As the bee collects honey without causing injury to flower so the king should collect Taxes without imposing any financial burden. Shanti Parva, Mahabharat
STAMP DUTY AND HOUSE OF LORDS
No doubt it is the duty of the common man and the assessee to pay the taxes to the government when they are just and reasonable. However if there be a means of evading stamp duty, so much the better for those who can evade it. It is not fraud upon the Crown, it is a thing which they are perfectly entitled to do. HOUSE OF LORDS, LONDON
| Q.1. | What is the object and purpose of Stamp Act ? | |||||||||||
| Ans. | The Stamp Act is a fiscal enactment, primary object of which is to raise revenue for the state. The Law Commission in its 67th report, had recommended certain amendments to the Indian Stamp Act, 1884, in order to simplify and rationalise its law and improve its working. The Bombay Stamp Act being very similar to the Indian Stamp Act, it was considered desirable to carry out suitable amendments to the State Act in the light of recommendation of the Law Commission. The rates of Stamp Duty leviable under different Articles of Schedule 1 to the Bombay Stamp Act, 1958 had not been revised since 1974. It was therefore, considered necessary to review the rates of duty with a view to revising and rationalising them so as to bring more revenue to the State Exchequer. Opportunity has also been taken among other things to reduce the procedural delays and to provide for the removal of certain lacunae in the Act to check the avoidance of Stamp Duty and to prevent the loss of revenue due to evasion for want of powers for collection of deficit duty in certain circumstances. | |||||||||||
| Q.2. | What principles whould be kept in mind when Stamp Act is interprested ? Is it true that while interpreting a fiscal statute the court cannot proceed to make good deficiencies if there be any; the court must interpret the statute as it stands and in case of doubt in a manner favourable to the tax payer (Ref.C.S.Abraham V/s.Income Tax Officer, Kottayam and Another AIR 1961) | |||||||||||
| Ans. | It is the policy of the State from time immemorial to collect the revenue from its subjects so as to run the administration of the state quite efficiently and to provide the facilities to the people by Judicial disbursement of taxes collected. It is worthwhile mentioning here that in Shantiparva of the epic poem Mahabharat, the King is advised the method shown therein for the collection of taxes is that 'the king shall collect the taxes from his subjects as the bee collects honey from the flowers'. At present, this is only an ideal because few states follow this precept of Shantiparva as laid down in the epic poem. However, the principles of natural justice demand that the duty imposed by the state on the people should not be so execessive as to tempt people to try to evade taxes. Therefore, it has been held by a number of decisions of different High Courts that the fiscal enactments must always be interpreted in favour of the subjects. To illustrate the point it has been held in the sase of the Central India spinning & Weaving and Manufacturing Company Lted., the Empress Mills Nagpur Vs. The Municipal Committee, Wardha reported in AIR 1958 Supreme Court 341 (343,344) in constructing a taxing statute if there are two interpretations possible then effect is to be given to the one that favours the citizen and not the one that imposes a burden on him. Similarly this view is reitereated in the case of C.S.Abrham V/s.Imcome Tax Officer, Kottayam and another reported in AIR 1961 Supreme Court 609 (910) wherein it was held by the Supreme Court that in interpreting a Fiscal Statute the court cannot proceed to make good deficiencies if there be any; the Court must interpret the statute as it stands and in case of doubt in a manner favourable to the tax payer AIR 1961 SC 609. | |||||||||||
| Q.3. | Who is liable to pay the Stamp Duty ? | |||||||||||
| Ans. |
Under Section 30 of the Stamp Act, in the absence of agreement
in the case of an instrument of exchange, by the parties in equal shares under Maharashtra Ownership Flat Act, registration of agreement is mandatory and the failure to do so is liable for punishment as stated in Section 13 of the Act. |
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| Q.4. | How the adjudication of Stamp is made ? | |||||||||||
