M/S Mars Developers, Junagadh vs State Of Gujarat
2023 Latest Caselaw 3517 Guj

     C/SCA/13827/2017                              JUDGMENT DATED: 28/04/2023




              IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

              R/SPECIAL CIVIL APPLICATION NO. 13827 of 2017


FOR APPROVAL AND SIGNATURE:


HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI

=============================================

1     Whether Reporters of Local Papers may be allowed
      to see the judgment ?

2     To be referred to the Reporter or not ?

3     Whether their Lordships wish to see the fair copy
      of the judgment ?

4     Whether this case involves a substantial question
      of law as to the interpretation of the Constitution
      of India or any order made thereunder ?

=============================================
                        M/S MARS DEVELOPERS, JUNAGADH
                                    Versus
                          STATE OF GUJARAT & 2 other(s)
=============================================
Appearance:
HARSHESH R KAKKAD(7813) for the Petitioner(s) No. 1
MR RC KAKKAD(389) for the Petitioner(s) No. 1
ADVANCE COPY SERVED TO GOVERNMENT PLEADER/PP for the
Respondent(s) No. 1
NOTICE SERVED for the Respondent(s) No. 1,2,3
=============================================

    CORAM:HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI

                               Date : 28/04/2023

                                ORAL JUDGMENT

1. By way of present petition, the petitioner herein has prayed for following reliefs:

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

"(A) This Hon'ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction, quashing and setting aside the impugned order passed by the respondent no.2 passed on 30.08.2016 passed in IJR/leagle/Appeal/53-A-Junagadh/48/14 which is at annexure - 'K' and also quash and set aside the final order passed by the Respondent No.3 - Dy. Collector passed on 04.02.2014 bearing No.Stamp/Section-33/14/A.G./370 to 371 which is at annexure - 'I' declaring it to be violative of the provisions of Bombay Stamp Act, 1958 and Rules framed there under and also violative of the provisions of Bombay Stamp (determination of market value of the property) Rules, 1984.

(B) Pending admission, hearing and final disposal of this Special Civil Application your lordships will be pleased to stay implementation, operation and execution of impugned orders passed by the respondent Nos.2 and 3 which are at annexure - 'K', annexure - 'I' or restrain the respondents, their officers, servants and agents from taking any steps including coercive steps and measures for recovery of deficit stamp duty amount pursuant to the order which is at annexure - 'I' or otherwise and from initiating any action of recovery against the petitioners.

(C) An ex-parte ad-interim relief in terms of para (B) above be granted.

(D) any other and further relief/s may kindly be granted in the interest of justice."

2. The brief facts leading to the filing of the present petition are read thus:

2.1 The petitioner herein is a registered partnership firm having executed an agreement to sell of a non agricultural land with possession, with respect to revenue survey No.253/1, situated in vicinity of Junagadh Municipal Corporation admeasuring 7640.90 sq. mtrs, by a registered agreement to sell registered with the office of the Sub-Registrar, Junagadh on 13.01.2011 at Sr. No.440 and appropriate stamp was affixed according to the prevailing rate of jantri.

2.2 The respondent No.3 issued a notice to the petitioner

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

herein on 04.07.2013 for deficit stamp duty on the ground that new jantri came into effect from 01.04.2011 and 18.04.2011 and therefore, as per the new jantri, valuation of the land is fixed at Rs.8050/- per sq. mtr. and therefore, the petitioner herein was called upon to pay the deficit stamp duty of Rs.14,72,852/- in accordance with the objection of the Audit Officer. The petitioner prayed for time by a communication dated 15.07.2013 and demanded certain details and documents from the respondent No.3.

2.3 A second show cause notice issued by the respondent No.3 on 08.08.2013 providing a copy of the Audit report bearing No.RSA (Report)/ 2012-13/SD & RF/PDP-116, informing the next date. On 19.08.2013, the petitioner wrote a letter whereby the petitioner asked the details and documents which were demanded informed that audit report could not be said to be a decision because of its remarks and was asked that whether the additional stamp duty is legally required? The petitioner herein informed that agreement to sell with possession amounts to sale deed and therefore, appropriate stamp duty was affixed at the relevant time and therefore, once the stamp duty is paid at the time of registration of first document i.e. agreement to sell, no further stamp duty is leviable at the time of registration of the sale deed save and except stamp duty of Rs.100/-. If at all the time of registration of the sale deed for the same transaction, any stamp duty is required because of change in jantri, the petitioner wants to know under which provision of law the said was leviable.

2.4 On 06.11.2013, the respondent No.3 issued third show

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

cause notice. The petitioner replied to the same on 25.11.2013 seeking details and documents which were earlier demanded by communications dated 15.07.2013 and 19.08.2013. Though, repeated demands made by the petitioner herein, the same was not supplied by the respondent No.3 to the petitioner herein and the respondent No.3 passed the final order on 04.02.2014 bearing No.Stamp/Section-33/14/A.G./370 to 371 and thereby passed an order of deficit stamp duty of Rs.14,72,852/- and penalty amounting to Rs.14,72,852/- amounting to Rs.29,45,704/- total duty recoverable from the petitioner herein. It was further ordered that if the aforesaid amount was not deposited within 90 days than under the provisions of Section 46 of the Act, 15% penal interest would be recovered from the petitioner herein.

