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Judgment
Dipankar Datta, J.—The question of law that is involved in this batch of writ petitions is common and hence the same shall stand disposed of by this common judgment. According to learned counsel appearing for the respective petitioners, this batch of writ petitions is covered by the decisions of this Court in W.P. No. 1342 of 2003 (Mendarian Enterprises Private Limited & Ors. v. Inspector General of Registration, Range-I & Ors.) decided on November 13, 2003 by Hon''ble Barin Ghosh, J. (as His Lordship then was) [the decision is reported in (2004) 1 CHN 3631 and W.P. No. 560 of 2012 (Jiten Raichand Shah & Anr. v. The State of West Bengal & Ors.), decided on July 26, 2012 by me.
On the first day W.P. No. 681 of 2012 and W.P. 791 of 2012 were considered by me, Mr. Talukdar and Mr. Mitra, learned senior counsel for the respective petitioners had prayed for orders of disposal of the said writ petitions in the same line Jiten Raichand Shah (supra) was disposed of. However, Mr. Dutta, learned counsel appearing for the respondents, urged the Court not to follow the decision in Jiten Raichand Shah (supra) on the ground that it is not a decision on merits but based on a concession of the learned counsel appearing for the respondents in that writ petition. Further, according to him, points that he would like to raise had not been urged in Mendarian Enterprise (supra) and, therefore, His Lordship had no occasion to consider the same. He urged the Court to consider the issue afresh based on his submissions.
It is noted that while disposing of Jiten Raichand Shah (supra), I had not relied on the decision in Mendarian Enterprises (supra) although the same was cited by Mr. Talukdar, who appeared for the petitioners therein, simply because of the concession of learned counsel for the respondents referred to above. Mr. Dutta is right that it is not a decision on the merits of the contentions urged by Mr. Talukdar.
Although questions of law and fact involved in this batch of writ petitions are more or less similar, it would be necessary to notice the facts giving rise to each one of the writ petitions.
In W.P. 681 of 2012, an agreement for sale in respect of an immovable property was registered on October 21, 2009. The Additional Registrar of Assurance-I, Kolkata, respondent No. 4, had generated a market value/chargeabtlity assessment slip dated October 20, 2009. The market value of such property was assessed at Rs. 18,23,64,999/- and on account of stamp duty, Rs. 1,27,65,570/- was paid on such value. Registration fee to the tune of Rs. 20,06,102 was also paid. The concerned Deputy Inspector General, however, suo motu exercised the power of determination of market value and enhanced the same to Rs. 26,60,31,500/- by his order dated March 2, 2012. An appeal carried from such order did not yield any result. The order impugned was confirmed by the Commissioner, respondent No. 3 by his order'' dated July 27, 2012.
In the meanwhile, the petitioner had presented the deed of sale before the Additional Registrar, respondent No. 4 for execution and registration. Despite payment of Rs. 1,27,65,570/- as stamp duty referred to above, a fresh market value/chargeability assessment slip dated July 28, 2012 was generated by the respondent No. 4. He determined the value of the property in question at Rs. 57,30,70,005/-, as a result whereof stamp duty and registration fee payable were determined at Rs. 2,73,48,920/- and Rs. 63,03,868/- respectively.
On enquiry made by the petitioners, they came to learn that the valuation as reflected in the said market value/chargeability assessment slip was based on Circular No. 3 of 2012 issued by the Additional Secretary, respondent No. 2. Circular No. 3 reads as follows:
Circular No. 3 for 2012
A question has been raised in connection with the chargeability of stamp duty on a deed of conveyance in furtherance of an ''Agreement to Sale'' registered before.
In exercise of the power conferred u/s 9 of the Indian Stamp Act, 1899, a proviso has been inserted in Article 23 of Schedule 1A of the Indian Stamp Act, 1899 by Notification No. 1191-L dated 01.07.1994 for determination of stamp duty payable.
The proviso is noted below:
Provided that in any case where sale or lease Cum-sale agreement is executed and is stamped with the ad valorem stamp required for such agreement under item (d) of Article 5 and in furtherance of such agreement a conveyance is subsequently executed, the duty on such conveyance shall not exceed ten rupees or the difference of the duty payable on such conveyance and the duty payable under item (d) of Article 5, whichever is greater.