| Ans. | Section 31 of the Stamp Act provides about adjudica tion as proper stamp. The word 'adjudication' suggests that it is the determination of the proper stamp duty. Once an application for adjudication is made to the collector or officer as to their opinion and if it is decided by them it is in all cases and for all prupose be final. If a person concerned is aggrieved by such decision reference lies to the High Court. For the purpose of adjudication a person is required to furnish an abstract or true copy of the instrument and also with such affidavit and other evidence so that the officer concerned can determine the proper stamp duty truly and correctly. | |||||||||||
| Q.5. | What are the consequences under valuation of document ? | |||||||||||
| Ans. | It must be noted that, if the collector has reason to believe that the instument does not mention the true market value and such instrument has already been presented for registration, he can take a step for recovery of the duties by coercive measures only after giving reasonable opportunity to the opposite party of being heard if the collector determines that the stamp duty has not been paid,panalties can be levied on such instruments. | |||||||||||
| Q.6. | What is meant by market value ? What points should be taken into consideration to determine Market value ? | |||||||||||
| Ans. |
Market Value means what a willing purchaser is pre pared to pay to the
willing seller. In determining the market value the following points must
be considered :
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| Q.7. | What is to be done when the Stamp Authorities demand excess Stamp Duty on the basis of their own ready reckoner, which includes incorrect information ? | |||||||||||
| Ans. | It is the duty of the citizen to pay the Stamp Duty on the value of the property purchased by them. If they honestly feel that the Stamp Duty assessed is much more than the true market value of the property, when the flat is purchased they can tender the amount according to their own calculations. For example, if the value of the flat is Rs.10 lakhs, they can tender the amount of Rs.38,750/-. If the value of the flat is Rs.25 lakhs, they can pay the amount of Rs.38,750/- plus Rs.15,000/- multiplied by 8 that is Rs.30,000/- and asking for the hearing for the balance amount. | |||||||||||
| Q.8. | What steps should be taken when the builder has issued a letter of allotment or a ordinary receipt for the payment received ? Whether such an agreement should be lodged for the purpose of Stamp Duty & registration ? | |||||||||||
| Ans. | Under the ownership Flat Act, it is mandatory to execute an agreement in writing. However, some of the builders avoid to execute an agreement in writing in a prescribed form. In the beginning, the flat purchasers will happy because they are not required to pay any stamp duty or registration fee. However, when the builder and developer avoids to give the possession on some pretext or the others. The flat purchasers find it very difficult to take legal action against the builder and the developer. There are several complaints received from the flat purchasers from Airoli, Khoparkhairne, CBD, in Navi Mumbai, Bhayander etc. stating that the builder has not executed agreement for sale of the flat and they are not able to take any action against them. Though it is late the flat purcahsers can make an Affidavit and lodge letter of allotment for the payment of stamp duty and thereafter for the registration fee, so that builder can be held responsible for the penalty for not lodging the document for the payment of stamp duty & registration fee. | |||||||||||
| Q.9. | Whether the Collector of Stamps can recover the stamp duty on the basis of ready reckoner which suppose to have been prepared about in the year 1993-1994 or 5 years ago or whether they should revise it from time to time ? | |||||||||||
| Ans. | It is true that the Stamp Duty will be payable on the basis of market value prevailing at the time execution of the agreement and not on the basis of market value that was prevailing before. However, it will not be possible for the Government to revise the ready reckoner referring to the market value from time to time. In order to the difficulty if the applicant made a statement on oath the amount mentioned should be accepted as a correct market value and the agreement should be accepted for the payment of Stamp Duty and balance if any can be recovered subsequently there is no provision for refund. | |||||||||||
| Q.10. | What are the important judgments on the question of payment of Stamp duty ? | |||||||||||
| Ans. | 1)
J.Naganathan V/s. Revenue Divisional Officer, 1994 4 SCC 595.
