CASE NO.:
Appeal (civil) 5273 of 2007
PETITIONER:
STATE OF RAJASTHAN & ORS
RESPONDENT:
M/S KHANDAKA JAIN JEWELLERS
DATE OF JUDGMENT: 16/11/2007
BENCH:
A.K. MATHUR & MARKANDEY KATJU
JUDGMENT:
J U D G M E N T
CIVIL APPEAL NO. 5273 OF 2007
[Arising out of S.L.P.(C) No.19439 of 2006]
A.K. MATHUR, J.
1. Leave granted.
2. This appeal is directed against the judgment dated 23.11.2005
passed by the Division Bench of the High Court of Judicature for
Rajasthan at Jaipur Bench, Jaipur in SBCWP No. 133/1997 and DBCSA
No. 427/2002 whereby the division bench has affirmed the order of the
learned Single Judge.
3. Brief facts which are necessary for the disposal of this appeal
are as under:
The S.B. Civil writ petition No. 133/97 was filed by M/s
Khandaka Jain Jewellers, petitioner (respondent herein) in the High
Court of Judicature for Rajasthan, Jaipur Bench, Jaipur who prayed
that a direction may be issued to the respondent Nos. 2&3 to
register the sale deeds sent by the Court of additional district
Judge No. 1, Jaipur city in execution application No. 15/94 and 16/94
and to send back the same to the Court immediately after
registration. It was also prayed that the respondents may be
directed to register the sale deeds on the stamps on which it is
executed by the executing court and not to charge more stamp duty
from respondent (herein). It was further prayed to quash and set
aside the proceedings taken under Section 47A(2) of the Stamps Act,
1952 in case No. 442/95 and 443/95 on 4th March, 1997 for determination
of the valuation of the sale deed for registration.
The respondent is a registered firm and it entered into two
agreements for purchase of properties with Shri Prem Chand Ajmera,
resident of 2148, Haldiyon Ka Rasta Jaipur by one agreement dated 20th
October, 1983. The property was agreed to be purchased for a sum of
Rs. 1,41,000/- out of which Rs. 20,000/- were paid at the time of the
agreement. As the vendor failed to comply with the terms of the
agreement, the respondent vendee filed a suit for specific
performance of the contract in the Court of district Judge, Jaipur
city which was later on transferred to the Court of additional
district Judge No.1, Jaipur city under registration No. 216/86. The
suit was decreed by the Judgment and decree dated 2nd February,1994.
In pursuance of the said decree, the respondent firm deposited an
amount of Rs. 1,21,000/- in the Court on 9th May, 1994. Since the
vendor did not execute the sale deed, therefore, the respondent firm
filed the execution application No. 16/90 before the Court of
additional district Judge No. 1, Jaipur city.
In another agreement dated 20TH October, 1983 the vendor
Premchand agreed to sell a portion of property for a sum of Rs.
50,000/- out of which Rs. 10,000/- was paid at the time of agreement.
The respondent firm purchased the stamp papers and got the sale deed
typed. In this case also the vendor failed to fulfill the condition
of agreement and to execute the sale deed. Consequently, the
respondent firm filed another suit for specific performance of the
contract in the Court of district Judge, Jaipur city. It was also
transferred to the court of additional district Judge No. 1, Jaipur
city under registration No. 151/91. The suit was decreed vide
judgment and decree dated 2nd February, 1994 and the respondent firm
was directed to deposit the remaining amount of Rs. 40,000/- and
the judgment debtor would execute the sale deed. If the judgment
debtor fails to comply with the decree, the decree holder would be
entitled to get the sale deed registered and to get the possession. In
compliance of the judgment and decree passed by the Court, the
respondent firm deposited an amount of Rs. 40,000/- in the court but
the judgment debtor did not execute the sale deed. The execution
application No. 15/94 was filed before the Court of additional
district Judge No. 1, Jaipur city. Both these applications No.
15/94 and 16/94 were taken up by the executing court and the
respondent firm was directed to submit the stamp papers for the
execution of the two sale deeds. The stamp papers for a sum of
Rs.14,100/- and Rs. 5,000/- for execution of the sale deeds in
respect of properties purchased for a sum of Rs. 1,41,000/- and
Rs. 50,000/- respectively, were submitted by the respondent firm.
