TaxTMI 
TaxTMI 
2022 (11) TMI 1385
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....of Assurances and Ors., a Writ Petition being Writ Petition No. 1295 of 2009 ("the Company matter"). The facts: 2. In Re the Partition Matter: In a Partition Suit being Extraordinary Suit No. 32 of 1987, Ld. Single Judge passed an order dated 15.09.1987 for the sale of Premises No. 20 to 20/14 (except 20/10) Chetla Flat Road, Kolkata- 700027 ("the land"), measuring 41 cottahs and 21 chittacks, i.e. approximately 2800 square metres. On 08.03.2006, the Joint Receivers appointed by the Court issued an advertisement in The Telegraph, a leading daily newspaper for sale of the land. At the auction, several parties participated, and the offer made by one Priya Dutta at the rate of Rs. 1,88,500 per cottah was the highest. However, she did not pay the entire earnest money which was stipulated at the rate of 10% of the bid amount. Sati Pvt. Ltd. (R1 in S.L.P. (C) 22197 of 2010) also offered to match the bid amount Rs. 1,88,500 and to pay the entire earnest money within 3 days. The court directed default clauses in case of failure to pay the earnest money or consideration amount, such as, if Sati Pvt. Ltd. did not pay the earnest money within 3 days, the joint receivers could proceed to con....
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..... On payment of the entire consideration, the Official Liquidator executed the Conveyance Deed on 07.05.2008 and presented the same before the Registrar of Assurance, Calcutta for registration. On 06.08.2008, the Additional Registrar of Assurance-II issued a Demand Notice to ASL Pvt. Ltd. informing that the market value of the property was assessed at Rs. 1.70 crores and ASL Pvt. Ltd. had to pay the deficit Stamp Duty of Rs. 5,86,000 as well as deficit Registration Fee of Rs. 92,125. Aggrieved, ASL Pvt. Ltd. filed the writ petition challenging the notice. Ld. Single Judge referred the question to a larger bench. Proceedings before the Full Bench of the Calcutta High Court: 7. In order to appreciate the controversy, it would be appropriate to first reproduce the relevant provision in exercise of which power the higher stamp duty was sought. Section 47A was inserted by the Indian Stamp (West Bengal Amendment) Act, 1990 (hereinafter referred to as the 'Act') reads as under: 47A. - Instruments of conveyance etc. undervalued how to be dealt with - (1) Where the registering officer appointed under the Registration Act, 1908 (16 of 1908), has while registering any instrument o....
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.... property in sale deed so as to defraud the government proper revenue. There was no provision in the original Stamp Act to empower the Revenue Authorities to make an inquiry about the value of the conveyed property. Hence, amendments were made to the Indian Stamp Act from time to time in several states to determine the correct stamp duty. 2. V.N. Devadoss v. Chief Revenue Control Office-cum-Inspector and Ors. (2009) 7 SCC 438, which arose Under Section 47A as applicable to Tamil Nadu, wherein it was held that it is not a routine procedure to be followed in respect of each and every document of conveyance presented for registration without any evidence to show lack of bona fide of the parties. Therefore, the basis for the exercise of power Under Section 47A of the Act is the wilful undervaluation of the subject of transfer with fraudulent intention to evade payment of proper stamp duty. The Registering Officer cannot have any reason to believe that the market value of the property was not truly set forth in an instrument of transfer executed pursuant to the order of a court, when the property was sold at a public auction after the publication of the advertisement in newspapers. 9....
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....icable to West Bengal read with Rule 3 of the West Bengal Stamp (Prevention of Undervaluation of Instruments) Rules, 2001 (hereinafter referred to as the 'Rules') is not applicable to an instrument executed by a Receiver pursuant to an order of sale passed by a civil court, after publication in newspapers. The sale conducted by the court through its officers qualifies to be an open market sale subject to the following conditions: a) there must be wide publicity of the proposed sale and particularly there shall be publication of advertisement in at least one newspaper having wide circulation in the concerned city/town/district. b) The purchaser of the property must not be connected with or related to the authority/officer conducting the sale. 13. In the discussion over the objective and purport of Section 47A of the Act as applicable to the State of West Bengal, Tamil Nadu and Andhra Pradesh, it was observed that they were in pari materia insofar as they confer power on the Registering Officer not to register an instrument when the Registering Officer has reason to believe that the market value of the property has not been truly set forth in the instrument. The differen....
