The Bombay High Court recently clarified the scope of the stamp authority's power in cases involving properties sold through court supervised auctions. In the instant case, a Writ Petition No.3651 of 2024 was filed before the Hon'ble Bombay High Court seeking to quash and set aside the impugned demand notice dated 7 February 2024 issued by Office of Joint District Registrar, Collector of Stamps inter alia levying stamp duty of Rs 83,60,550/- and penalty of Rs 23,41,000/- on a property acquired under a Sale-cum-Monitoring Committee constituted by Supreme Court.
Brief Facts
A Sale-cum-Monitoring Committee was constituted by the Supreme Court by an order dated 10 May 2018 passed in Civil Appeal No. 20971 of 2017 to sell the assets of Citrus Check Inn Ltd. ("CCIL") and Royal Twinkle Star Club Limited ("RTSCL") and all their associate/sister concerns. Sale-cum-Monitoring Committee followed e-auction process for sale of the premises land together with the building thereon comprising of plots collectively admeasuring about 2160 sq.mtrs. bearing Gat No.107, 108 and 109 having plinth/Plot No.229 in Amby Valley City, Pune, Maharashtra wherein Trident Estate Private Limited ("Petitioner No 1") was the successful bidder for Rs. 2,51,00,000/- and certificate was issued in favour of the Petitioner No 1.
Petitioner No 1 presented a certificate for registration before Sub-registrar of Lonavala and expressed its willingness to pay 5% stamp duty on the amount reflecting in the certificate. However, the sub-registrar of Lonavala verbally rejected Petitioner No 1'srequest for registration of the certificate. Being aggrieved by the same, Petitioner No 1 made an application to the office of the Joint District Registrar and Collector of Stamps (Rural), Pune, Maharashtra seeking direction for registration of the certificate.
Petitioner No 1 had also initiated appropriate proceedings before Bombay High Court seeking necessary interim reliefs since the certificate was valid up to 17 August 2024 and thereafter, there was no provision in Registration Act, 1908 for registering it.
In response to the application filed by the Petitioner No 1 before Joint District Registrar and Collector of Stamps (Rural), Pune, Maharashtra the impugned notice was issued to Petitioner No 1 calling upon them to pay stamp duty on the market value derived by Joint District Registrar and Collector of Stamps (Rural), Pune, Maharashtra and not as per certificate issued by Sale-cum-Monitoring Committee appointed by Supreme Court.
It was argued on behalf of the Petitioner No 1 that once a sale is conducted by a Court or under the aegis of Court, the Stamp Authorities could not embark upon a journey to determine the true market value themselves, come to conclusion on the value of the property and levy stamp duty on that basis.
Main Issue for Consideration
Whether in a case where a sale is conducted by a Court or under the aegis of Court, the stamp authorities can embark upon a journey to determine the true market value of the property sold in an e-auction conducted by the Court and levy stamp duty thereon?
High Court Judgement
The High Court relied upon the Judgement passed by the Division Bench of this Court in the matter of Spectrum Constrictions and Developers LLP [2022 SCC Online Bom 3693] and Judgement passed by the Supreme Court in the matter of Registrar of Assurances & Another v. ASL Vyapar Pvt Ltd & Anr [2022 SCC Online SC 1554] and held that the price offered by the Petitioner No 1 is above the reserve price and highest bid received for the property. The High Court further appreciated that the price received in any auction could be slightly less as any bidder has to take care of the scenario of the auction process being challenged resulting in passage of time or failure of entire auction process.
The High Court further held that auction of a property by a court is possibly one of the most transparent methods by which the property can be sold. Even in a Court monitored auction, the Registering Authority determining what the market price would amount to the Registering Authority sitting in appeal over the decision of the Court permitting sale at a particular price. The Court quashed the impugned order issued by Joint District Registrar and Collector of Stamps (Rural), Pune, Maharashtra demanding stamp duty and penalty on the market value.
MHCO Comment
The High Court has rightly held and cleared the ambiguity that, the role of the Collector of Stamps is to charge stamp duty on the document presented before him and he is not empowered to determine the market value of the property and charge stamp duty based on their calculation instead of the document presented before him.
This article was released on 28 November 2024.
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