Messrs Jain Mototrs Thru Its ... vs State Of U.P.And Others
2023 Latest Caselaw 26731 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 


Neutral Citation No. 2023:AHC:188872.
 
Reserved
 
Court No. - 5
 

 
Case :- WRIT - C No. - 21892 of 2011
 

 
Petitioner :- Messrs Jain Mototrs Thru Its Partner Mahendra Jain
 
Respondent :- State Of U.P.And Others
 
Counsel for Petitioner :- Karshit Nigam
 
Counsel for Respondent :- C.S.C.
 

 
Hon'ble Piyush Agrawal,J.

1. Heard Sri S.S.Niam learned senior counsel assisted by Sri Karshit Nigam, learned counsel for the petitioner and learned ACSC for the respondents.

2. Present writ petition has been filed assailing the order dated 29.6.2009 by which deficiency of stamp duty amounting to Rs. 35,69,800/- was imposed; the order dated 31.7.2009 by which recovery citation was issued and the order dated 16.3.2011 by which appeal preferred by the petitioner was dismissed by the respondent no.2 confirming the imposition of stamp duty.

3. Brief facts of the case are that the petitoner is doing the work of repairing and denting painting of vehicles and wheel allighment and has been given registration by the District Industries Centre, Kanpur Nagar which is categorised as 'small scale industries'. On 19.1.2009 a report was prepared by the General Manager of the District Industries Centre, Kanpur for execution of lease and higher purchase agreement and the stamp duty was determined for Rs. 8,62,800/-. On 12.2.2009 a survey was made by the Sub Registrar IV Kanpur Nagar in which allegation was put forward that no industrial activity was undertaken by the petitoner, on the basis of which, proceedings under section 47-A of the Indian Stamp Act, 1899 was initiated and notice was issued to which reply was submitted by the petitioner on 22.6.2009 before the respondent no.3 raising objection about the ex parte report. Being not satisfied with the said reply the impugned order dated 29.6.2009 was passed holding deficiency of stamp duty amounting to Rs. 35,69,800/- and imposed penalty as well. Against the order dated 22.6.2009 the petitioner preferred appeal before respondent no.2. During the pendency of the appeal respondent no.3 has issued a recovery citation dated 31.7.2009 against the petitioner against which the petitoner preferred an appeal before the Board of Revenue which was dismissed by the impugned order dated 16.3.2011. Hence the present writ petition.

4. Learned counsel for the petitioner submits that the petitioner was granted small scale industries licence mentioning therein the work of repairig and denting painting of vehicles and wheel allighment and the said business as recognized by the Industries Department was being undertaken and the property in question which was leased out by way of lease deed and higher purchase agreement to which the due stamp duty as quantified by the General Manager of the District Indutries Center Kanpur was paid. He further submits that a report was prepared by the Sub Registrar, Kanpur Nagar which could be justified for initiating the deficiency of the stamp duty but once the petitioner specifically raised an objection about the said report the Collector ought to have made spot inspection personally or through competent authority as prescribed under Rule 7 of the Uttar Pradesh Stamp (Valuatiion of Property) Rules, 1997 (for short 'Rules, 1997). He further submits that once the authority, after disputing the report of the Sub Registrar, has not exercised the said power whole proceedings vitiates and is laible to be set aside. In support of his submission, learned counel for the petitioner has relied upon the judgment of this Court in (Deo Prakash Maurya vs. State of U.P. And others) (2021(9) ADJ 451). He prays for allowing the writ petition.

5. Per contra, learned ACSC supports the impugned order and submits that under the Stamp Act, in the property in question, the petitioner was not doing the activity of industrial as neither any production nor any processing of any goods were being undertaken on the contrary only car servicing, denting and painting were being undertaken as well as there was selling of spare parts, therefore he tried to justify the deficiency of the stamp duty. He prays for dismissal of the writ petition.

6. After hearing the learned counsel for the parties the Court has perused the record.

7. It is admitted that the petitioner was granted small scale industries registration by the Industries Department. The property in question have been leased and paid the due stamp duty but on the basis of the report of the Sub Registrar the proceeding of deficiency of stamp duty has been initiated. The petitioner has disputed the said report. It is incumbent upon the authorities more precisely the District Collector/ District Magistrate, Kanpur Nagar ought to have made an independent enquiry for deciding the said proceeding or through authorised representative as prescribed under Rule 7 of the Rules, 1997. Once the authority who was authorised under law to carry out an independent inquiry to determine the value of the property comprises in the instrument and then determine the stamp liability but the respondent no.3 has failed to act in the manner prescribed under Rule 7 of the Rule, 1997 for determining the value of the property.