2) Gavrang Naik V/s. State of Orissa. Page 232 Division Bench. 3) State of Maharashtra Vs. M.S.Builders 1992 (1) Bom.CR 568. 4) Li Taka Pharmaceuticals Ltd Vs. State of Maharashtra 1996 (2) Mah.LJ 156, 1996 (4) Bom.CR 100. 5) Municipal Corpn Vs.Pramod Kumar Gupta, (1991) I SCC 633, AIR 1991 S.C.401. |
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| Q.11. | What is the effect of the circular dated 17th March, 1998 issued by J.N.Patel ? | |||||||||||
| Ans. | A clarification has been issued on the basis of letter issued on 17th December 1997. It is brought to notice that there is a difference in the scheme declared between 1st April, 1994 to 30th June, 1995 and 11th April 1994 to 30th March 1995. It is clarified that penalty payable was only Rs.250/- and not more. | |||||||||||
| Q.12 . | So far how many amensty schemes have been declared and what is the effect of the present Amnesty Scheme ? | |||||||||||
| Ans. | So far three Amnesty Schemes have been declared. The First came into force from 1st April, 1994 to 30th June 1996.The Second came into effect from 1st September 1997 to 31st March 1998. The Third Amnesty Scheme came into effect from 1st December, 1998 to 31st March 1999. The object of the third Amnesty scheme is to help the people to pay the Stamp Duty with nominal penalty and they are exempted from the usual penalty. The arrangement is good. However since the Government has not given proper guidelines revising the rate of stamp duty areawise and yearwise the peoples are avoiding to pay the stamp duty. In such cases the Government should issued porper guidelines to enable the people to pay the stamp duty. | |||||||||||
| Q.13. | Whether the collector of Stamp Duty has revised Stamp Duty from time to time, If it so how much ? | |||||||||||
| Ans. | The
stamp duty has been reduced as mentioned below.
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| Q.14. | What is the object and Purpose of notification issued by Government of Maharashra by the Department of Revenue and Forest on 26th November 1998, it will been forced up to what date ? what are the different categories made for making payment of penalty ? | |||||||||||
| Ans. |
This notification will been force up to 31st march 1999 it is divided into
4 catogaries as mentioned in the schedule the catogories are as under :-
Sr.No. Perticulars Amount
_______________________
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| Q.15. | What is meant by flat under Maharashtra Ownership Flat Act, 1960 ? Whether the purchaser of the flats who have entered into agreement prior to 4th July,1980 are required to pay the stamp duty on the basis of market value as contemplated under Section 31-A of the Bombay Stamp Act, or they will be allowed to pay the stamp duty on the basis of the amount mentioned in the Agreement for Sale or other instrument ? Whether this scheme is available to also non-residential premises ? | |||||||||||
| Ans. | The Flat has been defined under the Maharashtra Owner ship Flat Act, 1963. A flat means a self-contained premises used or entitled to be used for the purpose of residence or office, showroom or shop or godown or for carrying on any other business and includes garage or premises which forms the part of the building and includes apartment. | |||||||||||
| Q.16. | What is the difference between the Agreement for Sale or sell ? Is it true the agreements which are executed on stamp paper of Rs.5/- or such other amount, prior or such other amount, prior 10th of December 1985 will allowed to be registered without any additional Stamp Duty ? Can such agreements which are registered without additional stamp duty be valid and admissible in law ? | |||||||||||
| Ans. | Under Section 54 of the Transfer of Property Act, refers to the definition of sale. The sale is of transfer of ownership in exchange for a price paid for premises or partly paid and part premises. The Agreement of sale does not creat a right title interest in the property. Section 2 (g) of Bombay Stamps Act, 1985. The division bench of the Bombay High Court has taken a view that the agreement for sale is a sale ? A special leave petition is pending in the Supreme Court of India Mr. Talreja said that the agreement on Rs.5/- stamp paper or Rs.10/- stamp paper prior to 8th December 1985, are not required to pay the stamp duty on the basis of market value. | |||||||||||
| Q.17. | What is the position in respect of the flat whose area is below 650 sq.ft carpet ? Whether the purchasers of such flats will be required to pay the stamp duty ? | |||||||||||