2.5 Being aggrieved by the aforesaid order dated 04.02.2014 passed by the respondent No.3, the petitioner herein preferred an appeal/reference before the respondent No.2. The respondent No.2 passed a final order in IJR/leagle/Appeal/53-A/Junagadh/48/14 and confirmed the final order passed by the respondent No.3 and thereby decided the market value of the property at Rs.6,00,60,245/- an passed an order that as per Article 20 of the Schedule - 1, total stamp duty leviable is Rs.29,42,952/- out of that, stamp duty paid on sale deed is Rs.100/- and stamp duty paid on agreement to sell is Rs.14,70,000/- be reduced from Rs.29,42,952/- and therefore, the deficit stamp duty Rs.14,72,852/- + penalty Rs.14,72,852/- amounting to Rs.29,45,704/- be recovered from the petitioner.

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

2.6 Being aggrieved by the impugned orders passed concurrently by the respondent authorities, the petitioner herein has preferred the present petition with the prayers as referred above.

3. Heard Mr. R.C. Kakkad, learned advocate appearing for the petitioner and Mr. Trupesh Kathiriya, learned AGP appearing for the respondents.

4. Mr. R.C. Kakkad, learned advocate appearing for the petitioner, submitted that the orders impugned passed by the respondent Nos.2 and 3 with regard to recovery of deficit stamp duty are against the provisions of the Act and bad in law and therefore, the said orders are required to be quashed and set aside.

4.1 Mr. Kakkad, learned advocate submitted that the petitioner herein executed an agreement to sell with possession on 13.01.2011 and at that time, full stamp duty was paid according to the prevailing jantri rates.

4.2 Mr. Kakkad, learned advocate further submitted that it was not open for the Audit Officer to pass an order seeking deficit stamp duty on the basis of the Audit report. There is no provision under the Act or the Rules that the Deputy Collector has to pass the order only on the basis of report of the Audit Officer.

4.3 Mr. Kakkad, learned advocate, submitted that the stamp duty is not assessed as per the provision of the Bombay Stamp

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

Rules, 1984 more particularly, Rule 8 of the Rules. Mr. Kakkad, learned advocate, also submitted that the assessment arrived at by the respondent authorities, was in disregard to the aforesaid principles provided under the Stamp Rules and therefore, the deficit stamp duty was not payable.

4.4 Mr. Kakkad, learned advocate submitted that there was no intention of the petitioner to evade the payment of proper stamp duty in absence of any independent conclusion and without any evidence on record as well as without assigning any finding with regard to penalty, the order having passed without affording the opportunity of hearing to the petitioner before imposing penalty.

4.5 Reliance was placed on Rule 4 of the Gujarat Stamp (Determination of Market Value of Property) Rules, 1984, wherein it provides that the Collector is empowered to determine the true market value of the property and not the Accountant General. Mr. Kakkad, learned advocate, submitted that unfortunately, on the report of the Accountant General, the respondent authorities decided that market value of the property and decided the stamp duty, which is not permissible in eye of law.

4.6 Mr. Kakkad, learned advocate placed reliance on the decision rendered in case of Bileshwar Industrial Estate Developers Pvt. Ltd. Vs. State of Gujarat and Anr .. reported in 2013 (2)GLR 1435.

4.7 Placing reliance on the aforesaid submissions, Mr.

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

Kakkad, learned advocate appearing for the petitioner, submitted that the orders impugned passed by the respondent authorities be quashed and set aside the petition be allowed.

5. Per contra, Mr. Trupesh Kathiriya, learned AGP appearing for the respondents, submitted that the Audit report raised the objections due to change in jantri and the said change came into force on 01.04.2011 and the petitioner executed registered sale deed on 08.08.2011 at Rs.100/- stamp and therefore, due to change in the jantri value, the market value of the property automatically increased and based on the said information, the Deputy Collector, Stamp Duty Valuation Office, Junagadh, issued a show cause notice under Section 39(1)(b) and informed the petitioner that when the stamp duty is paid to the agreement to sell and thereafter, execution of the of the agreement to sell if the purchaser complied with the conditions as mentioned in the agreement to sell and fulfill the same, only in that case the registered sale deed is executed by the original owner in favour of the petitioner and therefore, at the time of execution of the registered sale deed, the correct market valuation/jantri value, the petitioner is liable to pay qua the differential amount and therefore, show cause notice came to be issued to the petitioner herein.

