Full Text
HIGH COURT OF DELHI
JUDGMENT
CTA APPARELS PVT LTD ..... Petitioner
Advocates who appeared in this case:
For the Petitioner :Mr Suhail Dutt, Sr. Advocate with Mr
Divij Kumar and Mr Rohit Jolly.
For the Respondent :Mr Ramesh Singh, Standing Counsel
GNCTD with Ms Nikita Goyal.
1. The petitioner has filed the present petition impugning an order dated 16.03.2018 (hereafter „the impugned order‟), passed by the Court of the Additional District Judge, South-East District, Saket Courts, New Delhi, rejecting the petitioner‟s appeal preferred under Section 47A(4) of the Indian Stamp Act, 1899 (hereafter „the Stamp Act‟).
2. The controversy involved in the present petition relates to the quantum of stamp duty payable on the sale deed in respect of a property admeasuring 1100 sq. yards bearing No. 66A, Friends 2019:DHC:1557 Colony (East), New Delhi-110065 (hereafter „the said property‟). The petitioner claims to have paid a sum of ₹36 crores as sale consideration for purchase of the said property which is duly reflected in the sale deed. The Collector of Stamps (hereafter „the Collector‟) has determined the value of the said property at ₹71,61,59,700/- on the basis of the prevailing circle rates. On the basis of the said value, the Collector has assessed the stamp duty payable at ₹4,29,79,582/- and, after adjusting the amount of ₹2,16,00,000/-being the duty paid, assessed the deficit stamp duty at ₹2,13,69,582/-. The petitioner disputes that aforesaid assessment. It claims that the value as set forth in the sale deed is the true market value of the said property
3. Being aggrieved by the aforesaid order dated 21.07.2017 passed by the Collector, the petitioner had preferred an appeal before the District Court which has been rejected by the impugned order. Factual Background
4. The petitioner claims to have purchased the said property – property bearing No. 66A, Friends Colony (East), New Delhi-110065 measuring 1100 sq. yards – for a consideration of ₹36,00,00,000/-. It is stated that the said property is one half of a plot measuring 2200 sq. yards, which has not been sub-divided by the concerned authority.
5. On 12.09.2016, the Vendor (Mr Samir Dev Sharma) executed a sale deed for the said property indicating the sale consideration as stated above. The petitioner paid a sum of ₹2,16,00,000/- as stamp duty and a sum of ₹36,00,000/- as registration fee for registration of the said sale deed.
6. The Registering Authority was of the view that the said sale deed did not correctly set forth the value of the property and, accordingly, referred the same to the Collector in terms of Section 47A(1) of the Stamp Act.
7. The Collector issued a notice dated 22.09.2016 calling upon the petitioner to appear before him on 29.09.2016, at 02:00 p.m. The said notice was issued in terms of Section 47A(2) of the Stamp Act with a view to afford the petitioner a reasonable opportunity to be heard.
8. The representative of the petitioner appeared before the Collector alongwith the relevant documents and also filed a detailed written statement articulating its objections for determination of the value of the said property.
9. The petitioner claims that its representative visited the office of the Collector on several occasions, thereafter, requesting him to hear and adjudicate the matter. However, the Collector did not pass any order.
10. Aggrieved by the inaction on the part of the Collector, the petitioner preferred a writ petition (W.P.(C) 5796/2017 captioned CTA Apparel Pvt Ltd v. Government of NCT of Delhi),inter alia, praying that directions be issued to the Collector to assess the stamp duty on the actual market value of the said property. The said petition was disposed of by this Court by an order dated 14.07.2017. The said order recordedthe statement made on behalf of the Collector that he would adjudicate the reference and pass a speaking order within a period of four weeks.
11. In compliance with the orders passed by this Court, the Collector passed an order dated 22.07.2017, assessing the deficit stamp duty at ₹2,13,69,582/-.
12. The petitioner also issued a public advertisement – which was published on 12.07.2017 and 13.07.2017 in the newspapers (the Economic Times and Indian Express) – inviting offers for the said property. It is further affirmed that pursuant to the said advertisement only two buyers showed interest offering a price of ₹2,75,000/- and ₹2,50,000/- per sq. yard, respectively. The petitioner claims that it immediately filed an affidavit dated 27.07.2017 with the Collector affirming the above.