| Ans. | It must be noted that upto 24th March, 1980 the flat below 650 sq.ft. carpet were fully exempted from the payment of stamp duty. In case that have excess area for example if the area is 650 sq.ft. carpet plus additional 100 sq.ft. carpet. Subsequently the position in law is changed and the purchasers are now required to pay the stamp duty on the basis of market value that is from 28th August, 1988. Now if these agreements are to be stamped and registered the flat purchasers will be required to pay the market value as the law prevailing as on today and he cannot get the benefit of the original concession given on the basis of area. (Please refer to the statement which is signed by Brahmanda Reddy the then Governor of Maharashtra). | |||||||||||
| Q.18. | Whether valuation made under Foram No.37-1 under Section 269 UC of the Income Tax Act, 1961 can be different from valuation made under Bombay Stamp Act, 1958 ? | |||||||||||
| Ans. | In the early years the stamp authorities did not accept the value as determined by the appropriate authority constituted under the Income Tax Act. However it is learnt that the stamp authorities are advised by Head Office that whenever transaction exceeds Rs.10 lakhas the value as determined by the appropriate authority should be accepted as fair market value but where the consideration is for less than Rs.10 lakhs it is advised to enclose the copy on NOC received from appropriate authority as annexure to the conveyance deed. | |||||||||||
| Q.19. | What is the difference between stamp duty and registration ? | |||||||||||
| Ans. | Stamp Duty authorities are constituted for collecting the revenue due to the Government. It is a sort of taxation authority whereas Registration is quite different. Registration charges are collected for keeping the records of the documents. | |||||||||||
| Q.20. | Whether at the time of conveyance between a builder and a society, where the duty has already been paid on an Agreement to Sale, the amount of duty paid on individual agreements shall be adjusted to the extent of those flats in the said conveyance ? | |||||||||||
| Ans. | There are two stages of conveyances: the first stage is between the Promoter as the first party and the Purchaser as the second party with the owner of the land acting as the confirming party. The second stage of conveyance is between the Co-operative Housing Society, which is duly registered and Promoter or Developer. In all such cases once duty is paid for Agreement to Sale of the flats then at the time of conveyance between the builder and the society the duty paid on individual agreements shall be adjusted to the extent of such flats of the said conveyance. | |||||||||||
| Q.21. | Whether the scone sale i.e. the sale by a member to an incoming member is to be treated as an independent instrument and therefore chargeable with duty ? | |||||||||||
| Ans. | The Second sale and subsequent sales are treated as independent instruments and are therefore chargeable with duty. In all those cases, where the stamp duty has already been paid has to be paid on the second sale when the agreement is executed. However when the second sale is made society may or may not insist upon registration in veiw of the judgment of the Bombay High Court pertaining to the case of Mrs. Usha Arvind Dongre Vs. Suresh Raghunath Kotwal. 1990 Mh.L.J. 306. However in some cases managing committee of the Society may insist upon an undertaking from a member to pay the stamp duty wherever it is payable in order to avoid liability of the society. | |||||||||||
| Q.22. | What is the purpose of registration ? Is there any difference between registration under the Maharashtra Ownership Flat Act and Registration under the Maharashtra Co-operative Societies Act ? What will be the consequences if the agreement is only stamped but not registered ? | |||||||||||
| Ans. |
The real purpose of registration is to secure every person dealing in property.
Where such dealings require registration the persons may rely with confidence
upon the statements contained in the register as a full and complete account
of all transactions by which his title may be affected--unless indeed he
has actual notice of some unregistered transaction which may be valid a
part from registration. Undersection 4 of Maharashtra Ownership Flat Act,1963,
registration of agreement is mandatory. The promoter is required to enter
into a written agreement for sale of flat with each of the persons who
take or have taken such flats. Each agreement should contain prescribed
particulars. The agreement should also attached with the documents or copies
as prescribed. To secure that the agreement is respect of the flat is genuine
certain conditions as to the regitration of such agreements prohibition
of accepting advance or deposit before entering into agreement are provided.