The learned executing court executed the sale deeds and sent the
same on 17th March, 1995 for registration before the Sub-
registrar, Registration Department, Collectorate Bani Park, Jaipur.
The Sub-Registrar exercising its powers under Section 47A(1) of the
Stamp Act sent these two sale deeds to Collector (Stamps) Jaipur for
determining the market value and to assess the charge of the stamp
duty. The Collector (stamps) registered these two cases No.
442/95 and 443/95 of the respondent firm and passed the order dated
5th March, 1997. In case No. 442/95 he assessed value of the
property as Rs. 5,60,000/- and deficient stamp duty was raised to
the extent of Rs. 41,900/- and deficient registration fees as Rs
1500/- and he also levied the penalty of Rs. 1000/-. Thus, the
total amount against the respondent firm raised was Rs. 44,400/-. In
the second case No. 443/95 he assessed value of the property as
Rs. 3,87,580/- and deficient stamp duty to the extent of Rs.
33,758/- and deficient registration fees as Rs. 1500/- and the
penalty of Rs. 1000/-. Thus the total amount directed to be recovered
from the respondent firm was Rs. 36,258/-. The respondent firm
filed writ petition challenging both these orders and the
contention of the respondent firm was that the valuation of the
property should be taken when the agreement of sale deed was
executed, and not at the time of the registration of the sale deed.
The learned Single Judge relying on the judgment in the case of Sub
Registrat, Kodad Town and Mandal v. Amaranaini China Venkat Rao and
Others reported in AIR 1998 Andhra Pradesh 252 allowed the writ
petition and observed that since the vendor backed out and did not
execute the sale deed of the property in pursuance of the agreement
on 20th October, 1983 therefore, the respondent firm filed a suit
for specific performance of contract in 1986 and the suit was
decreed. The respondent firm was ready and willing to pay the amount,
and therefore, it was not his fault. The same was the position
regarding the second suit which was filed in 1991. The learned Judge
after considering the matter directed to set aside both the orders
and held that for the purpose of charging stamp duty, etc, the
relevant date for assessment of the market value shall be the date on
which the suit for specific performance of the agreement to sale was
filed. Consequently the order dated 4th March, 1997 (Annexure 5 & 6)
was quashed and the authorities were directed to pass a fresh order
regarding the market value of the property in question for the purpose
of levy of the stamp duty as on the date of filing of the suit and
also directed to undertake this exercise keeping in view the
observation of the judgment within a period of one month from the date
of receipt of the certified copy of the order after notice to
respondent firm.
4. Aggrieved against this order, an appeal was preferred before the
Division Bench of the Rajasthan High Court at Jaipur Bench and the
Division Bench affirmed the order of the learned single Judge.
Aggrieved against the order of the Division Bench, the present appeal
was preferred by the State of Rajasthan & Ors., appellants herein.
5. We have heard learned counsel for the parties and perused the
records.
6. The question is whether the valuation should be assessed on the
market rate prevailing at the time of registration of the sale deed or
when the parties entered into agreement to sell.
7. Learned counsel for the State has submitted that the Stamp Act is
a taxing statute and a taxing statute has to be construed strictly.
Whatsoever may have been the consideration for the vendor not to get
the sale deed executed is a matter between both the parties, but
when the matter is before the registering Authority the registering
Authority has to see the valuation of the property at the market rate
at the time of the registration as per Section 17 of the Act.
Therefore, a notice under Section 47A of the (Rajasthan Amendment)
Stamp Duty Act was given and proper valuation was determined for
registration. As against this, the learned counsel for the
respondent submitted that Section 3 of the Act is a charging
section. The registering authority has to see the instrument and the
consideration mentioned therein for payment of duty as per Section 27
of the Act. If he finds it undervalued then he can hold an inquiry
with regard to market value which was prevailing at the time of
agreement to sell.
8. In order to appreciate the controversy involved in the matter,
it is necessary to reproduce the relevant provisions of the Stamp Act
which are as under:
Section 2(12) of the Act reads as under:
"(12) "Executed", and "execution", used with reference
to instruments, mean "signed" and "signature"."
