HIGH COURT OF JUDICATURE AT ALLAHABAD
A F R
Writ Petition No. 16843 of 2011
Satya Prakash Singh and another Petitioners
Vs.
State of U.P., and Others Respondents
Hon'ble Pankaj Mithal,J.
Petitioners are purchasers of two storied building vide registered sale deed dated 16.2.2009 for a sale consideration of Rs. 40 lacs, but for the purposes of payment of stamp duty petitioners disclosed its market value as Rs. 75lacs and paid stamp duty accordingly.
The authorities under the Indian Stamp Act, 1899 (hereinafter referred to as an 'Act'), on the report of the Sub-Registrar dated 19.2.2009 drew proceedings under Section 47-A of the Act for determination of deficiency in stamp duty, if any.
The Additional District Magistrate (for short ADM) inspected the property on 25.8.2009. On the basis of the above inspection and the report of the Sub-Registrar the authorities held that the property is partly in commercial use and partly is of residential nature. Accordingly, the market value of the ground floor portion of the building was assessed by treating it to be commercial for the reason it happened to be a clinic of a doctor and that of the first floor to be residential in nature. Thus, deficiency in stamp duty was determined and an equal amount of penalty was imposed. Both the amounts were directed to be recovered with interest @ 12.5% per mensum.
It is against the aforesaid two orders determining the deficiency in stamp duty and imposing penalty that the petitioners have invoked the writ jurisdiction of this Court under Article 226 of the Constitution of India.
I have heard Sri S.K. Chaturvedi, learned counsel for the petitioners and Sri Nimai Das, learned Standing counsel for the respondents and with their consent proceeds to decide the petition finally on the basis of the pleadings exchanged.
There is no dispute that the property was inspected by the ADM himself on 25.8.2009 in the presence of petitioner no. 1 and the Lekhpal of the area. A sketch map of the location of the property was prepared and placed on record showing shops in vicinity to the ground floor of the building in question. The said inspection was made at the insistence of the petitioners and in their presence. Therefore, the map prepared on the inspection can not be discarded simply for the reason that it is not accompanied by any narrative or a report when the inspection was made by the authorized officer himself in accordance with Rule 7 of the Uttar Pradesh (Stamp Valuation of Property) Rules, 1997. However, the said inspection map is not conclusive of the fact that the ground floor portion happened to be a commercial establishment or that it existed in a commercial area.
It has been stated in the writ petition that under the master plan of the Jhansi Development Authority the area where the building is located has been notified as residential area and therefore no part of the building can be treated as commercial. The averments to this effect made in the writ petition have not been denied by the respondent in the counter affidavit. Therefore, the Court is left with no option but to treat the area as residential in nature.
In the above facts and circumstances the solitary question which arises for consideration is whether the ground floor portion of the building situated in a residential locality and which at one time was being used as a clinic or a pathology laboratory by the Doctor son of the erstwhile owner would be assessable to market value as a commercial property for the purposes of realizing stamp duty on the aforesaid sale deed.
Commercial property has not been defined under the Act but the Rules in Section 2 (d) explains "commercial building" as a commercial establishment or a shop as defined under Section 2 (4) and (16) respectively of the U.P. Dukan and Vanijya Adhisthan Adhiniyam, 1962 (hereinafter for short 'Adhiniyam').
In view of the above definition of the commercial building, property which is covered by the definition of commercial establishment or shop as contained in Section 2(4) and (16) respectively of the Adhiniyam alone shall be assessable to market value as commercial building. Section 2 (4) of the Adhiniyam defines commercial establishment to mean any premises, not being the premises of a factory, or a shop, wherein any trade, business, manufacture, or any work in connection with, or incidental or ancillary thereto, is carried on for profit and includes a premises wherein journalistic or printing work, or business of banking, insurance, stocks and shares, brokerage or produce exchange is carried on, or which is used as theater, cinema, or for any other public amusement or entertainment or where the clerical and other establishment of a factory, to whom the provisions of the Factories Act, 1948, do not apply.
The above definition of the 'commercial establishment' can be put in a simplified manner to mean:-
i) Any premises or a shop wherein any trade, business, manufacture is carried on or any work in connection with, or incidental or ancillary thereto is carried on for profit;
ii) Such premises includes a premises wherein journalistic or printing work, or business of banking, insurance, stocks and shares, brokerage or produce exchange is carried on;
iii) Premises which is used as theater, cinema or for any other public amusement or entertainment.
iv) Any premises where clerical or other establishment of a factory to whom the provisions of Factories Act, 1948 do not apply. It excludes premises of a factory.
