TaxTMI 
TaxTMI 
2026 (9) TMI 647
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....s, thereby resulting in its dismissal, in effect. 3. The facts are simple and undisputed. Appellant purchased a parcel of land from the Government of India for a fixed sale consideration, which was fully discharged through cheques issued on different dates in the year 2014. Upon receipt of the entire consideration, possession of the land was delivered to the appellant on 21st January, 2014. Thereafter, a deed of transfer in respect of the said land was executed by the Government of India in favour of the appellant on 24th June, 2016. At the time of execution and presentation of the instrument for registration, the appellant paid stamp duty and registration charges on the full sale consideration reflected therein. However, instead of releasing the registered instrument, the registering authority, who is the second respondent in the appeal, made a reference under Section 47-A of the Indian Stamp Act, 1899 [the Stamp Act] to the District Revenue Officer, the first respondent. Consequent thereto, the appellant was served with a show cause notice in Form-I dated 22nd August, 2016 calling upon it to pay an additional sum towards the alleged deficit stamp duty. Questioning the legality....
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....examined the scheme of the Stamp Act and the provisions of the Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968 [the Stamp Rules]. It observed that once the registering authority, namely the second respondent, entertained a doubt regarding undervaluation of the instrument, it was competent to make a reference under Section 47-A, whereupon the matter was required to be adjudicated by the Collector, i.e., the first respondent. The Division Bench further noticed that Section 47-A provides a complete statutory mechanism for determination of market value and levy of stamp duty. Particular emphasis was placed on sub-section (5) thereof, which confers a right of appeal upon any person aggrieved by an order of the Collector, to be preferred within the prescribed period before the competent appellate authority. Reference was also made to Rule 9 of the Stamp Rules, under which the Inspector General of Registration functions as the appellate authority. The Division Bench additionally noted that the statutory scheme envisages an appeal before the High Court against the order of the appellate authority. 6. Upon applying the aforesaid statutory framework to the facts....
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....strument relating to the transfer of any property, has reason to believe that the market value of the property or the consideration, as the case 1. Subs. by Act 5 of 1927, s. 5, for "promissory note or cheque". 2. Subs. by Act 19 of 1958, s. 7, for "with the duty of one anna" (w.e.f. 1-10-1958). 3. Subs. by Act 5 of 1927, s. 5, for "note or cheque". 45 may be, has not been truly set forth in the instrument, he may, after registering such instrument, refer the same to the Collector for determination of the market value or consideration, as the case may be, and the proper duty payable thereon. (2) On receipt of reference under sub-section (1), the Collector shall, after giving the parties a reasonable opportunity of being heard and after holding an enquiry in such manner, as may be prescribed by rules, made under this Act, determine the market value or consideration and the duty, as aforesaid, and the deficient amount of duty, if any, shall be payable by the person liable to pay the duty. (3) The Collector may, suo moto or on receipt of reference from the Inspector General of Registration or the Registrar of a District, in whose jurisdiction the property, or any por....
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....lenge to a show cause notice: i) want of jurisdiction and ii) abuse of jurisdiction (i.e., mala fide exercise of jurisdiction). Where the authority is vested with no power in law to embark upon an enquiry in the first place, the notice issued by such authority is non est. Also, in cases where the power is exercised mala fide or as an abuse of the process of law, the constitutional court may interdict it even at the threshold. However, these are engrafted as exceptions and not as routine measures to litigate every show cause notice under Article 226. 11. Ms. Haripriya Padmanabhan, learned senior counsel for the respondents, relying on the decisions of this Court in Special Director v. Mohd. Ghulam Ghouse (2004) 3 SCC 440, Union of India v. Kunisetty Satyanarayana (2006) 12 SCC 28 and Union of India v. VICCO Laboratories 2023 SCC Online SC 489 has contended that the enquiry that ordinarily follows consequent upon issuance of a show cause notice should not have been interdicted by the Single Judge. It was neither a case of lack of jurisdiction to issue the show cause notice nor a case of mala fides. According to her, absolutely no case for interference had b....
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....eve that the market value of the property which is the subject-matter of the conveyance has not been truly set out in the instrument. 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 fides of the parties to the document by attempting fraudulently to undervalue the subject of conveyance with a view to evade payment of proper stamp duty and thereby cause loss to the revenue. Therefore, the basis for exercise of power under Section 47-A of the Act is wilful undervaluation of the subject of transfer with fraudulent intention to evade payment of proper stamp duty. *** 18. On the facts of the case it cannot be said that Section 47-A has any application because there is no scope for entertaining a doubt that there was any undervaluation. That being so, the High Court's order is clearly unsustainable and is set aside. The registration shall be done at the price disclosed in the document of conveyance. There is no scope for exercising power under Section 47-A of the Act as there is no basis for even entertaining a belief that the market value of the prop....
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....ction (1) of the said provision. On its own terms, Section 47-A does not require the registering authority to issue notice having "reason to believe" of a culpable mindset being the motive behind the transaction; it merely requires reason to believe that the market value of the property has not been truly set forth in the instrument presented before him for consideration. It is one thing to require that the authority should have relevant material preceding the formulation of reasons, followed by exercise of power under Section 47-A of the Stamp Act; and, it is totally another thing to require that, in addition to the explicitly spelt out statutory requirement, the officer must also have material demonstrating wilful or fraudulent intent to evade stamp duty. The latter proposition, if sought to be pressed as an independent ingredient for the invocation of power under the said provision, would be tantamount to judicial legislation under a provision, de hors the precincts of the plain text of the statute. The language is plain and the symmetry is straightforward, which should not be distorted in its purpose, through legal lexicalism. 17. We may also notice that the view expressed i....
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....ven may differ from the sizes of area and other relevant factors. This apart there has to be some material before such authority as to what is the likely value of such property in that area. In its absence it would be very difficult for such registering authority to assess the valuation of such instrument. It is to give such support to the registering authority that Rule 340-A is introduced. Under this the Collector has to satisfy himself based on various factors mentioned therein before recording the circle rate, which would at best be the prima facie rate of that area concerned. This is merely a guideline which helps the registering authority to assess the true valuation of a transaction in an instrument. This gives him material to test prima facie whether the description of valuation in an instrument is proper or not. *** (emphasis ours) 19. Furthermore, in our considered opinion, "wilful undervaluation" and/or "fraudulent intention" cannot be read as an intra-sentential component into Section 47-A of the Stamp Act for its invocation, and any distinction, if purportedly demarcated between bona fide undervaluation and wilful undervaluation, is alien to the pl....
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....valuer to confirm true depressed market value as Rs.1.5 cr. After due diligence, P agrees to purchase the property and offers Rs.1.5 cr. The offer of P is accepted by S who sells the property to P for Rs.1.5 cr. Being the entire sale consideration, Rs.1.5 cr. is shown in the instrument. There is not an iota of fraud, no cash dealing. As is customary, P as the purchaser bears stamp duty assessed on Rs.1.5 cr. Two courses are possible on such instrument. First, if Section 47-A is taken on its own terms and the registering authority has reason to believe that market value has not been truly set forth, the enquiry would be a pure valuation-based enquiry, i.e., whether Rs.1.5 cr. is the true market value given the encumbrances, though circle rate is Rs.2 cr.? The burden would be on P to prove the market value of the property sold as Rs.1.5 cr., not to disprove fraud. However, if the test in V. N. Devadoss (supra) is applied to such a situation, a fraudulent intention has to be the sine qua non for issuance of notice and the enquiry would shift from valuation to culpable mindset. P, who has been entirely honest, will now be called upon to prove absence of fraud....