5.1 Mr. Kathiriya, learned AGP submitted that, Rule 8 would apply in a case where the jantri value is less than the market value. Mr. Kathiriya, learned AGP, submitted that in the facts of the present case, the respondent authority is not disputing that the market value is higher than jantri value and therefore, Rule 8 is not required to be followed for the reason that the

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

authority has directly applied jantri as per prevailing value which came to be revised on 01.04.2011.

5.2 Mr. Kathiriya, learned AGP, also submitted that the respondent authority issued three show cause notices dated 04.07.2013, 08.08.2013 and 06.11.2013 respectively to the petitioner herein and sufficient documents also came to be provided to the petitioner and therefore, it is not open for the petitioner to contend that the respondent authority has breach the principles of natural justice.

5.3 Mr. Kathiriya, learned AGP, further submitted that the contentions raised by the petitioner that the stamp duty at the time of agreement to sell is fully paid and therefore, at the time of execution of the registered sale deed, due to change of jantri value (the valuation of the property is annexed) the petitioner is not liable to pay the differential amount, is not leviable.

5.4 Mr. Kathiriya, learned AGP, submitted that considering the provision of Indian Registration Act, 1908, any agreement to transfer of any immovable property of value more than Rs.100/- is required to be registered. So if the purchaser of the property under any agreement to sell, when it is followed by the registered sale deed, the petitioner do not get any right or interest of the property purported to transfer under the agreement to sell.

This absolute rule is subject to exception under Section 53-A of the Transfer of Property Act. Section 53-A of the said

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

Act states that once the buyer has possession of the property that is the subject matter of the transfer while complying with the part of obligation under the agreement, the seller does not entitle to disturb the possession so granted to the buyer. Section 53-A of the Act also provides the shield to the transfree against the transferer and bars the transferer from disturbing the possession from the transferee but it does not cure the title of the buyer of the property, the ownership of the property would still remain with the seller and therefore, in the present case, where the agreement to sell is done with the possession then also the title of the property would remain with the owner till execution of the sale deed under the Indian Registration Act.

Therefore, the title of the immovable property can only be transferred by the registered sale deed. The aforesaid provision reveals that the execution of the agreement to sell to full consideration is not paid by the present petitioner and therefore, whenever consideration and other condition as mentioned in the agreement to sell is paid and valuation has been mentioned in the agreement to sell only thereafter, the sale deed would be executed by the owner and therefore, the petitioner would be liable to pay the stamp duty but in the interregnum period i.e. on 01.04.2011, the remaining payment has been paid and all the conditions to be fulfilled by the petitioner in that case only, by way of execution of the agreement to sell, the title of the property/ownership of the property is transferred in favour of the petitioner and therefore, at the time of execution of the sale deed market

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

value as per prevailing jantri value is required to be levied by the authority and therefore, only Rs.100/- stamp, the sale deed could not have been executed.

5.5 Placing reliance on the aforesaid submissions, Mr. Kathiriya, learned AGP submitted that no interference is called for in the orders impugned passed by the respondents authorities and the petition be dismissed in limine.

Analysis:-

6. The facts relevant for the consideration of the dispute-in- question are read thus:

 It is an undisputed fact that the petitioner executed registered agreement to sell with possession dated 13.01.2011 and paid Rs.14,70,000/- out of Rs.3 crores.

 On 01.04.2011, new jantri came into force and therefore, the market value of the property increased as per the jantri value.

 The petitioner entered in to registered sale deed on 08.08.2011 and paid Rs.100/- towards stamp duty.

 On 04.07.2013, a show cause notice came to be issued under Section 39(1)(d) of the Stamp Act by the respondent authority.

 The petitioner replied to the said show cause notice by a letter dated 15.07.2013 and sought for an adjournment and A.G. Audit Report.

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

 On 08.08.2013, the respondent authority granted time and also provided A.G. Audit report to the petitioner and kept hearing on 26.08.2013.

 On 19.08.2013, the petitioner sought time 2 nd time which came to be granted by the respondent authority.

 On 06.11.2013, again show cause notice came to be issued to the petitioner.

 On 25.11.2013, petitioner asked for further documents reiterating the further request dated 19.08.2013 and 15.07.2013.

 On 04.02.2014, the respondent No.3 passed the final order under Section 39(1)(d) of the Stamp Act bearing No.Stamp/Section-33/14/A.G./370 to 371.

 Being aggrieved by the said order dated 04.02.2014, the petitioner herein preferred an appeal being No. IJR/leagle/Appeal/53-A/Junagadh/ 48/14 before the Deputy Collector, which came to be rejected by order dated 30.08.2016 confirming the order passed by the respondent No.3 dated 04.02.2014.

7. The final order passed by the respondent No.3 dated 04.02.2014 in Stamp/Section-33/14/A.G./370 to 371 read thus: (true translation)

"(1) Reading document no.6536 dated 03/11/2007 and document no.10027 dated 11/10/2011 of the Sub-Registrar Office, Junagadh jointly, it is found that the stamp duty used in document

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

no.10027 dated 11/10/2011 is not proper as per rules. Therefore, the same has been impounded under Section-7(3) read with Section-33 of the Gujarat Stamp Act, 1958 by the Sub-Registrar Office, Junagadh and produced before this office.