The ground floor portion of the building in question is certainly not covered by clause (ii) (iii) and (iv) above of the definition of the commercial establishment as referred to above.
Section 2(16) of the Adhiniyam defines 'shop' to mean any premises where any wholesale or retail trade or any business is carried on, or where services are rendered to customers and includes all offices, godowns or warehouse, which are used in connection with such trade or business.
The ground floor portion of the building is not a godown or a warehouse and to that extent would not be covered by the definition of the shop.
Now the issue is whether the ground floor portion of a building in a residential locality which at one time was used as a clinic/dispensary/pathology laboratory by a doctor would be a premises, shop or office where any trade either retail or wholesale or business is said to be carried or services are being rendered to customers.
The work of a Doctor, Chartered Accountant or a Lawyer or as a matter of fact any consultant is a profession which is distinct from any trade or business. Generally, profession is an activity which is carried by an individual by his personal skill, intelligence depending upon his character. It is not in the nature of any trade or business. It is a vocation or occupation requiring special, advance education, knowledge and skill predominantly of an intellectual nature rather than physical or manual.
The Supreme Court had an occasion to consider the nature of the activity of a private dispensary run by a a doctor vis-a-vis the definition of 'commercial establishment' contained in Section 2 (4) of the Bombay Shops and Establishment Act, 1948 which is para-materia to the definition of commercial establishment contained in Section 2 (4) of the Adhiniyam. Their Lordship's of the Supreme Court after in depth consideration of the matter held that the activity of a doctor is a profession and is not a commercial activity and therefore a private dispensary of a doctor is not a 'commercial establishment'.
A similar controversy arose before the Supreme Court in connection with lawyers office. The Supreme Court in considering the definition of commercial establishment as appearing in Section 2(4) of the Kerela Shops and Establishments Act went on to hold that office of lawyers or a firm of lawyers is not a commercial establishment within the meaning of the Act, as lawyers do not carry a trade or business nor do they render services to the customers.
In another case before the Supreme Court, the M.P. Electricity Board charged the Advocate with electricity tariff applicable to non domestic users by treating his office as a commercial activity. The Madhya Pradesh High Court held that the legal profession does not involve any commercial activity and therefore the rate applicable to commercial consumers can not be applied to a lawyer's office. The matter was taken up before the Supreme Court and the Supreme Court disagreeing with certain observations made in an earlier decision in the case of New Delhi Municipal Counsel Vs. Sohan Lal Sachdeva dead (2000) 2 SCC 494 referred the matter to a larger Bench.
The larger Bench of the Supreme Court vide judgment and order dated 27.10.2005 held that advocate running his office from his residence can not be charged additional tariff on commercial basis. However, in case office is run by him from an independent and commercial place, then he can not be exempted from the commercial tariff. Thus, a distinction was made between the office of a lawyer situate in a residential area or in a residence and the office situate in a commercial place.
The profession of lawyer and that of a doctor stand on equal footing as both are professionals and so is the lawyer's office and that of doctor's clinic/dispensary or even a pathology lab. The building in question is recognized by the respondents themselves partial as residential in nature, therefore the portion of the doctor's clinic/dispensary or lab situate therein would be a part of the residential premises. The area has also been notified by the Jhansi Development Authority as residential in nature. In short, the clinic/dispensary or laboratory is being run from a residential area and the portion would not be covered by commercial establishment or shop within the meaning of Sub-section (4) and 16 of Section 2 of the Adhiniyam and its market value is not determinable as a commercial building as provided under Rule 2 (d) of the Rules.
In view of the aforesaid facts and circumstances, I hold that the authorities below have erred in treating the ground floor portion of the building in question to be commercial in nature for the reason that at one point of time a doctor's clinic or a pathology lab was being run from there. It is a part of a residential building.
Accordingly, a writ of certiorari is issued quashing the impugned orders dated 10.3.2011 and 29.5.2010 passed by the Commissioner, Jhansi Division, Jhansi and Additional Collector respectively.
The writ petition is allowed. No costs.
