1. Property owners executed a release deed among family members; registration authorities subsequently classified the transaction as a sale and demanded deficit stamp duty based on internal audit guidelines. (Para 2 , 3 , 4 )
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2025 Supreme(Telangana) 2235
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
N.V. SHRAVAN KUMAR, J.
Promod Kumar – Appellant
Versus
State of Andhra Pradesh and Others – Respondents
W.P. No. 1414 of 2010
Decided On : 20-02-2025
Important Points
A release deed between co-owners resulting in the enlargement of an existing owner's interest cannot be reclassified as a 'conveyance on sale' simply because some co-owners were not parties to the instrument, particularly when such classification is based on an administrative circular lacking statutory authority.
Subject
Tax/Revenue - Stamp Duty
Act Referred
Headnote
(A) Indian Stamp Act, 1899 - Section 2(10), Article 41A and Article 46 of Schedule 1A - Release deed vs. Conveyance on Sale - Difference between sale and release - A sale involves the conveyance of title to a person without prior title for consideration, whereas a release involve a co-owner relinquishing rights in favor of other co-owners, resulting in the enlargement of existing interest (Paras 15, 16).
(B) Administrative Circulars - A circular memo issued by revenue authorities cannot override statutory provisions or create new legal requirements for classifying an instrument as a release deed under the Stamp Act (Para 13).
Facts of the case:
A petitioner, being one of the co-owners of an inherited property, obtained a release deed from several other co-owners. While the document was initially registered as a release, an internal audit led the authorities to issue a notice demanding deficit stamp duty. The authorities reclassified the instrument as a 'conveyance on sale' because not all co-owners were parties to the deed, relying on an administrative circular that required all coparceners/co-owners to be signatories for a document to be treated as a release.
Findings of Court:
The court found that the instrument was a release among family members and co-owners. The internal circular requiring all co-owners to be parties lacked a source of statute or any provision of the Stamp Act and therefore could not be the basis for demanding deficit stamp duty by reclassifying the deed as a sale.
Issues: Whether a release deed executed between some co-owners, but not all, constitutes a 'conveyance on sale' for the purpose of stamp duty based on an administrative circular.
Ratio Decidendi: A release deed is characterized by the enlargement of interest held by an existing co-owner. Since the transferee already held prior title or ownership, the transaction cannot be termed a 'sale' by any stretch of imagination, regardless of whether every single co-owner joined the instrument. Administrative circulars cannot supersede the statutory framework of the Stamp Act.
Result: Writ petition allowed; impugned notice set aside.
(B) Administrative Circulars - A circular memo issued by revenue authorities cannot override statutory provisions or create new legal requirements for classifying an instrument as a release deed under the Stamp Act (Para 13).
Facts of the case:
A petitioner, being one of the co-owners of an inherited property, obtained a release deed from several other co-owners. While the document was initially registered as a release, an internal audit led the authorities to issue a notice demanding deficit stamp duty. The authorities reclassified the instrument as a 'conveyance on sale' because not all co-owners were parties to the deed, relying on an administrative circular that required all coparceners/co-owners to be signatories for a document to be treated as a release.
Findings of Court:
The court found that the instrument was a release among family members and co-owners. The internal circular requiring all co-owners to be parties lacked a source of statute or any provision of the Stamp Act and therefore could not be the basis for demanding deficit stamp duty by reclassifying the deed as a sale.
Issues: Whether a release deed executed between some co-owners, but not all, constitutes a 'conveyance on sale' for the purpose of stamp duty based on an administrative circular.
Ratio Decidendi: A release deed is characterized by the enlargement of interest held by an existing co-owner. Since the transferee already held prior title or ownership, the transaction cannot be termed a 'sale' by any stretch of imagination, regardless of whether every single co-owner joined the instrument. Administrative circulars cannot supersede the statutory framework of the Stamp Act.
Result: Writ petition allowed; impugned notice set aside.
Legal Category Hierarchy
Advocates Appeared:
For the Appellant : Pratap Narayan Sanghi
For the Appellant : Pratap Narayan Sanghi
Table of Contents
2. The petitioner contended that the instrument was a release deed not subject to the circular's requirements, while the state argued the document constituted a conveyance on sale. (Para 3 , 4 , 5 , 6 , 8 )
3. The court observed that the circular lacks statutory authority and that the release of rights among co-owners essentially enlarges their interest rather than constituting a fresh conveyance via sale. (Para 13 , 14 , 15 , 16 , 17 )
4. A release deed between co-owners cannot be reclassified as a sale for stamp duty purposes where no new title is transferred and no third party is involved. (Para 15 , 16 , 17 )
5. The impugned notice claiming deficit stamp duty is set aside and the circular memo is held inconsistent with the Stamp Act. (Para 17 , 18 , 19 )
6. What is the distinction between a sale and a release deed in property law?
A sale involves a transfer of title to a person without prior interest, whereas a release deed allows a co-owner to renounce claims in favor of other existing co-owners, resulting in the enlargement of their existing interests rather than a new acquisition. (Para 8 , 15 )
7. Can an internal circular issued by revenue authorities override the classification of an instrument under the Indian Stamp Act?
