been truly set forth in the instrument, he may determine the market value of such property and the duty as aforesaid in accordance with the procedure provided for in Sub-Sec. (2 ). The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty. Provided that nothing in this Sub-Section shall apply to any instrument registered prior to the date of the commencement of the Indian Stamp (Madhya Pradesh Amendment) Act, 1975. (4) Any person aggrieved by an order of the Collector under Sub-Sec. (2) or Sub-Sec. (3) may in the prescribed manner appeal against such order to the Commissioner of the division. (5) Any person aggrieved by an order passed in appeal under Sub-Sec. (4) may in the prescribed manner appeal against such an order to the Chief Controlling Revenue Authority Madhya Pradesh. (6) Every first and second appeal shall be filed within thirty days from the date of the communication of the order against which the appeal is filed, along with a certified copy of the order to which objection is made and shall be presented andverified in such manner as may be prescribed :
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