Hence, there is no confusion in this matter that the stamp duty on such conveyance deed is to be calculated on the market value of the property as on the date of execution of the conveyance deed after allowing deduction of the amount of stamp duty previously paid during registration of ''Agreement to Sale''.
The CORD software in respect of transaction has been built up accordingly.
According to the petitioners, the proviso referred to in the said circular was inserted in Item 23 of Schedule 1A to the Indian Stamp Act, 1899 (hereafter the principal Act) by the legislature by the Indian Stamp (West Bengal Amendment) Act, 1990 (hereafter the Act XVII of 1990) and was in operation from January 31, 1994 to March 27, 1994, but has since been deleted by the Indian Stamp (West Bengal Amendment) Act, 1994, being Act XI of 1994. There has been no further insertion thereof in the principal Act after such deletion. Not only that, Article 23 of Schedule 1A to the principal Act was once again amended by the West Bengal Finance Act, 1996, which is a reiteration of the position that the proviso is a matter of the past. Therefore, the executive could not have pressed the said proviso into service to collect a duty that the legislature has chosen not to impose. The respondents having acted without jurisdiction, it is prayed that Circular No. 3 of 2012 be declared bad in law, illegal and inoperative and be set aside. It is also prayed that determination of market value of the property as reflected in the market value/chargeability assessment slip dated July 28, 2012 be quashed and the respondents directed to register the deed of sale on the basis of the valuation fixed by the respondent No. 3.
Insofar as W.P. No. 791 of 2012 is concerned, it appears that the petitioners intended to purchase an immovable property and, accordingly, an agreement for sale dated May 12, 2010 was executed in their favour by the 5 (five) joint owners thereof. Shares of the respective joint owners of such property was mentioned in such agreement. The market value of the property forming subject matter of the agreement for sale was determined as Rs. 30,34,21,962/-. On the basis thereof, assessed value of stamp duty of Rs. 2,12,39,548/- was duty paid on May 13, 2010. Thereafter, certain disputes and differences cropped up between the petitioners and one of the several joint owners. An arbitral tribunal is in seisin of such disputes and differences. During the pendency thereof, the remaining 4 (four) joint owners of the property executed a deed of sale seeking to transfer their 50% share in the property in favour of the petitioners. On presentation of such deed, market value/chargeability assessment slip dated August 30, 2012 was generated. Market value of 50% of the undivided share in the property had been determined as Rs. 31,63,55,481/- and stamp duty payable thereon was assessed at Rs. 2,21,44,828/-. The aforesaid assessment is the subject matter of challenge in the writ petition at the instance of the intending purchasers, who contend that market value of the entire property having been determined on the date the agreement for sale was presented for registration, market value of 50% thereof could not have been re-determined on the presentation of the deed of sale. Prayer has, accordingly, been made to register the deed without taking into account the impugned circular or without claiming any additional stamp duty over and above the stamp duty paid on the agreement for sale dated May 12, 2010. They have also prayed for quashing of the impugned circular and the market value/chargeability assessment slip dated August 30, 2012.
Since October 19, 2012 was the last date before commencement of the annual vacation of the Court, an interim order was passed which is to the following effect:
Turning to the point of grant of interim relief claimed by the petitioner, it is observed that market value of 50% of the undivided share in the property has been assessed at Rs. 31,63,55,481.00 and the petitioners are liable to pay stamp duty in a sum of Rs. 2,21,44,828.00. Admittedly, stamp duty to the extent of Rs. 2,12,39,548.00 has been paid by the petitioners on 13th May, 2010. The petitioners undertake to pay the difference amounting to Rs. 9.05,280.00 without prejudice to their rights and contentions in this petition.
It is made clear that in the event such payment of Rs. 9,05,280.00 is made by the petitioners, the Registrar shall proceed to register the deed but shall not deliver the same to the petitioners until further orders are passed by this Court.
