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SHAKUMBARI SUGAR AND ALLIED INDUSTRIES LTD. versus STATE OF U.P. THRU' CHIEF CONTROLLING AND OTHERS

High Court of Judicature at Allahabad

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Shakumbari Sugar And Allied Industries Ltd. v. State Of U.P. Thru' Chief Controlling And Others - WRIT - C No. 56505 of 2005 [2007] RD-AH 6740 (12 April 2007)

 

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HIGH COURT OF JUDICATURE OF ALLAHABAD

 

         Court No.28

Writ Petition No. 56505   of 2005

Shakumbari Sugar and Allied Industries Ltd.  .................................Petitioner.

  Versus.

State of U.P. through Chief Controlling Revenue Authority/

Commissioner, Saharanpur Division, Saharanpur and others.

                                                     .................................Respondents.

Connected with

Writ Petition Nos. 56509, 56511, 56513, 56508, 56516, 57099, 57102, 57103, 57104, 57107, 57108, 57110, 57112, 57114, 57123, 57924, 57926, 57928, 57930, 57933, 57934, 57936, 57939, 57941, 57943, 57946, 57948, 57949, 57952, 57982, 57983, 57984, 62793,  62794,  62795,  62796,  62797 and  62798 of 2005.

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Hon'ble Tarun Agarwala, J.

Heard Sri Yashvant Varma, the learned counsel for the petitioner and  the learned Standing Counsel for the respondents.

In this group of writ petitions, the petitioner has challenged the revisional order of the Chief Controlling Revisional Authority (CCRA) passed under Section 56 (2) of the Stamp Act, allowing the revision of the State and holding that the petitioner was liable to pay the deficiency of stamp duty. The petitioner has also prayed for the quashing of the circular dated 12.3.1994 issued by the District Magistrate which provided that in case the land was being purchased for industrial purposes, in that event, the stamp duty would be payable at three times the rate prescribed for agricultural land. For facility, the writ petition No.56505 of 2005 is being made the leading case and the facts mentioned therein are being taken into consideration.

Briefly stated, the facts leading to the filing of the writ petition is, that the petitioner is a company duly incorporated under the provisions of the Companies Act, 1956 and had purchased various pieces of land, in village Todarpur, in district Saharanpur, for the purpose of setting up a sugar factory.

The petitioner purchased agricultural land by means of a sale deed dated 22.7.94. Since the land was agricultural in nature, the petitioner paid the stamp

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duty in accordance with the circle rate issued by the District Magistrate. On 13.2.1995, the Additional District Magistrate ( Finance), issued a notice under Section 47-A read with Section 33(4) of the Stamps Act to the petitioner, to show cause, as to why the deficiency of stamp duty should not be levied. In the notice, it was alleged that the petitioner had purchased the land for industrial purposes and that the market value of the land for industrial purpose came to  Rs.1,51,312.50 per bigha on the basis of which a sum of Rs.54,312.50 was payable as stamp duty, whereas, the petitioner had only paid a sum of Rs.25,250/-.It is alleged that the aforesaid notice was issued on the basis of a circular dated 12.3.1994 issued by the District Magistrate which provided that in case the land was being purchased for business or for industrial purposes, in that event, the stamp duty was payable at three times the rate prescribed for agricultural land.

The petitioner, in response to the aforesaid show cause notice, filed a detailed objection denying the allegations made in the notice. The petitioner contended that there was no deficiency of stamp duty and that the stamp duty was paid in accordance with the market value of the land and in accordance with the circle rate issued by the District Magistrate.

The Assistant Commissioner (stamps), by his order dated 8.1.96, discharged the notice and held that there was no deficiency of stamp duty on the conveyance in question and that the petitioner had paid the stamp duty in accordance with the market value which was more than the prescribed circle rate fixed by the District Magistrate. The Authority further found that there was no industrial unit in the vicinity and that the land purchased was agricultural land and that adequate stamp duty was paid by the petitioner.

