I T C Hotels Ltd vs State And Ors
2023 Latest Caselaw 4043 Raj/2

[2023:RJ-JP:18793-DB]

        HIGH COURT OF JUDICATURE FOR RAJASTHAN
                    BENCH AT JAIPUR

              D.B. Civil Writ Petition No. 9532/2006

1. I.T.C. Limited (since amalgamated into ITC Limited) having
its registered office at 37, Virginia House, Jawahar Lal Nehru
Road, Kolkatta, Jaipur Unit - Welcomehotel, Hotel Rajputana
Palace Sheraton, 'Atal Van' Station Road, Jaipur through its
authorized signatory Mr. Sanjay Kirpal.

2.    Mr. Sanjay Kirpal son of Late Shri P.N. Kirpal, aged 56
years, General Manager, I.T.C. Limited, Unit Welcomehotel, Hotel
Rajputana Palace Sheraton, 'Atal Van', Station Road, Jaipur.
                                                                      ----Petitioners
                                       Versus
1. The State of Rajasthan through the Secretary Finance,
Department of Finance, Government Secretariat, Bhagwan Das
Road, Jaipur.
2. The Sub-Registrar, Jaipur City, Collectorate Circle, Bani
Park, Jaipur.
3. The Additional Collector (Stamp) Jaipur City Jaipur,
Government of Rajasthan, Collectorate, Bani Park, Jaipur.
4. The Rajasthan Tax Board, through its Registrar Nyaya
Marg, Vaishali Nagar, Ajmer.
                                                                    ----Respondents

Connected With D.B. Civil Writ Petition No. 9543/2006

1. I.T.C. Limited (since amalgamated into ITC Limited) having its registered office at 37, Virginia House, Jawahar Lal Nehru Road, Kolkatta, Jaipur Unit - Welcomehotel, Hotel Rajputana Palace Sheraton, 'Atal Van' Station Road, Jaipur through its authorized signatory Mr. Sanjay Kirpal.

2. Mr. Sanjay Kirpal son of Late Shri P.N. Kirpal, aged 56 years, General Manager, I.T.C. Limited, Unit Welcomehotel, Hotel Rajputana Palace Sheraton, 'Atal Van', Station Road, Jaipur.

----Petitioner Versus

1. The State of Rajasthan through the Secretary Finance, Department of Finance, Government Secretariat, Bhagwan Das Road, Jaipur.

[2023:RJ-JP:18793-DB] (2 of 10) [CW-9532/2006]

2. The Sub-Registrar, Jaipur City, Collectorate Circle, Bani Park, Jaipur.

3. The Additional Collector (Stamp) Jaipur City Jaipur, Government of Rajasthan, Collectorate, Bani Park, Jaipur.

4. The Rajasthan Tax Board, through its Registrar Nyaya Marg, Vaishali Nagar, Ajmer.

----Respondent D.B. Civil Writ Petition No. 9567/2006

1. I.T.C. Limited (since amalgamated into ITC Limited) having its registered office at 37, Virginia House, Jawahar Lal Nehru Road, Kolkatta, Jaipur Unit - Welcomehotel, Hotel Rajputana Palace Sheraton, 'Atal Van' Station Road, Jaipur through its authorized signatory Mr. Sanjay Kirpal.

2. Mr. Sanjay Kirpal son of Late Shri P.N. Kirpal, aged 56 years, General Manager, I.T.C. Limited, Unit Welcomehotel, Hotel Rajputana Palace Sheraton, 'Atal Van', Station Road, Jaipur.

----Petitioner Versus

1. The State of Rajasthan through the Secretary Finance, Department of Finance, Government Secretsariat, Bhagwan Das Road, Jaipur.