For preventing bogus sales being effected by a promoter to put a check
on malpractices indulged in by the promoter with regard to the sales and
transfer of flats the legislature has provided certain conditions thay
are :
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| Q.23 | What are the new changes for Registration Fee of Leave & License? | |||||||||||
| Ans. | As per notification
No. RGN 2000/2120/CR-591/M-18th June, 2000 which refers to as follows:-
In exercise of the powers conferred by sections 78 and 79 of the Registration Act, 1908 (XVI of 1908), in its application of the state of Maharashtra, read with sub-section (1) of section 55 of the Maharashtra Rent Control Act, 1999 (Mah. XVII of 2000), the Government of Maharashtra hereby further amends, with effect from the date of issue of this Notification, the Table of fees prepared under the said section 78 and published under the Government Notification, Revenue Department, No. RGN. 1558/677731-N. dated 17th July 1961, as required by the said section 79, as follows, namely: In the said table of fees,
after Article III, the following Article shall be inserted, namely- "IIIA.
For the registration of a document of agreement of leave and licence, if
such document is relating to the property situated;
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| Q. 24 | What are the new changes in respect of payment of stamp duty on Leave & license? | |||||||||||
| Ans. |
Agreement must be in writing, it must be duly stamped and registered as
required under the notification dated June18, 2000 and order 7 amendment
dated May 1, 2001 as mentioned below.
LEAVE
AND LICENCE AGREEMENT ( 1st May, 2001)
According to the proposed budget 2002-2003 new changes to revise the rates , For a period of 33 months ; if the total amount of annual rent plus deposit is
It must be further noted that in addition to payment of stamp duty parties are required to pay registration fee of Rs. 1000/- if the document is relating to the prperty situated within the area/ limits of Municipal corporation and in case of other areas it is Rs.500/- Under section 55 of Maharashtra Rent Control Act , registration of the greement of leave and license is made mandatory and in the absence of written registered agreement , the contention of the tenant above the terms and contitions shall prevail unless proved otherwise; not only that the landlord who contravane the provision of this section was liable to be punished with imprisonment which may extend to 3 months or with fine not exceeding Rs. 5000/- or both. |
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| Q.25. | Can the Superintendent of Stamps refuse to entertain documents for registration on the ground that stamp duty is not paid in accordance in ready reckoner? | |||||||||||
| Ans. | Similar question came up for hearing and order before the Division Bench of Mumbai High Court consisting of Justice B. P. Singh and Justice D.Y Chandrachud and in their Order dated 12th September 2001 in Writ Petition No.2027 of 2001 in the case of Practising Valuers Assocation & ors. Vs. State of Maharashtra held that the State of Maharashtra will not refuse to entertain the document for registration on the ground that full stamp duty has not been paid in accordance with the ready reckoner. | |||||||||||
| Q.26. | Whether Consent Decree can be brought within the ambit of conveyance? What is effect if consent decree is not duly stamped and Registered? | |||||||||||
| Ans. | The definitions of conveyance and instrument start with expression includes which that the definitions are very wide. It appears that the amendment was made out of abundant caution and it does not mean that the consent decree was not otherwise covered by the definitions given in section 2(g) or 2(I) of the Act. Mereecause an agreement is put in the shape of a consent decree it does not change the contents of the document. It remains an agreement and it is subject to all rights and liabilities which any agreement may suffer. Having a stamp of Court affixed will not change the nature of the document Decree does not stand on a higher footing than the agreement which preceded it. A consent decree is a mere creature of the agreement on which it is founded and is liable to be set aside on any of the grounds which will invalidate the agreement. Court is in agreement with the reasonings and conclusion of the Division Bench in the impugned Judgement. {Ruby Sales & Services (P) Ltd, Vs. State of Maharashtra 1995 (1) Bom.C.R. 518 SC} | |||||||||||
| Latest Judgements | ||||||||||||
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Bombay Stamp Act (60 of 1958)
S.2(1a) – Instrument of gift – Stamp duty – Document merely recording fact that gift has been received – cannot be termed as instrument of gift under S.2(1a) – No question of stamp duty being attracted to such document. {402 (SB)} S.9 – Exemption from stamp duty – Extended to small scale industrial undertaking by notification D/- 3rd Nov., 1972 – Hotel – Can be considered as such industrial undertaking within the meaning of notification. {403(SB)}
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