Stamp Authorities Cannot Levy Duty Twice On The Same Sale Consideration For Transfer Of An Immovable Property: Gujarat High Court

In a significant legal decision regarding the imposition of stamp duty on property transactions, the Gujarat High Court has ruled that Stamp Authorities cannot levy Stamp Duty twice on the same sale consideration for transfer of an immovable property, when sale consideration was paid at the stage of execution of the Agreement to Sell and the Stamp Duty was paid on the entire sale consideration at the time of registration of the said instrument.

The court's ruling, delivered by a bench comprising Chief Justice Sunita Agrawal and Justice Aniruddha Mayee, dismissed a government appeal on the matter.

The division bench observed, “In the instant case, the stamp duty was paid at the time of registration of the agreement to sale, as it was with possession. … The stamp duty was, thus, not leviable on the sale deed executed pursuant to the agreement to sale with possession as no stamp duty can be twice levied on the sale consideration with respect to one transfer.”

Background

The case originated when Meera Desai contested an order from the stamp duty authority demanding a shortfall payment of ₹31,62,667. Desai asserted that the stamp duty had been fully paid upon purchasing land in Vadodara in 2004. However, eight years later, the authority issued a notice demanding additional payment, which was deemed time-barred under Section 32A of the Gujarat Stamp Act.

Justice A S Supehia had initially quashed the notice on June 22, 2022, providing relief to the petitioners. Subsequently, the state government's challenge to this decision was rejected by a two-judge bench, affirming the earlier ruling.

The court also noted that collecting stamp duty twice on the same transaction contravenes established regulations, potentially offering relief to others facing similar issues.

Besides the issue of the inordinate administrative delay in filing the appeal and the Suo Motu proceedings initiated by the Collector beyond the period of six years as against Section 32 A (4) of the Gujarat Stamp Act 1958, another question before the Court for its consideration was to 'whether the Stamp Authorities are entitled to levy Stamp Duty on the Sale-Deed, which has been executed in furtherance of an Agreement to Sell with possession, when at the time of registration of the Agreement to Sale, Stamp Duty on the entire sale consideration was already paid.'

The court at the outset highlighted a significant delay of 570 days in the appeal without any satisfactory explanation. It observed that the Single Judge had annulled the show-cause notices and the Stamp Authority's order on the basis that the notices were issued beyond the six-year period after registration, as stipulated in Sub-Section (4) of Section 32(A).

Regarding the appellant's argument against the Single Judge's ruling, the court noted the purchasers' claim that the agreement to sell plots, dated 22.11.2004, was registered with possession, and full stamp duty was paid during registration. Furthermore, the Court noted a Sale Deed was executed on 30.05.2005 by the landowner. The notice issued on 21.12.2005 under Section 33 of the Gujarat Stamp Act, 1958, demanded deficit stamp duty and penalty through suo motu proceedings.

The court referred to Article 20 (cc), Explanation 1, which allows for the adjustment of duties on subsequent conveyances following a sale agreement with possession, where stamp duty was paid during the agreement's execution.

“For the above, we do not find any merit in the appeal, both from the point of view of delay as well as on the merit of the claim of the appellant to levy stamp duty on the sale deed dated 30.05.2005,” the Court concluded while dismissing the appeal.

Case Title: Deputy Collector & Anr. Versus Meera S. Desai & Anr

LL Citation: 2024 LiveLaw (Guj) 68

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