In May 2000, i.e., after more than 4 years, the State Government preferred a revision under Section 56(2) of the Act which contained no explanation of the inordinate delay in filing the Revision. The petitioner filed their objections contending that there was a huge delay in the filing of the revision and that no explanation had been given for condoning the delay. However, the Revisional Authority, by an order dated 6.6.2000, condoned the

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delay in the interest of justice. Subsequently, the Revisional Authority, by an order dated 20.7.2005, allowed the revision holding that there was a deficiency of stamp duty and that the petitioner was liable to pay three times the rates prescribed for agricultural land, since the petitioner had purchased the land for an industrial purpose. The Revisional Authority, based its order by relying upon the circular issued by the District Magistrate. The  Revisional Authority further held that the petitioner was liable to make good the deficiency of Stamp Duty amounting to Rs.29,062.50.  

Aggrieved, the petitioner has filed the present writ petition. The learned counsel for the petitioner submitted that the stamp duty is attracted on the instrument at the time of the execution of the document and that the stamp duty, on the potential value or the nature of the land that would be put in use in future, is not required to be considered, while, determining the market value of the land.

The learned counsel submitted that the market value of the land is to be determined on the basis of the character of the land and cannot be determined on the basis of its future potential. The learned counsel, consequently submitted that the rates fixed by the District Magistrate demanding three times the rates fixed for agricultural land for such agricultural land purchased for industrial purpose was wholly illegal and against the provisions of the Stamp Act.

The learned counsel further submitted that the revision was filed after more than 4 years of the passing of the order by the competent authority and submitted that the revision was highly belated and that no explanation whatsoever was given for condoning the delay in filing the revision. The learned counsel further submitted that the Revisional Authority had committed a manifest error in entertaining the revision on the ground of interest of justice without giving any reason for condoning the delay and that it should have dismissed the revision on the ground of laches.

On the other hand, the learned standing counsel submitted that the Assistant Commissioner had committed a manifest error in discharging the

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notice under Section 47-A of the Stamp Act and that the authority had erred in holding that there was no deficiency of stamp duty without determining the market value of the land in question. The learned standing counsel submitted that the Assistant Commissioner discharged the notice on the basis of giving a finding that the stamp duty has been paid in accordance with the circle rate issued by the District Magistrate without determining the market value as required under Section 47-A of the Act. The learned standing counsel submitted that since there was an error in the order of the Assistant Commissioner, a revision was filed which has been allowed by the Revisional Authority after considering the impact of the circular of the District Magistrate

and after determining that the rate of duty was required to be paid at three times the rate prescribed for agricultural land. This finding was based on the basis of the circular issued by the District Magistrate which contemplated that where the land was purchased for business or industrial purposes, in that event, the rate of stamp duty would be charged on the basis of three times the rate prescribed for the agricultural land. The learned standing counsel submitted that since a manifest error of law had crept in the order of the Assistant Commissioner and on the basis of a complaint, an enquiry was initiated by the Collector and thereafter, the I.G. Registration, vide its letter dated 25.9.1998, directed the District Magistrate to send all the sale deeds executed in favour of the petitioner, which were then placed before the Board of Revenue, and after considering the matter, the Board of Revenue directed the District Magistrate, by its letter dated 4.4.2000, to file a revision under Section 56 of the Stamp Act and, on that basis, the revisions were filed. Consequently, the learned standing counsel submitted that the delay in filing the revision was liable to be condoned in the interest of justice as substantial revenue was being lost by the State Government.

Admittedly, in the present case, stamp duty has been levied on the basis of the circular dated 12.3.1994 issued by the District Magistrate. This circular,  is in fact, the circle rate issued by the District Magistrate prescribing the rates of land for different areas in the district of Saharanpur. At the end of the

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circular, a note has been placed which reads as under:

"where agricultural land is purchased for business or industrial purposes, in that case, the stamp duty would be payable @  of three times the rate prescribed for agricultural land."

The moot question which arises for consideration is ,whether the market value of the land could be determined with reference to the use of the land to which a buyer intends to put it in use and whether the potential value of the land could be taken into consideration for determining the market value of the land in question.