13. The petitioner claims that it received the impugned order on 31.07.2018. Aggrieved by the same, the petitioner filed a writ petition (bearingW.P.(C) 7480/2017 captioned CTA Apparel Pvt Ltd v. Govt of NCT of Delhi, Through the Office of The Collector) impugning the order dated 22.07.2017. The said petition was disposed of by an order dated 28.08.2017, leaving it open for the petitioner to avail of the alternate remedy of appeal under Section 47A(4) of the Indian Stamp Act.
14. Thereafter, the petitioner preferred an appeal before the District Court, which was rejected by the impugned order. Submissions
15. MrDutt, learned senior counsel appearing for the petitioner, assailed the impugned order, essentially, on five fronts. First, he submitted that the District Court did not appreciate order passed by the Collector, which was in violation of the principles of natural justice as the petitioner was not afforded a fair opportunity of being heard. Second, he submitted that the Collector had relied upon various sale deeds. However, the petitioner was not confronted with the same. Thus, the petitioner had no opportunity to make any submission with regard to the said sale deeds.
16. Third, he submitted that the Collector had not taken into account the material produced by the petitioner, that is, the two valuation reports and the offers received pursuant to advertisements published in the newspaper. He submitted that ignoring the aforesaid material vitiated the order passed by the Collector.
17. Fourth, he submitted that the sale deeds of various properties, which were relied upon by the Collector, also indicated that the transaction value was below the circle rates and, therefore, the petitioner claimed that the circle rates were higher than the market value of the said property.
18. Fifth, he submitted that the petitioner had also produced various sale deeds in support of its claim. However, the Additional District Judge had not considered the same on the ground that the stamp duty paid on the sale deeds was on the basis of the value determined on circle rates and not on the value as set forth in the sale deeds.
19. Mr Ramesh Singh, learned counsel appearing for the respondents countered the aforesaid submissions. He submitted that the circle rates as notified in terms of Rule 4 of the Delhi Stamp (Prevention of Under Valuation of Instruments) Rules, 2007 (hereafter „the Rules‟) are fixed after due deliberation and, therefore, unless sufficient evidence is produced to establish that the value of a property is less than the value as assessed on the basis of circle rates, the same must be accepted. He submitted that in the present case, the petitioner had not produced any evidence to establish that the value of the said property was below the value as determined on the basis of the circle rates. He referred to the valuation report submitted by the petitioner and pointed out that the said value was based only on a bald statement that enquiries had been made from property dealers and was not based on any cogent material. He submitted that it was not sufficient for the petitioner to rely on the reports without adducing the material on which such reports are based and, therefore,the said valuation reports could not be relied upon.
20. Next, he submitted that the Collector of Stamps had conducted an enquiry and referred to various other sale deeds in arriving at the conclusion that the consideration as set forth in the sale deed in question was below the market value of the said property.
21. Lastly, he contended that the jurisdiction of this Court under Article 227 of the Constitution of India was limited and that unless this Court found an error in exercise of jurisdiction by the Learned Additional District Judge, no interference would be called for. He also relied upon the decision of the Supreme Court in State of Haryana and Anr. v. Manoj Kumar: (2010) 4 SCC 350 and the decision of the Division Bench of this Court in Amit Gupta v. Govt. of NCT of Delhi and Ors.: (2016) 229 DLT 385 in support of his contentions. Reasons and Conclusion
22. Before proceeding further, it would be relevant to refer to the Section 47A of the Indian Stamp Act, 1899, which is set out below:- “47A. (1) If the Registering Officer, while registering any instrument transferring any property, has reason to believe that the value of the property or the consideration, as the case may be, has not been truly set forth in the instrument, he may, after registering such instrument, refer the same to the Collector for determination of the value or consideration, as the case may be, and the proper duty payable thereon. (2) On receipt of a reference under sub section (1), the Collector shall, after giving the parties a reasonable opportunity of being heard and after holding an enquiry in such manner as may be prescribed by rules made under this Act, by order, determine the value of the property the consideration and the duty aforesaid, and the deficient amount of duty, if any, shall be payable by the person liable to pay the duty and, on the payment of such duty, the Collector shall endorse a certificate of such payment on the instrument under his seal and signature. (3) The Collector, may, suo moto within two years from the date of the registration of any instrument not already referred to him under sub section (1), call for and