2. The Sub-Registrar, Jaipur City, Collectorate Circle, Bani Park, Jaipur.

3. The Additional Collector (Stamp) Jaipur City Jaipur, Government of Rajasthan, Collectorate, Bani Park, Jaipur.

4. The Rajasthan Tax Board, through its Registrar Nyaya Marg, Vaishali Nagar, Ajmer.

----Respondent

For Petitioner(s) : Mr. A. Kasliwal, Sr. Adv. assisted by Mr. Vaebhava Kasliwal Ms. Charu Pareek Mr. Deewakar Khaldwa For Respondent(s) : Mr. R.P. Singh, AAG with Mr. J.S. Shekhawat

[2023:RJ-JP:18793-DB] (3 of 10) [CW-9532/2006]

HON'BLE THE CHIEF JUSTICE AUGUSTINE GEORGE MASIH HON'BLE MR. JUSTICE SAMEER JAIN

Judgment

Per Hon'ble Mr. Sameer Jain, J.

Reserved on:               24.07.2023
Pronounced on:             23.08.2023

1. Since common issue is involved in all these writ

petitions, with the consent of the parties, they were heard

together and are now being decided by way of this common order.

D.B. Civil Writ Petition No. 9532/2006 is taken as lead file to

peruse the facts.

2. The petitioner-company is engaged in the business of

running and operating hotels throughout the country, including the

city of Jaipur in Rajasthan. The petitioner-company was operating

the Hotel Rajputana Palace Sheraton in Jaipur, for which the land

in question was leased for a period of 20 years vide lease deed

dated 14.07.1989. The subject matter of the present writ petitions

are three strips of land bearing Khasra No. 328/3 admeasuring

800 sqmtr, 400 sqmtr, and 380 sqmtr, which are within the Atal

Ban area on which the hotel is constructed. The present writ

petitions arises out of proceedings for adjudication of classification

of lease deed dated 23.03.1998 executed by M/s J.K. Atal HUF in

favour of the petitioner-company, with regard to the three strips of

land as mentioned above, the levy and charge of stamp duty

thereupon as also the valuation of the lease deed for aforesaid

purpose. When the lease deed was presented for registration

before the Respondent No.2 / Sub-Registrar, Jaipur, the

Respondent No.2 classified it as a perpetual lease and for the

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purpose of determining value of the subject land, applied a land

rate being 110% of Rs. 36,000/- per square meter. The

Respondent No.2 had obtained the said rate from the rates

prescribed by the District Level Committee (for short "DLC") for

commercial property situated at main station road, Jaipur. As the

petitioner was not satisfied with the valuation arrived at by

Respondent No.2, the matter was referred to Respondent No. 3 /

The Additional Collector (Stamp), Jaipur, under Section 47-A (i) of

the Rajasthan Stamp Law (Adaptation) Act, 1952 (hereinafter

referred to as "the Act of 1952"). The Respondent No. 3 confirmed

the proposal made by the Respondent No. 2 vide impugned order

dated 31.12.2005. Against the said impugned order, the petitioner

filed a revision petition before the Tax Board, which was also

dismissed vide impugned order dated 03.10.2006. Being

aggrieved by the impugned orders dated 31.12.2005 and

03.10.2006, the present writ petitions were filed under Article 226

and 227 of the Constitution on India.

3. Learned counsel for the petitioner submits that the

Respondent No. 2 had mis-classified the lease deed dated

23.03.1998 as perpetual lease because the lease was clearly

issued only for the time till the adjacent premises were used by

the petitioner-company for running the hotel. The lease for the

hotel, dated 14.07.1989, was only for a period of 20 years and at

the time of execution of lease deed dated 23.03.1998, more than

ten years had already elapsed and accordingly the petitioner-

company was only leasing the subject property for a definite

period of about 9-10 years. Learned counsel for the petitioner

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further submits that there was a termination clause in the lease

deed itself, which goes to show that the lease deed was never

intended to be for indefinite or perpetual. Learned counsel for the

petitioner contends that even the classification of hotel activity as

commercial activity is erroneous in light of Notification dated

04.03.1989 bearing No. F.12(4) IInd/85, issued by Industries

(Gr.I) Department, Government of Rajasthan, by which the State

Government had declared all tourism units to be treated as an

industry. Learned counsel for the petitioner further contends that

Respondent No. 2 ought to have applied the industrial rate and not

the commercial rate, in consonance with the correct and latest

legal position. Learned counsel for the petitioner further submits

that as per Section 47-A of the Act of 1952, the Respondent No. 3

was obligated to conduct an inquiry in respect of the market value

of the property and on the basis of such inquiry, the quantum of

tax/duty could be determined. However, the Respondent No. 3

failed to conduct any inquiry and mechanically approved the levy

of duty as arrived at by Respondent No. 2. The statutory power of

framing an assessment which has been conferred onto the

competent authority necessarily have to be exercised by him/her

by applying his/her own mind to relevant material and factors.