(2) Upon audit by the Office of the Accountant General (A.G.), Ahmedabad in the year 2012 as to whether stamp duty used on the document registered in the Sub-Registrar Office, Junagadh in the year 2011 is proper or not, the A.G. has raised objection that the party has not used proper duty on the registered document as per the provision of the rules determining the market values and as per the Gujarat Stamp Act, 1958.

(3) The party has purchased agricultural land admeasuring 4600 Sq. Mts. of Survey No.253/1 paiki of Junagadh Taluka of Junagadh District in the State of Gujarat vide Document No.6536 dated 03/11/2007. It appears clear that the said land has been purchased for residential purpose by Document No.10027 dated 11/10/2011. Despite that the parties have used stamp duty as per prevailing jantri rate for agriculture. Whereas the A.G. has raised an objection that the party has purchased the land for residential purpose is liable for stamp duty as per the rate of residential purpose. The purpose of the agricultural land purchased by the party is only for the residence and therefore, as the agricultural land mentioned in the document is converted into 'land for residential purpose', based on the jantri, the rate of the land in question is fixed to Rs.1575/- per Sq. Mt., and therefore, the market value of the property comes to Rs.72,45,000/- and applicable stamp duty on the same comes to Rs.3,55,005/-. Whereas, you have used Rs.27,100/-, the document in question is executed with deficit stamp duty of Rs.3,27,905/-.

(4) The party was given sufficient opportunity for representation by issuing notice vide Read-(2) regarding why the deficit stamp duty of Rs.3,27,905/- as per Section-39(1)(b) of the Gujarat Stamp Act, 1958 and ten times amount for the penalty thereof should not be recovered.

(5) The party has made representation by Read-(3) about the said notice and objections. There is no legal or lawful representation therein, but the questions except of original subject matters and objections have been raised.

(6) Considering the gravity of case, objection raised by the A.G. and representation made by the party, all subject and merits, following order is hereby passed.

: ORDER :

"By virtue of power conferred under Section-39(1)(b) of the Gujarat Stamp Act, 1958, I, the Deputy Collector, Stamp Duty Valuation Organization, Junagadh, do hereby order that the deficit stamp duty of Rs.14,72,852/- and the amount of Rs.14,72,852/- towards the penalty thereof, aggregating to Rs.29,45,704/-

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

(Rupees Twenty Nine Lakhs Forty Five Thousand Seven Hundred Four only) be recovered from the party: M/s. Marsh Developers, a Partnership Firm through its Partner: Mr. Vipulkumar Vallabhbhai Rajpara, Residing at: Marigold-2, Opp. Bahauddin College, District: Junagadh towards land revenue dues."

If the amount of dues is not paid within 90 days from the date of order, it shall be recovered with 15% Penal Interest as per the provision of Section-46 of the said Act from the date of Order.

If aggrieved by the said order, an appeal can be filed before the Chief Controlling Revenue Authority, Office of the Chief Controlling Revenue Authority, Block No.14, First Floor, Old Secretariat, Gandhinagar by depositing 25% amount of the order within 90 days from the date of order.

Affixed my signature and seal today on 04/02/2014."

8. The final order passed by the respondent No.2 dated 30.08.2016 in IJR/leagle/Appeal/53-A/Junagadh/ 48/14 read thus: (true translation)

"1) The appellant - M/s. Marsh Developers, a Partnership Firm through its Partner: Mr. Vipulkumar Vallabhbhai Rajpara has submitted document no.8051 for the non-agricultural land for residential purpose admeasuring 7640.90 Sq. Mts. of R.S. No.253/1 paiki 1 of Moje: Junagadh for registration before the Sub- Registrar Office, Junagadh. The said document was registered by the Sub-Registrar, Junagadh and returned.

2) Upon audit of the Office of the Sub-Registrar, Junagadh by the Office of the Accountant General, Ahmedabad for the year - 2011, upon determining the market value of the land described in the document in question, as the duty was used in the Document of Agreement for Sale dated 13/01/2011, the document in question was executed by using Stamp Duty of Rs.100/-. Though the rates of the land bearing R.S. No.253/1 paiki 1 of Moje: Junagadh described in the document were available vide Jantri, the Sub-Registrar, Junagadh has not even considered the rates of next S. No.253/2 and as the proper stamp duty was not used as per the provision of the rules determining the market values and as per the Gujarat Stamp Act, 1958, the A.G. raised objection to recover the deficit stamp duty and the matter was forwarded to the Deputy Collector, Stamp Duty Valuation Organization, Junagadh.

3) The Deputy Collector ordered to recover the deficit stamp duty of Rs.14,72,852/- under Section-39(1)(b) of the Gujarat Stamp Act and the amount of Rs.14,72,852/- towards the penalty thereof under Section-39(1)(b), aggregating to Rs.29,45,704/- (Rupees Twenty Nine Lakhs Forty Five Thousand Seven Hundred

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

Four only) vide Ordered vide read-(2) above.