examine the instrument for the purpose of satisfying himself as to the correctness of its value or consideration, as the case may be, and the duty payable thereon, and if after such examination, he has reason to believe that the value or consideration has not been truly set forth in the instrument, he may determine the value or consideration and the duty aforesaid in accordance with the procedure provided for in sub section (2), and the deficient amount of duty, if any, shall be payable and the person liable to pay the duty and, on the payment of such duty, the Collector shall endorse a certificate of such payment on the instrument under his seal and signature. (4) Any person aggrieved by an order of the Collector under sub-section (2) or sub-section (3) may appeal to the District Court within whose jurisdiction the property transferred is situated. (5) An appeal under sub-section (4) shall be filed within thirty days of the date of the order sought to be appealed against. (6) The District Court shall hear and dispose of the appeal in such manner as may be prescribed by rules under this Act. Explanation- For the purpose of this section, value of any property shall be estimated to be the price which in opinion of the Collector or the appellate authority, as the case may be, such property would have fetched, if sold in the open market on the date of execution of the instrument relating to the transfer of such property.”
23. A plain reading of Sub-section (2) of Section 47A indicates that the Collector is required to afford the parties reasonable opportunity of being heard and after holding enquiry in such manner as may be prescribed, determine the value of the said property and the duties payable thereon. Rule 7 of the Rules set forth the procedure to be adopted by the Collector on receipt of reference under Section 47A(1). Rule 7 of the Rules is set out below:- “7. Assessment of duty. – (1) On receipt of reference under sub-section (1) of section 47-A, the Collector shall serve on the person or persons concerned, a notice in Form B, requiring him on a date and at a place to be specified therein, either to attend in person or through an authorized agent, to produce or to cause to be produced any evidence on which such person or persons may rely in his or their support. (2) The Collector, after taking such evidence as the person or persons may produce and after making such enquiry as he may deem proper including taking into account the prices determined as per rule 4, shall determine the value of property or consideration, as the case may be, and assess the amount of deficient duty recoverable from the person concerned. (3) If the person or persons fails or fail to attend in response to the notice served under sub-rule (1), the Collector shall proceed ex parte and assess the deficient amount of duty, if any, to the best of his judgment.”
24. In terms of Sub-rule (1) of Rule 7 of the Rules, the Collector is required to serve a notice as prescribed in Form B to the concerned persons. In the present case, it is admitted that the Collector had issued a notice dated 22.09.2016, directing the petitioner to appear before him on 29.09.2016. Admittedly, the said notice was received and the petitioner had appeared before the Collector on the said date. The petitioner had also filed detailed objections for re-determination of the value of the said property for the purposes of stamp duty. Thus, the principles of natural justice were duly complied with and the petitioner was afforded an opportunity to adduce the evidence in support of the value as set forth in the sale deed.
25. The Collector had also made independent enquiries and had referred to five sale deeds in relation to separate immovable properties in the same area. It is not disputed that the said sale deeds were not shown to the petitioner. The said sale deeds were considered as material evidence by the Collector in determining the value of the said property and the same ought to have been disclosed to the petitioner. The contention that sale deeds were referred by him as the part of the enquiry required to be conducted and, therefore, were not required to be shown to the petitioner, is unmerited. Although, Rule 7 does not expressly state that the Collector must share the material considered by him,nonetheless, it is implicit that the proceedings before the Collector, be conducted in a transparent manner. The person concerned must not only be given an opportunity to produce evidence in support of his claim, but also an opportunity to comment on other material, which may be relied upon by the Collector.
26. Having stated the above, it is necessary to note that the Collector also did not proceed on the basis that he was not required to share details of five transactions relating to immovable properties in the area that were relied upon by him to determine the value of the said property. On the contrary, he had supported his decision with the observation that “there was no rebuttal to the said sale deeds”. Clearly, the Collector could have not proceeded on the aforesaid basis without informing the petitioner as to the details of the five sale deeds relied upon by him. In view of the above, the order passed by the Collector is not sustainable as no opportunity was afforded to the petitioner to comment on the material relied upon by the Collector.