8. This Court in Deo Prakash Maurya (supra) has held that once an objection has been raised to the report then the Collector/District Magistrate is duty bound to make an independent inquiry as prescribed under Rule 7 of the Rules, 1997. Relevant paragraph nos. 9, 10, 12 and 13 of the said judgment are quoted below:

"9.The intendment of such inspection report is only to assist the adjudicating authority to record a prima facie satisfaction on the correctness of the valuation of the property as disclosed in the instrument. The said report merely becomes the basis of initiating proceedings under Section 47-A of the Indian Stamp Act, 1899. Once the report is disputed by the noticee, the stamp authorities cannot place reliance on the same to determine stamp liability. The adjudicating authority will have to make an independent enquiry as prescribed in Rule 7 of the Uttar Pradesh Stamp (Valuation of Property) Rules, 1997 to determine the valuation of the property and on that basis assess the stamp liability payable on the instrument.

10.This narrative is supported by good authority in point. In Ram Khelawan (supra), this Court while construing the purpose of the inspection report [Such as one made by the learned Additional District Magistrate (Finance & Revenue) in this case], held as under:

"25. It has been found in several cases like the present one that the entire basis of determination of market value for the purpose of stamp duty is ex-parte report of Tehsildar or other officer. Ex-parte inspection report may be relevant for initiating the proceedings under Section 47-A of Stamp Act. However, for deciding the case no reliance can be placed upon the said report. After initiation of the case inspection is to be made by the Collector or authority hearing the case after due notice to the parties to the instrument as provided under Rule-7(3) (c) of the Rules of 1997. Moreover in the inspection report distance of the property from other residential or commercial properties and road must be shown and wherever possible sketch map must also be annexed alongwith the report so that correct valuation may be ascertained with reasonable certainity."

10.The proposition of law is squarely applicable to the facts of this case. On this footing alone, the orders passed by the learned authorities below are vitiated.

12.The District Magistrate/Collector (Stamps), Sonebhadra has failed to cause an enquiry in the manner prescribed under Rule 7 of the Uttar Pradesh Stamp (Valuation of Property) Rules, 1997 to determine the valuation of the property. It is beyond the pale of dispute that the District Magistrate/Collector (Stamps), Sonebhadra has evidently fettered his jurisdiction for no good cause. 

The learned appellate authority/Commissioner, Vindhyachal Mandal, Mirzapur in its order dated 22.03.2012 failed to redeem the error committed by the learned adjudicating authority/District Magistrate/Collector (Stamp), Sonebhadra. 

13.In wake of the preceding narrative, the order dated 21.06.2011 passed by the learned adjudicating authority/District Magistrate/Collector (Stamps), Sonebhadra as well as the order dated 22.03.2012 passed by the learned appellate authority/Commissioner, Vindhyachal Mandal, Mirzapur, are liable to be set aside and are set aside.

The matter is remitted to the learned adjudicating authority/District Magistrate/Collector (Stamps), Sonebhadra, with the following directions:

I. The learned adjudicating authority/District Magistrate/Collector (Stamps), Sonebhadra, shall decide the matter afresh, consistent with the manner stated in this judgement.

II. The controversy shall be adjudicated by the learned adjudicating authority/District Magistrate/Collector (Stamps), Sonebhadra, within a period of three months from the date of production of a computer generated copy of this order, downloaded from the official website of the High Court Allahabad. The Authority/Official shall verify the authenticity of such computerized copy of the order from the official website of High Court Allahabad and shall make a declaration of such verification in writing.

III. The petitioner undertakes to cooperate in the enquiries before the learned adjudicating authority/District Magistrate/Collector (Stamps), Sonebhadra, and shall not seek any unnecessary adjournment.

IV. If necessary, the learned adjudicating authority/District Magistrate/Collector (Stamp), Sonebhadra, shall conduct the proceedings on day to day basis to ensure that the above stipulated timeline of three months is strictly adhered to.

V. The amount already deposited by the petitioner shall remain subject to the final adjudication by the learned adjudicating authority/District Magistrate/Collector (Stamps), Sonebhadra in accordance with the above directions. "

9. In view of the above facts and circumstances of the case and law laid down the impugned orders dated 29.6.2009, 31.7.2009 and 16.3.2011 passed by respondent nos. 3 and 2 respectively cannot be sustained and are hereby set aside.

10. The matter is remitted back to the respondent no.3 to decide the issue afresh after making independent inquiry as contemplated under Rule 7 of the Rules, 1997 and thereafter, after hearing all stake holders the proceedings shall be concluded within four months from the date receipt of a certified copy of this order. The petitioner is directed to produced a certified copy of this order before the respondent no.3 within fortnight from today.

11. The writ petition succeeds and is allowed.

Order Date :- 3.10.2023

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