Section 3 of the Act reads as under:
"3. Instruments chargeable with duty - Subject to the
provisions of this Act and the exemptions contained
in Schedule I, the following instruments shall be
chargeable with duty of the amount indicated in that
Schedule as the proper duty therefore, respectively,
that is to say
(a) every instrument mentioned in that Schedule which,
not having been previously executed by any person,
is executed in (India) on or after the first day of
July, 1899;
(b) every bill of exchange payable otherwise than on
demand or promissory note drawn or made out of
India on or after that day and accepted or paid,
or presented for acceptance or payment, or
endorsed, transferred or otherwise negotiated, in
India; and
(c) every instrument (other than a bill exchange or
promissory note) mentioned in that Schedule, which,
not having been previously executed by any person,
is executed out of India on or after that day
relates to any property situate, or to any matter
or thing done or to be done, in India and is
received in India:
Provided that no duty shall be chargeable in respect
of-
(1) any instrument executed by, or on behalf of, or in
favour of, the Government in cases where, but for
this exemption, the Government would be liable to
pay the duty chargeable in respect of such
instrument;
(2) any instrument for the sale, transfer or other
disposition, either absolutely or by way of
mortgage or otherwise, of any ship or vessel, or
any part, interest, share or property of or in any
ship or vessel, registered under the Merchant
Shipping Act, 1894, or under Act 19 of 1938, or
the Indian Registration of Ships Act, 1841 (10 of
1841) as amended by subsequent Acts.
(3) Any instrument executed, by or on behalf of, or in
favour of the Developer, or Unit or in connection
with the carrying out of purposes of the Special
Economic Zone.
"
Section 17 of the Act reads as under:
"17. Instruments executed in India All instrument
chargeable with duty and executed by any person in
India shall be stamped before or at the time of
execution."
Section 27 of the Act reads as under:
"27.Facts affecting duty to be set forth in
instrument.- The consideration (if any) and all
other facts and circumstances affecting the
chargeability of any instrument with duty, or the
amount of the duty with which it is chargeable,
shall be fully and truly set forth therein."
Section 47-A inserted by Rajasthan(Amendment)
State Stamp Act reads as under:
"S.47-A Instruments under-valued, how to be valued
(1) Notwithstanding anything contained in the
Registration Act, 1908 (Central Act XVI of 1908)
and the rules made thereunder as in force in
Rajasthan where in the case of any instrument
relating to an immovable property chargeable with
an ad valorem duty on the market value of the
property as set forth in the instrument, the
registering officer has, while registering the
instruments, reason to believe that the market
value of the property has not been truly set forth
in the instrument, he may either before or after
registering the instrument, send it in original to
the Collector for determination of the market-value
and to assess and charge the duty in conformity
with such determination together with a penalty not
exceeding ten-times the deficient stamp duty
chargeable and surcharge, if any, payable on such
instrument.
(2) On receipt of the instrument under sub-
section(1), the Collector shall, after giving the
parties a reasonable opportunity of being heard and
after holding an enquiry in the prescribed manner
determine the market-value and the duty including
penalty and surcharge, if any, payable thereon; and
if the amount of duty including penalty and
surcharge, if any, already paid, is deficient, the
deficient amount shall be payable by the person
liable to pay the duty including penalty and
surcharge, if any.
(2-A) Where it appears to a person having by law or
consent of parties authority to receive evidence or
a person in charge of a public office, during the
course of inspection or otherwise, except an
officer of a police, that an instrument is
undervalued, such person shall forthwith make a
reference to the Collector in that matter.
(3)The Collector may, suo motu, or on a reference
made under sub-section (2-A) call for and examine
any instrument not referred to him under sub-
section (1), from any person referred to in sub-
section (2-A) or the executant or any other person
for the purpose of satisfying himself as to the
correctness of the market-value of such property
has not been truly set forth in the instrument, he
may determine in accordance with the procedure
provided in sub-section(2), the market-value and
the amount of stamp duty together with a penalty
not exceeding ten times the deficient stamp duty
chargeable on it, which shall be payable by the
person liable to pay the stamp duty and penalty.