4) Aggrieved by the Order referred at Para-3 above, the appellant preferred appeal under Section-53(1) of the said Act before this office.

5) Considering the facts mentioned in the appeal, the same was admitted as it was in consonance with the provisions of Section-53(1) of the Gujarat Stamp Act. As per the Principle of Natural Justice, hearing was kept on 13/07/2016 issuing the notice dated 30/06/2016 to the appellant. Ld. Advocate Mr. J.M. Devani for the appellant remained present.

6) Main written submission vide appeal of the appellant and by the Advocate for the appellant is as under:

(1) The order of the Deputy Collector is liable to be quashed as the same is ex-parte, unconstitutional, illegal, against the principle of natural justice and against the provisions of law.

(2) The order of the Deputy Collector is liable to be quashed as the same is passed without considering my written submissions, without providing necessary documents and against principle of natural justice.

(3) The document in question was registered at the office of the Sub-Registrar in the year-2011. I had paid the stamp duty of Rs.14,70,000/- at the time of registering first agreement for sale and the sale deed was executed on stamp paper of Rs.100/- as per rules, which has not been taken into consideration by the Deputy Collector before passing an Order.

(4) Upon considering the facts of the document in question, it appears clear that the possession of the property was handed over to the appellant at the time of registering Agreement for Sale. Moreover, the cheque towards consideration of the property has been given to the original owner. Hence, it appears clear that the purpose of the said document was to transfer the ownership of the property between the parties. As per the provision of the Transfer of Property Act, the transaction is entirely legal. Accordingly, sale deed with possessions was executed. Therefore, market price as on the date of agreement of sale should be determined. The Deputy Collector passed order without considering the aforesaid significant facts, which is liable to be quashed.

(5) In the impugned sale deed, the complete stamp duty as per law was paid and the same was approved by the office of the Sub-Registrar. However, objection was raised by the office of A.G. Audit, therefore the order passed by the Deputy Collector without determining its legality, is liable to be quashed.

(6) The order passed by the Deputy Collector is unlawful and unconstitutional, therefore it is liable to be quashed.

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

7) With regard to the aforesaid subject, upon conducting detailed analysis of the case papers of the office of the Deputy Collector, appeal application of the applicant, submission of the advocate of the applicant, the Act and the laws therein, the following conclusions can be derived.

(1) The Deputy Collector issued notice to the applicant for the hearing dated 15/07/2013 and 26/08/2013. The Deputy Collector provided the copy of the para of the office of A.G. in accordance with the details of the case along with the notice to the applicant. The applicant submitted representation in writing on 23/07/2016 and 19/08/2013. Upon considering the aforesaid representation and details of the case, the Deputy Collector passed order to recover the amount of deficit stamp duty and penalty as per section-39(1)(B) of the Act.

(2) In the disputed case, as submitted by the applicant, the transaction was done as per the sale deed, executed on 13/01/2011 and the amount of Rs.100/- was paid as duty for the sale deed no.440, dated 13/01/2011 for the selling.

Upon considering the provisions of the Gujarat Stamp Act, as per section-2 (na), the definition of market value, is as under.

Section-2(n-a) "market value" in relation to any property which is the subject matter of an instrument means the price which such property would have fetched if sold in open market on the date of execution of such instrument.

As per the provision of section 2 (na), the market value to be determined for the sale deed for transfer of ownership under the Gujarat Stamp Act, is to be determined on the date of execution of such instrument.

Moreover, the following provision is made under the explanation:- 1 of the Article-20 of Schedule 1 of the Act.

"For the purpose of this Article, an agreements to sell an immovable property or an irrevocable power of attorney shall, in case of transfer of the possession of such property before, at the time of, or after the execution of such agreement or power of attorney, be deemed to be a conveyance and the stamp duty thereon shall be chargeable accordingly"

Provided that the provisions of section 32-A shall apply mutatis mutandis to such agreement or power of attorney as are applicable to a conveyance:

Provided further that where subsequently a conveyance is executed in pursuance of such agreement of sale, or an irrevocable power of Attorney, the stamp duty, if any, already paid and recovered on the agreement of sale or an irrevocable power of Attorney which is deemed to be a conveyance, shall be

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

adjusted towards the total duty leviable on the conveyance.

According to the aforementioned provisions, the submission of the applicant to determine the market value as on the date of agreement to sale, is not appropriate in the impugned chapter, therefore the same can not be accepted.