Mr. Ayan Banerjee, learned advocate who was assisting Mr. Dutta was appointed Special Officer to supervise the exercise of registration of the sale deed.
Insofar as the 4 (four) writ petitions filed on the Appellate Side are concerned, there are certain factual similarities. The agreements for sale were all executed on September 22, 2009 and at the time of registration thereof, stamp duty as assessed was paid. The proposed deeds of sale were presented before the registering authority on October 2, 2012, whereafter fresh market value/chargeability assessment slips were generated on October 8, 2012. Prayers made in the writ petitions are identical, whereby the respective petitioners have prayed for cancellation/revocation/withdrawal of the impugned market value/chargeability assessment slips dated October 8, 2012 and for direction on the registering authority (respondent No. 5 in all the writ petitions) to forthwith register the deeds of sale on payment of Rs. 2/-as stamp duty in accordance with section 4 of the principal Act, as amended and applicable in this state.
Mr. Talukdar referred to various statutory provisions to buttress his contention that the petitioners are entitled to relief, as claimed. He contended that although none can possibly dispute that title passes only on registration of the sale deed, it is not the scheme of the principal Act that stamp duty has to be paid on the market value of the property that is determined at the time the sale deed is presented for registration. Referring to section 4 of the principal Act as applicable in this state, it was his specific contention that the statute permits a series of instruments to be employed for completing a transaction of sale and it is the instrument that a party determines to be the principal instrument, which shall be chargeable with the highest duty and the other Instruments shall be chargeable with duty of Rs. 2/- instead of the duty chargeable under Schedule I-A. Emphasizing on the word ''instead'' appearing in sub-section (1) of section 4, it was urged that the agreement for sale registered on October 21, 2009 having been determined by the parties to be the principal instrument in terms of such sub-section, stamp duty that is payable has to be assessed reckoning Rs. 26,60,31,500/- as the market value of the property at the time the agreement for sale was registered, in view of the suo motu. determination made by the respondent No. 3, and not Rs. 57,30,70,005/-, which has subsequently been determined to be the market value. Instead of Rs. 2,73,48,920/- which the respondents have demanded on account of stamp duty, the petitioners are liable only in a sum of Rs. 2/- on account thereof.
While focusing his attack on the impugned circular, Mr. Talukdar contended that a circular cannot override a statutory provision. According to him the legislature having consciously deleted w.e.f. March 28, 1994 the proviso that was appended to Item 23 of Schedule I-A to the principal Act by Act XVII of 1990, it was not within the province of the executive to impose such proviso by an administrative instruction.
The arguments of Mr. Talukdar have been adopted by Mr. Mitra and Mr. Ghose, learned counsel appearing on behalf of the petitioners in the writ petitions filed on the Appellate Side.
Per contra, Mr. Dutta has contended that the writ petitions are premature and, thus, not maintainable. Referring to the facts of W.P. 681 of 2012, he contended that the valuation of the property, as assessed by the respondent No. 4, would not be final and conclusive if the petitioners choose not to pay the stamp duty that has since been assessed and in such case, on a reference being made under sub-section (3) of section 47A of the principal Act as applicable to this state, it would be the Collector who would have the authority to determine the proper market value of the property. Similar argument was advanced in regard to W.P. 791 of 2012. According to him, the petitioners are thus not without a remedy and hence he urged that the writ petitions ought not to be entertained.
On the merits, Mr. Dutta commenced his arguments by referring to the provisions of sections 2(14) and 2(10) of the principal Act, which define ''instrument'' and ''conveyance'' respectively. He further referred to section 54 of the Transfer of Property Act, 1882 (hereafter the T.P. Act) to contend that a contract for sale does not create interest or charge on a property and that an agreement for sale is not an instrument as defined in section 2(14) of the principal Act. Similarly, he sought to impress the Court that an agreement for sale is also not covered by the explanation appended to section 2(10) of the principal Act in its applicability to this state and, therefore, not an instrument in terms thereof. The agreement for sale not being an instrument in terms of the definition clauses of the principal Act, reference to section 4 thereof by Mr. Talukdar was misplaced.