Dated: 29.5.2012
SKS
A F R
Writ Petition No. 16843 of 2011
Satya Prakash Singh and another Petitioners
Vs.
State of U.P., and Others Respondents
Hon'ble Pankaj Mithal,J.
Petitioners are purchasers of two storied building vide registered sale deed dated 16.2.2009 for a sale consideration of Rs. 40 lacs, but for the purposes of payment of stamp duty petitioners disclosed its market value as Rs. 75lacs and paid stamp duty accordingly.
The authorities under the Indian Stamp Act, 1899 (hereinafter referred to as an 'Act'), on the report of the Sub-Registrar dated 19.2.2009 drew proceedings under Section 47-A of the Act for determination of deficiency in stamp duty, if any.
The Additional District Magistrate (for short ADM) inspected the property on 25.8.2009. On the basis of the above inspection and the report of the Sub-Registrar the authorities held that the property is partly in commercial use and partly is of residential nature. Accordingly, the market value of the ground floor portion of the building was assessed by treating it to be commercial for the reason it happened to be a clinic of a doctor and that of the first floor to be residential in nature. Thus, deficiency in stamp duty was determined and an equal amount of penalty was imposed. Both the amounts were directed to be recovered with interest @ 12.5% per mensum.
It is against the aforesaid two orders determining the deficiency in stamp duty and imposing penalty that the petitioners have invoked the writ jurisdiction of this Court under Article 226 of the Constitution of India.
I have heard Sri S.K. Chaturvedi, learned counsel for the petitioners and Sri Nimai Das, learned Standing counsel for the respondents and with their consent proceeds to decide the petition finally on the basis of the pleadings exchanged.
There is no dispute that the property was inspected by the ADM himself on 25.8.2009 in the presence of petitioner no. 1 and the Lekhpal of the area. A sketch map of the location of the property was prepared and placed on record showing shops in vicinity to the ground floor of the building in question. The said inspection was made at the insistence of the petitioners and in their presence. Therefore, the map prepared on the inspection can not be discarded simply for the reason that it is not accompanied by any narrative or a report when the inspection was made by the authorized officer himself in accordance with Rule 7 of the Uttar Pradesh (Stamp Valuation of Property) Rules, 1997. However, the said inspection map is not conclusive of the fact that the ground floor portion happened to be a commercial establishment or that it existed in a commercial area.
It has been stated in the writ petition that under the master plan of the Jhansi Development Authority the area where the building is located has been notified as residential area and therefore no part of the building can be treated as commercial. The averments to this effect made in the writ petition have not been denied by the respondent in the counter affidavit. Therefore, the Court is left with no option but to treat the area as residential in nature.
In the above facts and circumstances the solitary question which arises for consideration is whether the ground floor portion of the building situated in a residential locality and which at one time was being used as a clinic or a pathology laboratory by the Doctor son of the erstwhile owner would be assessable to market value as a commercial property for the purposes of realizing stamp duty on the aforesaid sale deed.
Commercial property has not been defined under the Act but the Rules in Section 2 (d) explains "commercial building" as a commercial establishment or a shop as defined under Section 2 (4) and (16) respectively of the U.P. Dukan and Vanijya Adhisthan Adhiniyam, 1962 (hereinafter for short 'Adhiniyam').
In view of the above definition of the commercial building, property which is covered by the definition of commercial establishment or shop as contained in Section 2(4) and (16) respectively of the Adhiniyam alone shall be assessable to market value as commercial building. Section 2 (4) of the Adhiniyam defines commercial establishment to mean any premises, not being the premises of a factory, or a shop, wherein any trade, business, manufacture, or any work in connection with, or incidental or ancillary thereto, is carried on for profit and includes a premises wherein journalistic or printing work, or business of banking, insurance, stocks and shares, brokerage or produce exchange is carried on, or which is used as theater, cinema, or for any other public amusement or entertainment or where the clerical and other establishment of a factory, to whom the provisions of the Factories Act, 1948, do not apply.
The above definition of the 'commercial establishment' can be put in a simplified manner to mean:-
i) Any premises or a shop wherein any trade, business, manufacture is carried on or any work in connection with, or incidental or ancillary thereto is carried on for profit;
ii) Such premises includes a premises wherein journalistic or printing work, or business of banking, insurance, stocks and shares, brokerage or produce exchange is carried on;
iii) Premises which is used as theater, cinema or for any other public amusement or entertainment.
iv) Any premises where clerical or other establishment of a factory to whom the provisions of Factories Act, 1948 do not apply. It excludes premises of a factory.