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....above the reserve price or even matching the reserve price, as was seen in the company matter. The whole basis of holding that a Court sale is an open market sale is the sanctity with which the proceedings of the sale are conducted by the court and its officers. In case the registering authority has any material to doubt such sanctity, it is open for it to move the court with a proper application pointing out such materials for reviewing the order regarding the determination of price. 15. We may note that in order to buttress the entitlement for fixation of stamp duty based on a market value as perceived in the aforesaid Sub-section, the State relied upon the judicial pronouncement of this Court in M/s. Kayjay Industries Pvt. Ltd. v. M/s. Asnew Drums (P) Ltd. and Ors. (1974) 2 SCC 213. It was submitted that a Court sale is a forced sale and notwithstanding the competitive element of a public auction, the best price is not often forthcoming, thereby creating an apprehension that it will adversely affect the State Exchequer in respect of other properties in the area. However, even if the property at a Court sale does not fetch the highest or best available price and there are other ....
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....Amendment) Act, 1967, the matter would be referred to the Collector for the determination of market value, whereas under the Indian Stamp Act (West Bengal Amendment) Act, 1990, the matter has to be referred to such authority as may be prescribed in the Rules for the same. The "reasonable belief" Under Section 47A of the Act is an objective assessment based on the facts and information disclosed, and it is incorrect to read the intention of the parties to the sale. * The impugned judgment incorrectly drew a similarity between Section 2(16B) of the Act as amended in West Bengal and the Explanation appended to Section 47A of the Act applicable in Tamil Nadu. The former contemplates that the market value must be determined in the manner prescribed in the W.B. Stamp Rules and aims to determine an amount "whichever is higher", whereas the latter leaves it to the discretion of the authorities specified therein. * There could be diverse reasons for the Registering Officer to have 'reason to believe' that the market value is incorrect, including in a court sale or liquidation proceedings, the advertisement was not made properly to elicit buyers; the sale of the property was freq....
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....new class which was not contemplated by the statute. * The Stamp Act being a fiscal statute, should be interpreted strictly and literally. The impugned judgment inserted a 'non-obstante clause' which would make Rule 3 of the W.B. Stamp Rules and Sections 47A, 47B, and 47C of the Act as applicable in West Bengal, inapplicable to any court sale/auction sale. The impugned judgment cannot create an 'exemption' Clause in the fiscal statute when none is provided under the statute. Section 47A as amended in West Bengal is similar to Section 47A as amended by the State of Andhra Pradesh, which has been upheld in P. Laxmi Devi (supra) case, wherein it was held that where wordings of a taxation statute are so plain and unambiguous that it admits no exceptions, the relying on the object and purpose of the amendment would be committing an error. * The decision of V.N. Devadoss (supra) case is per incuriam in view of paragraph 7 of Kayjay Industries (supra) case which held that a court sale is a forced sale notwithstanding the competitive element of a public auction, and the best price is often not forthcoming. * The impugned judgment relies on the doctrine ....
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....view that the provision of Section 47A of the Act cannot be said to have any application to a public auction carried out through court process/receiver as that is the most transparent manner of obtaining the correct market value of the property. 23. It is no doubt true that in a court auction, the price obtainable may be slightly less as any bidder has to take care of a scenario where the auction may be challenged which could result in passage of time in obtaining perfection of title, with also the possibility of it being overturned. But then that is a price obtainable as a result of the process by which the property has to be disposed of. We cannot lose sight of the very objective of the introduction of the Section whether under the West Bengal Amendment Act or in any other State, i.e., that in case of under valuation of property, an aspect not uncommon in our country, where consideration may be passing through two modes - one the declared price and the other undeclared component, the State should not be deprived of the revenue. Such transactions do not reflect the correct price in the document as something more has been paid through a different method. The objective is to take c....
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....y the fundamental intent with which the provision was brought into force and specifies so in the same manner though albeit in a different language. In a court auction following its own procedure, the Registering Officer cannot have any reason to believe that the market value of the property was not duly set forth - a pre-requisite for a Registering Authority to exercise its power under the said Section. 27. If we see in the factual context of the two scenarios before us in respect of the two cases, the telling aspect in a partition case was the existence of 98 tenants on a land at a monthly rent of Rs. 8,000 for the entire land and 80 vendors occupying the land for hawking business during day time. It is trite to say that the mere existence of tenancy results in a considerable decline in the market value of the property as they may have their statutory rights and even otherwise, the purchaser would be acquiring the property hardly in an ideal scenario and would be left with the burden to take legal processes for the eviction. In such a scenario, there is actually a great depression in the market value of the property as even if a fair transaction without an auction takes place wit....