Next, Mr. Dutta argued that notwithstanding the fact that a proviso in Item 23 of Schedule 1A of the principal Act similar to the one that was in force for a limited period between January 31, 1994 and March 27, 1994 has not been re-introduced and, therefore, the same could not have formed the basis for issuance of the impugned circular, the same nonetheless is not too relevant and material for a decision on these writ petitions. According to him, even without the aid of the impugned circular, the respondents are justified in claiming stamp duty based on determination of the market value of the property on the date of registration of the sale deed having regard to the clear provisions of the principal Act itself. He contended that in view of section 17 read with section 49 of the Registration Act, 1908 (hereafter the 1908 Act), title of a property does not pass to the purchaser so long the sale deed is registered although a registered agreement for sale might be in existence. An agreement for sale, according to him, is not compulsorily registrable and no right is created on execution of such agreement. It was urged that since an agreement for sale is not compulsorily registrable, the petitioners are not entitled to any adjustment of the stamp duty payable at the time of registration of such agreement and are liable to pay the stamp duty assessed in its entirety upon determination of the market value of the property forming the subject matter of the deed of sale, when presented for registration.
The decision of the Supreme Court reported in State of Rajasthan and Others Vs. Khandaka Jain Jewellers, was heavily relied on by Mr. Dutta in support of the proposition that stamp duty on a sale has to be assessed on the market value of the property at the time of the sale itself, and not at the time of the prior agreement to sell.
He submitted that the learned judge while deciding Manderian Enterprise (supra) was deprived of adequate assistance from the side of the respondents and therefore, did not have the occasion to decide the dispute in the proper perspective from the angle raised by him and the said decision is not worthy of being followed.
In reply, Mr. Talukdar contended that section 53A of the T.P. Act provides a shield of protection to the proposed transferee to remain in possession against the original owner who has agreed to sell to the former, provided other conditions are satisfied. This provision, according to him, demolishes the contention of Mr. Dutta that an agreement for sale does not create any right or liability. Referring to the decision of the Supreme Court in Khandaka Jain Jewellers (supra), he argued that it is not applicable here -because of two reasons, first, the facts giving birth to the dispute were completely different and secondly, the facts and circumstances did not warrant consideration of section 4 of the principal Act by the Court. He reiterated his submissions based on section 4 of the principal Act and prayed for appropriate relief.
Mr. Mitra submitted that if the contention of Mr. Dutta that an agreement for sale does not create any right or liability were accepted, no suit for specific performance before a civil court would lie. He, therefore, urged the Court to reject such absurd contention.
I have heard the parties at length and considered the statutory provisions as well as the authorities that were relied on and it would now be my endeavour to decide as to whether the petitioners are entitled to succeed in their claim based on the decision in Mendarian Enterprise (supra) or the respondents are justified in their claim for realisation of unpaid stamp duty as pre-condition for registration of the sale deeds.
The object of the principal Act is to collect proper stamp duty on an instrument or conveyance on which such duty is payable. It is, therefore, a fiscal measure enacted to generate revenue for the State. Its stringent provisions are conceived in the interest of the revenue and have to be interpreted accordingly. This appears to be settled law and none has disputed the position.
However, there cannot be any doubt that taxes and duties must be reasonably collected by the State from its citizens, instead of resorting to an arbitrary procedure bordering on extortion. The procedure must be made less cumbersome and totally hassle free. Since it is not, unfortunately a growing trend of undervaluation of instruments is discernible amongst citizens. While provisions are being made to arrest undervaluation, experience has also shown that arbitrariness and/or over zealousness of the concerned officers responsible for collecting taxes contributes to the malady of such citizens arriving at compromises with them for monetary gains at the expense of the State, which ultimately loses out on revenue. Sizable sections of the citizenry, who stand affected by the irresponsible dealings of the officers, rather than challenge such actions, prefer to condescend for fear of escalating costs and delay. The process does no good either to the State or to the citizenry seeking registration of instruments. The failure of the State, acting through its officers, to exact taxes and duties that are really due and payable encourage citizens to indulge in malpractices and thereby attempts are made to evade it. How much revenue is lost on account of tax evasion need not detain me for long, for that is beyond the subject matter of controversy here. But it is of paramount importance that the State directs its action towards just and proper collection of revenue without impinging on the rights of its people.