Admittedly, the circle rates issued by the District Magistrate are only guidelines and, at best, it prima facie indicates the value of the land in a particular area as held by the Supreme Court in R.C. Bansal vs. District Magistrate, AIR 1999 SC 2126. In  State of Punjab vs. Mahabir Singh, AIR 1996 SC 2994, the Supreme Court held that the circle rate was merely a guideline provided by the State which could only serve as prima facie material of the value of the land.

In M/s May Foods  and Vanaspati Ltd., Allahabad vs. Chief Controlling Revenue Authority (BR), Allahabad and others, 1998 (4) AWC 636, a single judge of this court held that the market value of the land cannot be determined with reference to the use of the land to which the buyer intends to put it in use. The learned judge held-

" Learned Chief Controlling Revenue authority has observed that the land was purchased for an industrial purpose and the Collector is not arbitrary in deciding the price of the land on the basis of the proposed usage. This proposition is legally incorrect. The market value of the land cannot be determined with reference to the use of the land to which buyer intends to put it. One buyer may intend to establish an industrial undertaking thereon, another may intend to use it for agricultural purpose and a third person may intend to dedicate it for charitable purposes like leaving it open as pasture ground or a cremation ground or a playground. These different intentions may affect the price that each of them may be willing to pay for the property and such prices have wide variations but the market value is not what each such individual may offer for the property. The market value is what a general buyer may offer and what the owner may reasonably expect. In determining the market value, the potential of the land as on the date of sale alone

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can be taken into account and not what potential it may have in the distant future."            

In Anirudhha Kumar and Ashwini Kumar vs.  Chief Controlling Revenue Authority, Uttar Pradesh, Allahabad and another, 2000(3) A.W.C. 2587, the learned single judge held-

" In the present case, the market value is to be determined on the basis of the value that would satisfy the vendor. Thus, the question of future potential cannot be a factor for determining the market value of such a land for the purpose of stamp duty payable under the Stamp Act. The vendee pays the price that satisfies the vendor and, therefore, it is the

utility of the land as on the date of transfer by the vendor and as such, if the land was an agricultural land, it has to be treated as such and the valuation has to be done accordingly. Whether in future the purchaser puts the land into residential use or changes the character is immaterial for the purpose of payment of stamp duty."

In Rakesh Chandra Mittal and others vs. Additional District Magistrate ( Finance and Revenue), Moradabad and another, 2004(3) UPLBEC 2434, a Division Bench of this court held-

" It is well settled that market value of the property has to be determined with reference to the date on which the document is executed. Market value as such keeps on varying and changing. Any subsequent improvement or change in the nature or user of the land, which may result into enhancement of the market value of the property, is not to be taken into account and it is only the value of the property on the date of execution of the document that is to be considered for the purpose of determination of proper stamp duty payable on the instrument."

Above all, a Full Bench of this court in Shri Ramesh Chandra Srivastava, Kanpur vs. State of U.P. and others, 2007 U.P.T.C. 335 held that the market value of the property has to be determined with reference to the date of which the document is executed.

In view of the judgments of this court, it is clear that the market value of the property has to be determined with reference to the date of which the document is executed. The market value of the property cannot be determined on the basis that the said property could be used for a different purpose nor could the market value be determined on the basis that it has a potential value

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in future. A Full Bench of this court has clearly held that on the basis of the various provisions of the Stamp Act, the market value is to be determined with reference to the date of which the document was executed and that any subsequent change in the nature or use of the land which may result in the enhancement of the market value of the property was not to be taken into account.

Consequently, the note (b) given by the District Magistrate in its circular dated 12.3.1994 is against the provisions of the Stamp Act and is without jurisdiction and cannot be sustained. Such type of determination of the market value cannot be envisaged. Since the writ petition is being allowed on this ground itself, it is not necessary for the Court to dwell on the question as to whether the revisional authority was justified in condoning the delay in the filing of the revision.

For the reasons stated aforesaid, the impugned order of the Revisional Authority cannot be sustained and is quashed. The writ petition is allowed. Further, I also hold that note (b) of the circle rate dated 12.3.1994 issued by the Collector, Saharanpur is wholly illegal and against the provisions of the Stamp Act and is also quashed.

In the circumstances of the case, there shall be no order as to cost.

Dated: 12.4.07

SFH


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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