IMPORTANT POINT
Stamp duty – Royalty and dead-rent, both cannot be levied simultaneously on same lease.

ORDER

Pradeep Mittal, J.—The petitioner has filed the present Miscellaneous Petition challenging the order dated 29.03.2016 (Annexure P/3) passed by the Collector, whereby the petitioner was directed to pay deficit stamp duty along with a penalty amounting to Rs.2,44,57,462/- (Rs.1,94,58,462/- towards deficit stamp duty and Rs.50,00,000/- as penalty). Against the said order, the petitioner preferred a revision before the Board of Revenue, however, the same was dismissed vide order dated 28.01.2019.

2. The facts of the case are that petitioner Company was granted a mining lease for extraction of limestone over an area of 150.028 hectares situated at Village Karmau, Tehsil Rampur Baghlan, District Rewa (Madhya Pradesh), for a period of 30 years by the State Government of Madhya Pradesh for use in its cement manufacturing plant. A Mining Lease Agreement was executed on 09.10.2014. The petitioner required limestone as captive mining material for manufacturing cement and, due to urgent necessity, executed the agreement on a stamp paper of Rs.1,000/-. The petitioner submitted the document before the Sub-Registrar, Rampur Baghelan, on 12.12.2014 for proper determination and payment of stamp duty and for registration. In compliance with Circular No. 1164 dated 21.05.2004 issued by the Inspector General, Madhya Pradesh, Bhopal, the Sub-Registrar, Rampur Baghelan, forwarded the document to the Registrar for correction and determination of stamp duty under Section 38(vi) of the Stamp Act, as amended by the Madhya Pradesh Stamp Duty Amendment Ordinance, 2014, published in the M.P. Gazette dated 16.09.2014 and effective from 16.09.2014. As per Article 38(vi), where a lease purports to be for a period of thirty years or more, or in perpetuity, or does not specify a definite period, stamp duty is payable at five percent (5%) of the amount of premium or money advanced or to be advanced as set forth in the deed, plus the average annual rent reserved, or the market value of the property, whichever is higher. As per the aforesaid provision, stamp duty was payable at 5% of the average annual rent reserved.

3. On 19.01.2015, proceedings were registered by the Collector of Stamps, Satna, under Section 40 read with Article 38(vi) of the Stamp Act. The Collector issued a letter dated 15.01.2015 to the Mining Officer, Satna, seeking information regarding the average annual royalty for the lease area of 150.028 hectares. The Mining Officer, Satna, submitted a report dated 24.01.2015 stating that the average annual royalty, as per the approved mining plan, was Rs.1,25,35,110/-. The Mining Officer also stated that the dead rent at Rs.1,000/- per hectare per year for five years would amount to Rs.6,04,000/-. However, it is settled that dead rent cannot be added to royalty, as royalty becomes payable when it exceeds the dead rent, and in such cases, dead rent is not payable separately. Based on the Mining Officer’s report, the stamp duty at 5% of the average annual royalty of Rs.1,25,35,110/- would amount to Rs.6,26,755/-. However, the Collector wrongly added the dead rent and further multiplied the total annual amount by 30 years, determining the duty at 5% on Rs.12,65,59,10/- × 30 years, and thereby calculated stamp duty at Rs.1,94,58,462/-which also included dead rent and cess (Upkar). The said calculation is wholly erroneous. Under Article 38(vi), stamp duty is to be calculated on the average annual rent reserved. Royalty is equivalent to rent as per Section 26 of the Stamp Act, and dead rent cannot be added thereto. Therefore, stamp duty payable should be 5% of Rs.1,25,35,110/-, i.e., Rs.6,26,755/- only. The determination of duty on the entire 30-year lease period is illegal and contrary to law. The petitioner filed objections before the Collector of Stamps on 11.04.2016 stating that, as per the mining plan, total production for five years would be 5,96,910 metric tons, and the average annual production would be 1,19,382 metric tons. At the royalty ra