27. The learned ADJ did not consider the aforesaid aspect. He proceeded on the basis that holding an enquiry under Section 47A of the Act by referring to the value of properties located in the vicinity,was not mandatory. The relevant paragraphs, Paragraphs 7 and 8,of the impugned order are set out below:- “7. No doubt, the concerned Collector has ample power to determine the market value of a property sought to be registered for the purpose of determining its valuation for charging stamp duty as per Section 47A of the Indian Stamp Act, which includes the power to hold an enquiry. But from the language of the said Section, it is clear that it is not a mandatory provision which is required to be followed to hold an enquiry by visiting the spot or comparing the market value of the other surrounding properties.
8. As per Section 47A(2) of the Indian Stamp Act, theCollector has been given power to determine the value of the propertyafter giving the parties areasonable opportunity for hearing and afterholding an enquiry in such manner as may be prescribed by rules madeunder the said Act. None of the parties placed on record any such rulesmade under the said Act. As such the concerned Collector was havingample discretionary power to determine the market value of aparticular property as per the prevailing circumstances. While passingthe order, the concerned Collector kept in mind the prevailing circlerates as well as sale deeds of other properties of the contemporarytime.”
28. Whilst it is not disputed that Section 47A(2) does not prescribe any method of holding an enquiry, it cannot be disputed that the Collector is required to an hold an enquiry under Section 47A of the Act. The provisions of Section 47A(2) are clear;the Collector is required to hold an enquiry in the manner as prescribed. Rule 7(2) of the Rules is relevant in this context, and reads as under: “7(2) The Collector, after taking such evidence as the person or persons may produce and after making such enquiry as he may deem proper including taking into account the prices determined as per rule 4, shall determine the value of property or consideration, as the case may be, and assess the amount of deficient duty recoverable from the person concerned.”
29. The learned ADJ also had correctly held that the Collector is empowered to determine the value of the properties after holding an enquiry. In this case, the Collector had also referred to sale deeds of other properties and, therefore, the reasoning that he was not required to examine the value of surrounding properties is not relevant. Surely, it cannot be suggested that the same be ignored. The said approach is erroneous as, in fact, the Collector had included such examination in the scope of his enquiry.
30. The next issue to be addressed is with regard to the relevance of the sale deeds considered by the Collector. In its order, the Collector had referred to five sale deeds. A Tabular chart indicating the details of the same are set out below:-
┌────────────────────────────────────────────────────────────────────────────────────────────────────────────────────┐ │ Sl. Sale Date of Year of Description of Area of Transaction Value Registration │ │ No Deed- Sale constructi property sold plot (sq. (ILR) value (as per │ │ . Registrat on mer.) circle rate) │ │ ion No. (INR) │ │ 3035 20.06.201 2012- Entire second 95.94 4,24,00,000 7,93,00,674 │ ├────────────────────────────────────────────────────────────────────────────────────────────────────────────────────┤ │ 7 2017 floor + one │ │ (approx..) servant │ │ quarter with │ │ toilet + two │ │ car │ │ parking+22% │ │ undivided │ │ ownership │ │ rights in the │ │ land │ │ 2062 09.05.201 2011- Entire third 78.17 4,95,00,000 6,55,80,952 │ │ 7 2013 floor + two (third │ │ (approx..) stilt car floor with │ │ parking terrace │ │ spaces + front and 1/4th │ │ terrace+1/4 share in │ │ share in basement) │ │ basement+25 │ │ % undivided │ │ ownership │ │ right in land │ │ W.P.(C) 3587/2018 Page 13 of 21 │ │ 2019:DHC:1557 │ │ 1337 31.03.201 1990- Second floor 83.5543 5,00,00,000 7,08,30,000 │ │ 7 2000 + third floor + │ │ terrace │ │ rights+1/3rd │ │ undivided │ │ ownership of │ │ land │ │ 1304 30.03.201 2012 Second floor 61.7 5,29,000 5,28,10,200 │ │ 7 + 2 car │ │ parking in stilt │ │ area +15% │ │ undivided │ │ ownership │ │ rights in plot │ │ 1898 02.5.2017 2013 Entire second 56.45 4,80,00,000 4,77,60,850 │ │ floor + 2 stilt │ │ car parking + │ │ space for one │ │ utility with │ │ common W.C. │ │ in the stilt │ │ area + 22.5% │ │ undivided │ │ ownership │ │ rights in the │ │ plot of land │ │ 31. It is noticed that the properties referred to in the afore- │ └────────────────────────────────────────────────────────────────────────────────────────────────────────────────────┘
32. Insofar as the material produced by the petitioner is concerned – that is, thetwo valuation reports and the affidavit affirming to the offers received pursuant to the public advertisements – the Collector did not advert to them. Mr Singh‟s contention that the said reports could not be relied upon appears merited considering that the said reports are not supported by any cogent material. However, it was necessary for the Collector to have examined the same and come to his ownconclusion. It does not appear that he had even considered the same as the order passed by him does not refer to the valuation reports at all.