(4)Where for any reason the original document
called for by the Collector under sub-section(3)
is not produced or cannot be produced, the
Collector may after recording the reasons for its
non-production call for a certified copy of the
entries of the document from the registering
officer concerned and exercise the powers conferred
on him under sub-section (3).
(5)For the purpose of enquiries under this section,
the Collector shall have power to summon and
enforce the attendance of witnesses including the
parties to the instrument or any of them, and to
complete the production of documents by the same
means, and so far as may be in the same manner, as
is provided in the case of Civil Court under Code
of Civil Procedure, 1908 (Central Act V of 1908)"
9. The contention of the learned counsel for the State that as per
Section 17 of the Act, the market value has to be taken into
consideration because Section 17 stipulates that all the instruments
chargeable with duty and executed by person of India shall be
stamped before or "at the time of execution". The word "execution"
has been defined in Section 2(12) of the Act which says that
"Execution" used with reference to the instruments, mean "signed" and
"signature". Therefore, it shows that the document which is sought
to be registered has to be signed by both the parties. Till that time
the document does not become an instrument for registration. A
reading of Section 2(12) with Section 17 clearly contemplates that
the document should be complete in all respects when both the parties
should have signed it with regard to the transfer of the immovable
property. It is irrelevant whether the matter had gone in for
litigation.
10. It may be mentioned that there is a difference between an
agreement to sell and a sale. Stamp duty on a sale has to be assessed
on the market value of the property at the time of the sale, and not
at the time of the prior agreement to sell, nor at the time of filing
of the suit. This is evident from section 17 of the Act. It is true
that as per Section 3, the instrument is to be registered on the
basis of the valuation disclosed therein. But Section 47-A of the
Rajasthan(Amendment) Stamp Duty Act contemplates that in case it is
found that properties are under valued then it is open for the
Collector (Stamps) to assess the correct market value. Therefore,
in the present case when the registering authority found that
valuation of the property was not correct as mentioned in the
instrument, it sent the document to the Collector for ascertaining
the correct market value of the property. The expression "execution"
read with Section 17 leaves no manner of doubt that the current
valuation is to be seen when the instrument is sought to be
registered. The Stamp Act is in the nature of a taxing statute, and
a taxing statute is not dependant on any contingency. Since the word
"execution" read with Section 17 clearly says that the instrument
has to be seen at the time when it is sought to be registered and in
that if it is found that the instrument has been undervalued then it
is open for the registering authority to enquire into its correct
market value. The learned single Judge as well as the Division
Bench in the present case had taken into consideration that the
agreement to sell was entered into but it was not executed.
Therefore, the incumbent had to file a suit for seeking a decree
for execution of the agreement and that took a long time. Therefore,
the Courts below concluded that the valuation which was in the
instrument should be taken into account. In our opinion this is not a
correct approach. Even the valuation at the time of the decree is
also not relevant. What is relevant in fact is the actual valuation
of the property at the time of the sale. The crucial expression used
in Section 17 is "at the time of execution". Therefore, the market
value of the instrument has to be seen at the time of the execution
of the sale deed, and not at the time when agreement to sale was
entered into. An agreement to sell is not a sale. An agreement to
sell becomes a sale after both the parties signed the sale deed. A
taxing statute is not contingent on the inconvenience of the
parties. It is needless to emphasize that a taxing statute has to
be construed strictly and considerations of hardship or equity
have no role to play in its construction. VISCOUNT SIMON quoted with
approval a passage from ROWLATT, J. expressing the principle in the
following words
" In a taxing Act one has to look merely at what
is clearly said. There is no room for any
intendment. There is no equity about a tax.
There is no presumption as to tax. Nothing is
to be read in, nothing is to be implied. One can
only look fairly at the language used."
11. The same view was expressed by Hon'ble Bhagwati J. in the
case of A.V. Fernandez v. State of Kerala reported in AIR 1957 SC
657. The principle is as follows:
"In construing fiscal statutes and in determining
the liability of a subject to tax one must have
regard to the strict letter of the law. If the
revenue satisfies the court that the case falls
strictly within the provisions of the law, the
subject can be taxed. If on the other hand, the
case is not covered within the four corners of the
provisions of the taxing statute, no tax can be
imposed by inference or by analogy or by trying to
probe into the intention of the Legislature and by
considering what was the substance of the matter."