That being the settled position, it is contended that, it is not open

for the competent authority to abdicate his/her statutory powers

and functions by mechanically following any administrative circular

issued by any Department in respect of determination of market

value and assessment of stamp duty. Learned counsel for the

petitioner has also relied on Apex Court judgments of B. Arvind

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Kumar Vs. Govt. of India & Ors. reported in (2007) 5 SCC

745, State of U.P. & Ors. Vs. Lalji Tandon (Dead) through

LRs reported in (2004) 1 SCC 1, Juthika Muliek (Smt.) &

Anr. Vs. Mahendra Yashwant Bal & Ors. reported in (1995) 1

SCC 560 and Hardesh Ores Pvt. Ltd. vs. Hede and Company

reported in (2007) 5 SCC 614 and Allahabad High Court

judgment of Ashish Kumar vs. Deputy Commissioner

(Stamp) and Ors. reported in 2010 (7) ADJ 55.

4. Per contra, learned AAG representing the respondents

submits that the valuation of lease-hold property was done as per

provisions of law. Learned AAG has placed reliance on

Clause/Entry 35 of Appendix D (Stamp Duty payable under

various articles included in Schedule II of the Rajasthan Stamp

Law (Adaptation) Act, 1952 from time to time from 08.03.1976

upto 26.05.2004, when the new Rajasthan Stamp Act, 1998 came

into force from 27.05.2004), which provides for levy of Stamp

Duty on 'Lease'. The said clause was amended from 30.03.1997

and as per Sub-clause (a)(iii), when the lease purports to be for a

term in excess of twenty years, the duty payable would be the

same duty as on conveyance on the market value of the property

which is the subject matter of the lease. Learned AAG has

highlighted that though the lease deed dated 14.07.1989 was

initially for a period of twenty years, the same has been renewing

from time to time. The lease deed in question, i.e. lease deed

dated 23.03.1998, which prescribes the period of lease from

execution of lease till the time the petitioner-company is operating

the hotel in adjacent land, is in effect also a lease deed for a

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period of over 20 years and therefore the stamp duty was rightly

levied. Learned AAG has also highlighted that as per Clause 4 of

the lease deed dated 23.03.1998 itself, the possession and

occupation of the subject land was already with the petitioner-

company since 1992. Learned AAG further contends that the

reliance placed on notification dated 04.03.1989 is also misplaced.

Simply because the government has decided to consider tourism

as an industry would not mean that the land has become

industrial, especially since the notification was not issued under

any provisions of the Stamp Act.

5. Heard the arguments advanced by both the sides,

scanned the record of the writ petitions and considered the

judgments cited at Bar.

6. The petitioners have challenged the impugned orders,

primarily, on the ground of classification of lease deed as

perpetual lease and on the ground of classification of operating

hotel as commercial activity, as opposed to industrial activity.

7. Before adverting to the merits of the matter, it would

be apt to consider the relevant clauses of the lease deed in

question and relevant provisions of the Act of 1952. The relevant

clauses of the lease deed dated 23.03.1998 are reproduced as

under:

"Clause 3 (A): The lessor hereby gives on lease to the Lessee the land detailed in Schedule I hereunder for a period which shall be so long as the Lessee runs the hotel in the complex.