As per the aforementioned details, pursuant to the instruction of the A.G., the stamp of Rs.29,42,952/- is to be utilized for the land having market value of Rs.6,00,60,245/- in the impugned sale deed, as per article 20 of Schedule 1. While adjusting the stamp duty of Rs.100 paid on the sale deed in addition to the duty of Rs.14,70,000/- utilized on the sale deed no.440 of the agreement to sale, dated 13/01/2011, the order was passed by the Deputy Collector is found appropriate to recover the deficit duty of Rs.14,72,852/- and Rs.14,72,852/- as penalty as per section 39(1) (B) of the Act, amounting to total Rs.29,45,704/-.

As per the aforementioned details, the order was passed by the Deputy Collector after considering the submission of the applicant after giving him the opportunity of hearing, description of the property, rate of Jantri fixed by the Government, provisions under the Act and the rules to determine market value of the property. Thus, the order passed by the Deputy Collector as per section 39 (1) (B) of the Gujarat Stamp Act 1958, is found to be appropriate. Therefore, it is appropriate to uphold the same. Upon considering all the aspects, the following order is passed.

-:ORDER:-

I, Dr. Sandhya Bhullar (IAS), Chief Controlling Revenue Authority, by the power conferred upon me as per section 53 (1) of the Gujarat Stamp Act 1958, uphold the order of the Deputy Collector, Stamp Duty assessment authority, Junagarh pursuant to section 39 (1) (B), dated 04/02/2014, referred at preface-2, in the impugned sale deed no.8051, dated 08/08/2011, on account of the reasons mentioned above.

Considering the aforementioned details, I reject the application of the applicant under section 53(1)

As per the order of the Deputy Collector, the stamp of Rs.29,42,952/- is to be utilized for the property having market value of Rs.6,00,60,245/- in the sale deed no.8051, dated 08/08/2011, according to article-20 of the Schedule-1. Upon adjusting the stamp duty of Rs.100 paid on the sale deed in addition to the duty of Rs.14,70,000/- utilized on the sale deed no.440 of the agreement to sale, dated 13/01/2011, thus the deficit duty of Rs.14,72,852/- and Rs.14,72,852/- as penalty as per section 39(1)(B) of the Act, therefore, I hereby hold to recover the amount of Rs.29,45,704/- (Rupees Twenty Nine Lakh Forty Five Thousand Seven Hundred and Four only) from the partner Mr. Vipulkumar Vallabhdas Rajpara, for the applicant partnership firm M/s. Marsh Developers, Junagadh, pursuant to the order of the

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

Deputy Collector.

Under my sign and seal on 30th August, 2016."

9. Heard the learned advocates appearing for the respective parties. It appears that the agreement to sell came to be entered into by the petitioner by a registered agreement to sell of a non agricultural land with possession bearing No.440 on 13.01.2011, which is duly produced at Annexure - A. The market value of the said property was Rs.3 crores out of which, Rs.14,70,000/- came to be paid by the petitioner herein. The petitioner entered into a registered sale deed being registration No.8051 on 08.08.2011 by depositing Rs.100/- towards stamp duty. In the interregnum period, on 01.04.2011, new jantri came into force wherein the market value of the subject property came to be increased. The show cause notices came to be issued by the respondent No.3 under Section 39(1)(d) of the Stamp Act; pursuant to the instruction by the Accountant General, the stamp duty of Rs.29,42,952/- is to be utilized for the land having market value of Rs.6,00,60,245/- in the said sale deed as per Article 20 of Schedule - I. While adjusting the stamp duty of Rs.100/- on the sale deed in addition to Rs.14,70,000/- utilized on the sale deed No.440 of the agreement to sell, dated 13.01.2011, the order was passed by the Deputy Collector to recover deficit stamp duty of Rs.14,72,852/- and Rs.14,72,852/- as penalty under the provisions of Section 39(1)(B) of the Gujarat Stamp Act, 1958.

10. At this stage, it is apposite to refer to the provision of law. Section 2(na) of the Gujarat Stamp Act, 1958 reads thus:

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

"(na) 'market value', in relation to any property which is the subject matter of an instrument means the price which such property would have fetched if sold in open market on the date of execution of such instrument."

10.1 Section 2(l) of the Gujarat Stamp Act, 1958 reads thus:

"(l) "instrument" includes every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded, but does not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of share, debentures, proxy and receipt;"

10.2 Article 20 of Schedule - I of the Gujarat Stamp Act, 1958 reads thus:

"For the purpose of this Article, an agreements to sell an immovable property or an irrevocable power of attorney shall, in case of transfer of the possession of such property before, at the time of, or after the execution of such agreement or power of attorney, be deemed to be a conveyance and the stamp duty thereon shall be chargeable accordingly"

Provided that the provisions of section 32-A shall apply mutatis mutandis to such agreement or power of attorney as are applicable to a conveyance:

Provided further that where subsequently a conveyance is executed in pursuance of such agreement of sale, or an irrevocable power of Attorney, the stamp duty, if any, already paid and recovered on the agreement of sale or an irrevocable power of Attorney which is deemed to be a conveyance, shall be adjusted towards the total duty leviable on the conveyance.