No, a departmental circular memo cannot override the substantive provisions of the Indian Stamp Act, 1899. Revenue authorities cannot use such circulars to invalidate or reclassify instruments at odds with the Act's definitions. (Para 13 , 16 , 17 )
8. Does the non-joinder of certain co-parceners in a release deed transform the transaction into a sale?
No, the fact that some co-owners do not participate in a release deed among other family members does not transform the document from a release into a conveyance of sale, provided the transaction only concerns interested parties. (Para 16 , 17 )
ORDER :
1. Questioning the impugned notice dated 02.09.2009 and the very impugned circular memo dated 29.05.2007 as being arbitrary, illegal and contrary to Section 2(10) and Article 46 and 49 of Schedule 1A of Indian Stamp Act, 1899, the present writ petition is filed.
2. The facts in brief are that the petitioner’s mother Smt.Lalita Bai inherited a total extent of house property bearing No.3191 (old) H.No.7-2-533 to 7-2-546 (new) admeasuring 421 sq.yds., at Buruguchetty Bazar, Secunderabad from her maternal grandparents under a Deed of Settlement vide Doc.No.1142 of 1956. Thereafter, petitioner’s mother died on 30.08.1988 leaving behind 5 sons and 4 daughters. Petitioner is the 5th son and whereabouts of 3rd son is not known since long time. Thereafter, a portion of the property inherited by the petitioner was released in favour of wife of 3rd son under deed of partial partition registered vide Doc.No.1795/2008 dated 17.10.2008. It is further submitted that the 3rd sister Smt.Usha Khatri died on 19.04.1994 leaving behind two legal heirs. It is further submitted that petitioner’s eldest brother viz., Sri Ananth Prasad along with 4 sisters, 2 legal heirs of 3rd sister who are all 8 co-owners have executed a release deed dated 18.10.2008 vide Doc.No.1831/2008 in favour of petitioner herein; and 2 brothers of petitioner retained their respective portions. Thereafter, the said release deed was presented before respondent No.3 for registration.
3. Respondent No.3 after examination of the entire contents of the documents and after having satisfied that the said deed was released in favour of petitioner, imposed the duty as contemplated under Article 46 of Schedule 1A of Indian Stamp Act, 1899. The petitioner further submits that as per the recitals of the document, market value was assessed by the petitioner at Rs.30,00,000/-, whereas respondent No.3 after verifying the specifications of the property did not agree with the market value mentioned by the petitioner and fixed a market value of Rs.45,00,000/- and directed the petitioner to deposit a sum of Rs.1,07,450/- as stamp duty and registration charges and on payment of the same, the document was registered and released in favour of the petitioner. Thereafter, respondent No.3 within 10 days of registration of the document, based on an internal audit, issued notice dated 02.09.2009 under Article 41A of Schedule IA of Stamp Duty on Certain Instruments under the Stamp (Andhra Pradesh Amendment) Act, 1922 to the petitioner claiming a deficit stamp duty of Rs.9,02,025/-.
4. Subsequently, petitioner approached respondent No.3 and stated that the subject document was a relinquishment deed which is between family members and not a sale deed. However, without hearing the contention of the petitioner, respondent No.1 on 02.09.2009, has calculated the market value of the subject property at Rs.1,06,25,000/- and claimed stamp duty of Rs.9,02,025/. Thereafter, petitioner approached respondent No.1 and explained the contents of the documents, however, respondent No.1 clearly stated that said notice under Article 41A of Indian Stamp Act, 1899 was issued based on the circular issued by respondent No.2 on 29.05.2007 and hence insisted the petitioner either to pay the deficit stamp duty or the matter will be disposed of on merits and further action will be taken to recover the deficit stamp duty under the provisions of Indian Stamp Act. Having left with no other option, petitioner had given an undertaking to pay the entire deficit stamp duty. It is further submitted that the said undertaking was given under coercion and threat of complications for the reason that after the release deed got registered, petitioner got entered into a Development Agreement dated 08.12.2008 with M/s.Sneha Constructions and also demolished the existing structures. Questioning the said notice dated 02.09.2009 and also the Circular dated 29.05.2007, the present writ petition is filed.
5. Mr.Pratap Narayan Sanghi, learned senio