Clause 4: That the parties hereto confirm that the land in reference is already in possession, occupation and use of Lessee, in terms of Operating License Agreement dated 30 th June 1992 referred to above which stand superseded on the execution of Sale/Transfer Deed dated 23rd March 1998 in

[2023:RJ-JP:18793-DB] (8 of 10) [CW-9532/2006]

respect of the exempt land and building comprising of hotel complex, the lease signed by the other 2 HUFs in respect of their part of the free hold land referred to above and the lease hereunder.

Clause 5: The Lease shall not be liable to termination except as provided hereunder:

a) In case of any deficiency in service or otherwise Atals shall give a weitten notice to ITCHL stating the breach and give 60 (sixty) days notice to rectify such breach. ITCHL shall rectify the breach within the said period of 60 (sixty) days.

b) In case the said breach continues beyond the notice period then Atals shall give another 30 (thirty) days notice to ITCHL failing which they would be entitled to terminate the lease."

The relevant Entry No. 35 of Appendix D (Stamp Duty payable

under various articles included in Schedule II of the Rajasthan

Stamp Law (Adaptation) Act, 1952 from time to time from

08.03.1976 upto 26.05.2004, when the new Rajasthan Stamp Act,

1998 came into force from 27.05.2004), is reproduced as under:

" 35. Lease:

From 30.03.1997:

Clause (a)-Subs. Vide Raj. Act 9 of 1997 as under:-

(a) Where, by such lease, the rent is fixed and no premium is paid or delivered -

(I) Where the lease purports The same duty as on a Bond to be a term for less than (No. 15) for the whole amount one year payable under such lease.

(ii) Where the lease purports The same duty as on to be for a term of not less conveyance (No. 23) for than one year but note more consideration equal to the than twenty years amount or value of the average rent of two years.

(iii) Where the lease The same duty as on purports to be for a term conveyance (No. 23) on the in excess of twenty years market value of the or perpetuity or where the property which is the term is not mentioned. subject matter of the lease.

Emphasis supplied"

8. Having considered the rival submissions and on careful

analysis of the above, the following points emerge:

[2023:RJ-JP:18793-DB] (9 of 10) [CW-9532/2006]

8.1. As per clause 3 of the lease deed, the land in question

was transferred with the understanding and consensus that the

period of the lease shall be as long as the petitioner-company

operates the hotel in the complex. It is an admitted position that

the petitioner-company has been operating the hotel without

disturbance since 1989 and is also in possession and occupation of

the land in question since 1992. Therefore, as the petitioner-

company have been enjoying the possession and occupation of

land well over 20 (twenty) years, the duty payable would

necessarily have to be determined as per the relevant entry in

force, i.e. Entry No. 35 Sub-clause (a)(iii), as reproduced above.

8.2. Even at the time of determination, the Respondent No.

2 and Respondent No. 3 were cognizant of the fact that the lease

deed for the hotel, dated 14.07.1989, was for a period of 20

(twenty) years. But as the same was renewable, which has been

renewed from time to time, the Respondent No. 2 and Respondent

No. 3 had rightly levied the impugned duty on the lease deed

dated 23.03.1998, in terms of Entry No. 35 as quoted above, as

the phrase used in the said entry is 'purports to be for a term in

excess of twenty years'.

8.3. None of the judgments relied upon by learned counsel

for the petitioner-company have considered the specific Entry No.

35, as applicable after 30.03.1997, and therefore, all those

judgments are distinguishable and inapplicable in the facts and

circumstances of the present case.

8.4. Although the petitioner-company had earlier contested

the classification of operating hotel as commercial activity, the

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said ground was not pressed anymore, on account of subsequent

developments. Therefore, this Court refrains from recording any

finding on the said aspect. However, it is important to note that

the notification dated 04.03.1989 was issued by the Industries

(Gr.I) Department, and not Department of Stamps and

Registration or Department of Finance, and therefore the said

notification would be of no significance in the instant case.

9. In view of the above, this Court is not inclined to

interfere with the concurrent findings as arrived at by all the

authorities below.

10. The writ petition(s) are accordingly dismissed. Pending

application(s), if any, shall stand disposed of.

(SAMEER JAIN),J (AUGUSTINE GEORGE MASIH),CJ

JKP/73-75

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