10.3 Section 32A of the Stamp Act, 1958 reads thus:

"32A. Determination of market value of property which is the subject matter of conveyance, etc. : [(1) Every instrument of conveyance, exchange, gift, certificate of sale, partition, partnership, settlement, power of attorney to sell immovable property when given for consideration or transfer of lease by way of assignment, presented for registration under provisions of the Registration Act, 1908 (XVI of 1908) shall be accompanied by a true copy thereof; [and the Statement in such form as may be prescribed by rules] and if an officer registering such instrument under the aforesaid Act or any person referred to in section 33

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

before whom such instrument is produced or comes in the performance of his functions, has reason to believe that the consideration set forth therein does not approximate to the market value of the property which is the subject matter of such instrument or as the case may be the market value of the property which is the subject matter of such instrument, has not been truly set forth therein, he [shall before] registering the instrument or, as the case may be, performing his functions in respect of such instrument, refer the instrument or true copy thereof to the Collector of such district in which either the whole or any part of the property is situated for determining the true market value of such property and the proper duty payable on the instrument under this section.]

[Provided that for the purpose of this Sub-section, the consideration set forth in an instrument executed by the State Government, the Central Government, a local authority, Gujarat Housing Board, Gujarat Slum Clearance Board or Gujarat Industrial Development Corporation, shall be deemed to be the true market value of the property which is the subject matter of such instrument.]

(2) On receipt of the instrument under sub-section (3) of [section 31 or instrument or true copy of instrument under] sub-section (1) of this section, the Collector of the district shall, after giving the parties concerned a reasonable opportunity of being heard, and in accordance with the rules made by the State Government in this behalf, determine the true market value of the property which is the subject matter of the instrument and the proper duty payable thereon.

(3) Upon such determination, the Collector of the district shall require the party liable to pay the duty, to make payment of such amount as is required to make up the difference between the amount duty determined under this sub-section and the amount of duty already paid by him and shall also require such party to pay a penalty [of two hundred and fifty rupees] [or the amount of the proper duty or of the deficient portion there of whichever is less] and on such payment, return the instrument to the officer referred in sub-section (5) of section 31 or, as the case may be, sub-section (1) of this section:

Provided that, no such party shall be required to pay any amount to make up the difference or to pay any penalty under this sub- section if the difference between the amount of the consideration or, as the case may be, the market value as set forth in the instrument and the market value as determined by the Collector of the district does not exceed ten per cent, of the market value determined by the Collector of the district, this proviso deleted w.e.f. 11-6-2004.

(4) The Collector of the district may, suo motu or on receipt of information from any source, within [six years] from the date of registration of any instrument referred to in sub-section (1), not

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

being the instrument upon which an endorsement has been made under section 32 or the instrument in respect of which the proper duty has been determined by him under sub-section (3) or an instrument executed before the date of the commencement of the Bombay Stamp (Gujarat Amendment Act, 1982) call for and examine the instrument for the purpose of satisfying himself as to the correctness of the consideration or of the market value of the property which is the subject matter of such instrument and the duty payable thereon; and if on such examination, he has reason to believe that the consideration does not approximate to the market value of such property or, as the case may be, market value of such property has not been truly and fully set forth in the instrument, he shall proceed as provided in sub-sections (2) and (3)."

10.4 Section 53-A of the Transfer of Property Act, 1882 reads thus:

"53A. Part performance.-- Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that 2[***] where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract:

Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof."

11. Considering the provisions of law, as referred above, following emerges for the consideration of this Court:

(a) Considering the Article 20 of Schedule - I, in the facts of

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

the present case, the agreement to sell in case of transfer of possession of the subject property before such agreement is deemed to be conveyance and the stamp duty is chargeable accordingly.

(b) Article 20 of Schedule - I clearly stipulates that where a conveyance is executed in pursuance of such agreement to sell, the stamp duty, if any, already paid and recovered on the agreement to sell, which is deemed to be a conveyance, shall be adjusted to the total duty leviable to the conveyance.

(c) Provision of section 32A shall applies mutatis mutandis to such agreement as applicable to a conveyance.

(d) In the facts of the present case, after entering into the agreement to sell with possession, the jantri rates came to be increased on 01.04.2011 subsequent thereto considering the same, the Accountant General opined that the market value of the property be valued at Rs.6,00,60,245/- before the sale deed which was executed on 08.08.2011. In such situation, the jantri value having increased between the interregnum period of agreement to sell and sale deed, the same came to be recovered by way of deficit stamp duty payable after following due process of law.

(e) Further, the contention is raised by the petitioner that the authority is required to follow The principles laid down in Rule 8 for the determination of the market value of the property, qua to that aspect, Rule 8 for the determination of the market value of the property would be required to be followed in a

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

situation where the authority raised the objection that the value of the property is higher than the jantri value and the authority had calculated the stamp value based on the market value and not based on prevailing jantri value. On that occasion, The principles laid down in Rule 8 are required to be followed. In the present case the authority determined market value based on prevailing Jantri value which came into force on 1.04.2011, further, the petitioner has also not disputed the prevailing jantri value and therefore, in the facts of the present case the principles and/or procedure laid down in Rule 8 are not applicable.