Hon'ble Shah J has formulated the principle thus:
"In interpreting a taxing statute, equitable
considerations are entirely out of place. Nor can
taxing statutes be interpreted on any presumptions
or assumptions. The court must look squarely at the
words of the statute and interpret them. It must
interpret a taxing statute in the light of what is
clearly expressed; it cannot imply anything which
is not expressed; it cannot import provisions in
the statute so as to supply any assumed
deficiency."
Therefore, a taxing statute has to be read as it is. In other
words, the literal rule of interpretation applies to it.
12. In this back-ground, if we construe Section 17 read with
Section 2(12) then there is no manner of doubt that at the time of
registration, the Registering Authority is under an obligation to
ascertain the correct market value at that time, and should not go by
the value mentioned in the instrument.
13. Learned counsel for the respondent submitted that if we
construe Section 3 read with Section 27 of the Act then the
Registering Authority is under an obligation to only see the value
mentioned in the instrument. In our opinion Section 3 which is the
charging section cannot be read in isolation but has to be read
along with Section 17 of the Act. From a composite reading of
Sections 3,17 and 27, it becomes abundantly clear that the valuation
given in an instrument is not conclusive. If any doubt arises in the
mind of the Registering Authority that the instrument is under-
valued then as per Section 47-A of the Rajasthan (Amendment) the
instrument can be sent to the Collector for determination of the
correct market value. Under Section 47-A read with Sections 3,17 and
27, it becomes clear that the Registering Authority has to
ascertain the correct valuation given in the instrument regarding
market value of the property at the time of the sale.
14. Learned Counsel for the respondent strenuously urged before us
that in fact when the agreement to sell was not executed by the
vendor, the respondent had no option but to file a suit and a
long time was taken for obtaining a decree for execution of the
agreement. He was not at fault and as such the valuation given in the
instrument should be taken into consideration because during the
litigation the valuation of the property has shot up. In this
connection, learned counsel has invited our attention to the
principle "Actus curie neminem gravabit" meaning thereby that no
person shall suffer on account of litigation. Hence learned counsel
submitted that since the matter had been in the litigation for a
long time, the respondent cannot be made to suffer. He invited our
attention to the decision of the Andhra Pradesh High Court Sub-
Registrar, Kodad Town and Mandal (supra). It is true that no one
should suffer on account of the pendency of the matter but this
consideration does not affect the Principles of interpretation of a
taxing statute. A taxing statute has to be construed as it is all
these contingencies that the matter was under litigation and the
value of the propeprty by that time shot up cannot be taken into
account for interpreting the provisions of a taxing statute. As
already mentioned above a taxing statute has to be construed strictly
and if it is construed strictly then the plea that the incumbent
took a long time to get a decree for execution against the vendor
that consideration cannot weigh with the Court for interpreting the
provisions of the taxing statutes. Therefore, simply because the
matter have been in the litigation for a long time that cannot be
a consideration to accept the market value of the instrument when
the agreement to sale was entered. As per Section 17, it clearly says
at the time when registration is made, the valuation is to be seen
on that basis.
15. In the case of Sub-Registrar, Kodad Town and Mandal (Supra),
the learned single Judge of the Andhra Pradesh High Court felt
persuaded on account of 30 years' long litigation and therefore,
declined to send the papers back to the Collector for valuation at
the market value. With great respect, the view taken by the learned
single Judge is against the principles of interpretation of a taxing
statute. Therefore, we are of the opinion that the view taken by
the learned single Judge of the Andhra Pradesh High Court is not
correct.
16. Accordingly, we are of the opinion that the view taken by the
learned single Judge as well as by the Division Bench cannot be
sustained and the same is set aside. The Collector shall determine
was the valuation of the instrument on the basis of the market
value of the property at the date when the document was tendered by
the respondent for registration, and the respondent shall pay the
stamp duty charges and surcharge, if any, as assessed by the
Collector as per the provisions of the Act. The appeal of the State
is allowed. No order as to costs.