33. The public advertisements issued by the petitioner and the affidavit affirming the offers received pursuant thereto were filed before the Collector after the order had been passed and, therefore, his decision could not be faulted on account of not considering the same. Further, it was also not open for the petitioner to keep filing documents at its will.The petitioner was required to file the same on or before the date indicated in the notice issued by the Collector. If the petitioner desired further time to produce relevant material, it could have made a request to this effect. However, it was certainly not open for the petitioner to keep filing documents even after the hearing was concluded.
34. Before proceeding to examine the impugned order passed by the Learned ADJ, it would be relevant to refer to Rule 14 of the Rules, which set out below:- “14. Hearing of appeal.‒(1) If the appeal is not summarily rejected, the appellate authority shall fix a day and place for hearing the appeal and may, from time to time, adjourn the hearing. (2) The appellate authority may, before disposing of any appeal, make such further enquiry as it may think fit or cause further enquiry to be made by the Collector concerned. (3) The appellate authority shall not enhance the assessment unless the appellant has had a reasonable opportunity of showing cause against such enhancement. (4) If the order on appeal is likely to affect any person other than the appellant adversely, that other person shall also be given a reasonable opportunity of being heard before passing such an order.”
35. It is apparent from the aforesaid Rules that the Learned ADJ is also empowered to make further enquiry as deemed fit or to cause further enquiries to be made by the Collector concerned. In the present case, the ADJ did not make any enquiry and simply proceeded on the basis that the Circle Rates had been notified and, therefore, there was no infirmity with the decision of the Collector. The relevant extract of the impugned order reflecting the aforesaid view are set out below:- “9. In the past, the vendors/purchasers of properties werehaving unguidedchoice to fix any amount towards market value of theproperties under sale and in order to check/contain the said arbitrarypractices of the generalpublic as well as to limit the wide discretionary power of the Collector, the Government has notified the specific Circle Rates which were based on some background material. Once the:Circle Rates notified, the rates of the property of a particular area became the substantial yardstick to determine the value of theproperty. This way, the concerned Collector has been also given atoolto determine the market value of the properties uniformly. Theimpugned order dated 22.07.2017 was also passed by the concernedCollector of the Stamps on the basis of the said Circle Rates and thiscourt finds no illegality, impropriety or irregularity in the said order which is based ona sound and uniform fixation ofrate ofthe property. xxxx xxxx xxxx xxxx
13. This court is also of the considered opinion that CircleRates of a particular property/area have been determined on the basisof legislative deliberations and it is applicable uniformly in particularareas in the public interest. Therefore, the said Circle Rates havegreater decisive weightage than the individual interest. Therefore this court is not inclined to remand back the case.”
36. It is now well settled that circle rates are only to act as a guide for the assessment of the duty chargeable on the value of any immovable property. Rule 4(3) of the Rules expressly indicates the same and is set out below for ready reference:- “4(3) The valuation so fixed by the Government shall act as guide/indicator for the purposes of assessing the duty chargeable on the value or the consideration of any immovable property.”