(f) The petitioner herein was aware that by notification dated 01.04.2011 new jantri came into effect and on that basis valuation of the said land was arrived at Rs.8050/- per sq. mtr. The petitioner replied to the said notices, as referred above, however, never appeared before the respondent authority. In the aforesaid set of facts, the competent authority proceeded to pass the final order dated 04.02.2014. Though, there was some error in the contents of the facts narrated in the order passed by the competent authority, final order pertains to the facts of the present case.

(g) Being aggrieved by the said order passed by the competent authority, the petitioner herein filed appeal under Section 53 of the Stamp Act. In the said appeal, the petitioner reiterated the contentions taken in the show cause notice stating that the petitioner herein had paid the entire stamp duty at the time of agreement to sell with possession and therefore, only Rs.100/- was required to deposited at the time

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

of registration of the sale deed. The petitioner reiterated the contention that the order passed by the competent authority was without following the principles of natural justice and the requisite documents were not supplied to the petitioner but, by way of second show cause notice dated 08.08.2013, the authority provided A.G. Audit report which was demanded by the petitioner.

(h) The appellate authority while passing the impugned order considered the submissions made by the petitioner herein and considering the provisions of Section 2(na) of the Gujarat Stamp Act and Article 20 of Schedule - I, held that pursuant to the instructions of the Accountant General, the stamp of Rs.29,42,952/- is to be utilized for the land having market value of Rs.6,00,60,245/- in the impugned sale deed as per Article 20 of Schedule - I.

(i) Having gone through the contentions raised by the petitioner in the appeal, the petitioner herein has contended before the appellate authority that the ownership is transferred in favour of the petitioner on the agreement to sell being executed with possession and considering same, it was submitted that the said transfer was a final transfer under the Transfer of Property Act, 1882.

(j) Section 53 A of the Transfer of Property Act, 1882 clearly stipulates that once the buyer has possession of the property which is subject matter of the transfer while fully complying with his part of the obligation under the agreement, the seller is not entitled to disturb the possession so granted to the

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

buyer. Section 53-A also provides the shield to the propose the transferee against the transferer and debars the transferer from disturbing the possession of the transferee but the same does not cure the title of the buyer of the property, the ownership of the property still remains with the seller and therefore, in the facts of the present case, while the agreement to sell was entered into by the petitioner with possession, the title of the property still remains with owner till execution of the sale deed under the Indian Registration Act.

(k) Further, from the aforesaid provisions it also reveals that the agreement to sell to full consideration qua the agreement to sell is not paid by the petitioner and therefore, whenever consideration and other conditions as mentioned in the agreement to sell is paid and the valuation as mentioned in the agreement to sell, only thereafter, sale deed would be executed by the owner and therefore, the petitioner, in the opinion of this Court, is liable to pay the stamp duty as stated in the agreement to sell. In the facts of the present case, the jantri rates having increased, the differential market value as per the prevailing jantri value as levied by the respondent authority is required to be paid by the petitioner herein over and above, Rs.100/- paid on the execution of the sale deed.

(l) Learned advocate for the petitioner relied on the judgment reported in 2013 (2) GLR 1435.

 In the aforesaid judgment, as referred above, the property was purchased in Court auction from the Debt Recovery Tribunal. The sale was accepted and the sale deed

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

was registered by the competent authority. The notice under section 39(1)(d) of the Act, could not have been issued. The notice under section 32(a) can be issued only when the document is impounded. On the basis of the report of Accountant General, valuation cannot be reopened, if the valuation authority has not demanded the deficit stamp duty.

 The aforesaid judgment is not applicable to the facts of the present case in view of the fact that the in the present case, the sale deed has not been registered. It is an agreement to sell with possession and the title has not passed. The agreement to sell does not confirm the title. It is only when the sale deed is registered and title passes through the purchaser. Therefore, market value of the land on the date of registration is to be computed for the purpose of stamp duty. The stamp duty would be on the basis of market value prevailing on that day. In the facts of the present case, as referred above, between the agreement to sell with possession and sale deed, the jantri value came to be increased.

12. In the facts of the present case, the agreement to sell came to be entered into on 13.01.2011, the jantri value increased on 01.04.2011 and the sale deed came to be entered into between the parties on 08.08.2011. Since the jantri value increased before the parties entered into sale deed, show cause notice came to be issued by the respondent authorities.

13. In view of the aforesaid discussion, no interference is called for in the impugned order by exercising extra-ordinary

C/SCA/13827/2017 JUDGMENT DATED: 28/04/2023

jurisdiction under Article 226 of the Constitution of India considering the fact that the respondent authority has passed the impugned orders taking into consideration the provisions of law, as referred above and in the facts of the present case.

(VAIBHAVI D. NANAVATI,J)

NEHA