The ground floor portion of the building in question is certainly not covered by clause (ii) (iii) and (iv) above of the definition of the commercial establishment as referred to above.
Section 2(16) of the Adhiniyam defines 'shop' to mean any premises where any wholesale or retail trade or any business is carried on, or where services are rendered to customers and includes all offices, godowns or warehouse, which are used in connection with such trade or business.
The ground floor portion of the building is not a godown or a warehouse and to that extent would not be covered by the definition of the shop.
Now the issue is whether the ground floor portion of a building in a residential locality which at one time was used as a clinic/dispensary/pathology laboratory by a doctor would be a premises, shop or office where any trade either retail or wholesale or business is said to be carried or services are being rendered to customers.
The work of a Doctor, Chartered Accountant or a Lawyer or as a matter of fact any consultant is a profession which is distinct from any trade or business. Generally, profession is an activity which is carried by an individual by his personal skill, intelligence depending upon his character. It is not in the nature of any trade or business. It is a vocation or occupation requiring special, advance education, knowledge and skill predominantly of an intellectual nature rather than physical or manual.
The Supreme Court had an occasion to consider the nature of the activity of a private dispensary run by a a doctor vis-a-vis the definition of 'commercial establishment' contained in Section 2 (4) of the Bombay Shops and Establishment Act, 1948 which is para-materia to the definition of commercial establishment contained in Section 2 (4) of the Adhiniyam. Their Lordship's of the Supreme Court after in depth consideration of the matter held that the activity of a doctor is a profession and is not a commercial activity and therefore a private dispensary of a doctor is not a 'commercial establishment'.
A similar controversy arose before the Supreme Court in connection with lawyers office. The Supreme Court in considering the definition of commercial establishment as appearing in Section 2(4) of the Kerela Shops and Establishments Act went on to hold that office of lawyers or a firm of lawyers is not a commercial establishment within the meaning of the Act, as lawyers do not carry a trade or business nor do they render services to the customers.
In another case before the Supreme Court, the M.P. Electricity Board charged the Advocate with electricity tariff applicable to non domestic users by treating his office as a commercial activity. The Madhya Pradesh High Court held that the legal profession does not involve any commercial activity and therefore the rate applicable to commercial consumers can not be applied to a lawyer's office. The matter was taken up before the Supreme Court and the Supreme Court disagreeing with certain observations made in an earlier decision in the case of New Delhi Municipal Counsel Vs. Sohan Lal Sachdeva dead (2000) 2 SCC 494 referred the matter to a larger Bench.
The larger Bench of the Supreme Court vide judgment and order dated 27.10.2005 held that advocate running his office from his residence can not be charged additional tariff on commercial basis. However, in case office is run by him from an independent and commercial place, then he can not be exempted from the commercial tariff. Thus, a distinction was made between the office of a lawyer situate in a residential area or in a residence and the office situate in a commercial place.
The profession of lawyer and that of a doctor stand on equal footing as both are professionals and so is the lawyer's office and that of doctor's clinic/dispensary or even a pathology lab. The building in question is recognized by the respondents themselves partial as residential in nature, therefore the portion of the doctor's clinic/dispensary or lab situate therein would be a part of the residential premises. The area has also been notified by the Jhansi Development Authority as residential in nature. In short, the clinic/dispensary or laboratory is being run from a residential area and the portion would not be covered by commercial establishment or shop within the meaning of Sub-section (4) and 16 of Section 2 of the Adhiniyam and its market value is not determinable as a commercial building as provided under Rule 2 (d) of the Rules.
In view of the aforesaid facts and circumstances, I hold that the authorities below have erred in treating the ground floor portion of the building in question to be commercial in nature for the reason that at one point of time a doctor's clinic or a pathology lab was being run from there. It is a part of a residential building.
Accordingly, a writ of certiorari is issued quashing the impugned orders dated 10.3.2011 and 29.5.2010 passed by the Commissioner, Jhansi Division, Jhansi and Additional Collector respectively.
The writ petition is allowed. No costs.
Dated: 29.5.2012
SKS