37. The Division Bench of this Court in Amit Gupta v. Govt. of NCT of Delhi & Ors. (supra) had also noted that the circle rates are of act as a guide/indicator for the purposes of assessing the duty chargeable on the value or the consideration of any property. Rule 7(2) of the Rules makes it amply clear that the Collector has to determine the value of the property after taking such evidence as may be produced by the concerned person and after making such enquiry as he deems proper, including taking into account the prices as determined as per Rule 4 of the Rules. Undoubtedly, the Collector was required to take into account the circle rates but his decision is not to be based on that evidence alone.
38. The observations made by the petitioner that circle rates have greater decisive weightage than any individual interest is also unsustainable. The enquiry to be made by the Collector is for determining the market value.Although, the circle rates have a significant weightage, the same are not to beweighed in the scales of public interestor private interest, but only as an indicator or a guide for the purposes of assessing the market value of the propertybeing transacted. The object is to accurately determine whether the value or consideration is truly set forth in the sale deed.
39. The Learned ADJ had also rejected the petitioner‟s contention that the sale deeds relied upon by the Collector indicate that the transaction value of the properties was below the value as determined on the basis of circle rates. The learned ADJ had held that since the concerned parties had paid stamp duty on the basis of circle rates, it was irrelevant that the value set forth in the sale deeds was less than the circle rates. The petitioner had also produced certain sale deeds which indicated the transaction value of the properties in the area to be less than the prices determined on the basis of notified rates. A tabular statement indicating the details of the sale deeds produced by the petitioner is set out below:-
┌──────────────────────────────────────────────────────────────────────────────────────────────────────────────────┐ │ Sl. Sale Date of Year of Description of Area of Transaction Value Registration │ │ No Deed- Sale constructi property sold plot (sq. (ILR) value (as per │ │ . Registrat on mer.) circle rate) │ │ ion No. (INR) │ ├──────────────────────────────────────────────────────────────────────────────────────────────────────────────────┤ │ 1 4662 December 2015 Second Floor 109.11 5,75,00,000 8,97,86,322 │ │ 2016 + servant │ │ quarter in the │ │ stilt + 25% │ │ undivided │ │ ownership of │ │ land │ │ 2 3351 19.07.201 2008 Basement + 45.85 1,60,00,000 4,12,00,000 │ │ 7 servant room │ │ in stilt area + │ │ 10% │ │ undivided │ │ share in land │ │ 3 4114 15.11.201 After First Floor + 2,05,00,000 4,28,00,000 │ │ 6 2005 one car │ │ parking + │ │ servant │ │ quarter on │ │ terrace │ │ W.P.(C) 3587/2018 Page 19 of 21 │ │ 2019:DHC:1557 │ │ 4 3583 07.10.201 2015 Basement + 42.14 2,50,00,000 3,78,26,810 │ │ 6 10% │ │ undivided │ │ ownership │ │ rights in land │ │ 5 1883 01.05.201 2002 Part lower 98.09 4,22,00,000 8,10,50,000 │ │ 7 ground floor + │ │ exclusive │ │ driveway + │ │ proportionate │ │ undivided │ │ ownership of │ │ land │ │ 40. The aforesaid material was also rejected on the basis that the │ └──────────────────────────────────────────────────────────────────────────────────────────────────────────────────┘
41. This Court is of the view that the aforesaid approach is erroneous. There may be cases where the parties may not wish to contest the levy of stamp duty on the basis of values of circle rates. It may not be worthwhile for a party to contest the same if the difference of the value is not significant. However, that does not mean that the transaction value is less than the market value of the property. The five sale deeds produced by the petitioner and three of the five sale deeds relied upon by the Collector clearly indicate that the transaction values of the properties were less than the circle rates. Clearly, the said material could not be brushed aside only for the reason that the concerned parties had not contested the levy of stamp duty in excess of that which was payable on the consideration as set forth in the documents.
42. In view of the above, this Court is of the view that the impugned order cannot be sustained. The impugned order as well as the order dated 22.07.2017 passed by the Collector are set aside and the matter is remanded to the Collector to consider afresh in accordance with law. The Collector shall issue a fresh notice to the petitioner in accordance with Rule 7(1) of the Rules and decide afresh after affording the petitioner an opportunity to be heard.
43. The petition is disposed of in the aforesaid terms. The pending application also stands disposed of.
VIBHU BAKHRU, J MARCH 14, 2019 RK