It would be worthwhile to note the statutory provisions contained in the principal Act and its applicability to the State of West Bengal, having regard to the state amendments effected thereto. For facility of reference, the relevant provisions of the principal Act as well as the amendments thereto, having a bearing on the issue raised herein, are quoted below:
Definitions.--In this Act, unless there is something repugnant in subject or context,:--
(6) Chargeable--''Chargeable'' means, as applied to an instrument executed or first executed after the commencement of this Act, chargeable under this Act, and, as applied to any other instrument, chargeable under the law in force in India when such instrument was executed or, where several persons executed the instrument at different times, first executed;
(10) Conveyance--''Conveyance'' includes a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos and which is not otherwise specifically provided for by Schedule I; or by Schedule IA, as the case may be;
Explanation--An instrument:--
(i) whereby a co-owner of a property having defined share therein transfers such share or part thereof to another co-owner of the property or divides such property among co-owners, or
(ii) whereby a partner transfers his share in the property of the partnership business to another partner or to other partners, whether separately or together with transfer of other business assets on retirement or dissolution, or whereby he contributes to the capital of the partnership firm by transferring his right and title to, or interest in any property, is, for the purpose of this clause, an instrument by which property is transferred;
(12) Executed and execution- ''Executed'' and ''Execution'' used with reference to instruments mean ''signed'' and ''signature'';
(14) Instrument--''Instrument'' includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded;
(16B) Market value-means, in relation to any property which is the subject-matter of an instrument, the price which such property would have fetched or would fetch if sold in open market on the date of execution of such instrument as determined in such manner and by such authority as may be prescribed by rules made under this Act or the consideration stated in the instrument, whichever is higher;
Several instruments used in single transaction of sale, mortgage or settlement:--
(1) Where, in the case of any sale, mortgage or settlement, several instruments are employed/or completing the transaction, the principal instrument only shall be chargeable with the duty prescribed in Schedule I or Schedule I-A, as the case may be, for the conveyance, mortgage or settlement and each of the other instruments shall be chargeable with a duty of one rupee if the principal instrument be chargeable with the duty prescribed in Schedule 1 or, with a duty of two rupees if the principal instrument be chargeable with the duty prescribed in Schedule IA, instead of duty (if any), prescribed for such other instrument in Schedule I. or Schedule I-A, as the case may be.
(2) The parties may determine for themselves which of the instruments so employed shall, for the purpose of sub-section (1), be deemed to be the principal instrument:
Provided that the duty chargeable on the instrument so determined shall be the highest duty which would be chargeable in respect of any of the said instruments, employed.
Instruments executed in India.--All instruments chargeable with duty and executed by any person in India shall be stamped before or at the time of execution.
47A. Instrument of conveyance, etc., under-valued, how to be dealt with:--
(1) Where the registering officer appointed under Registration Act, 1908(16 of 1908), has, while registering any instrument of:--
(a) agreement or memorandum of an agreement relating to a sale or lease-cum-sale of immovable property,
****
reason to believe that the market value of the property which is the subject-matter of any such instrument has not been truly set forth in the instrument presented for registration, he may, after receiving such instrument, ascertain the market value of the property which is the subject-matter of such instrument in the manner prescribed and compute the proper stamp duty chargeable on the market value so ascertained and thereafter he shall notwithstanding anything to the contrary contained in the Registration Act 1908, in so far as it relates to registration, keep registration of such instrument in abeyance till the condition referred to in sub-section (2) or subsection (7), as the case may be. is fulfilled by the concerned person.
(2) Where the market value of the property which is the subject-matter of an instrument has been ascertained and the proper duty chargeable thereon has been computed under sub-section (1), the registering officer shall, in the manner prescribed, send to the concerned person a notice calling upon him to make payment of the deficit amount of stamp duty within such tune as may be prescribed, and if such person makes payment of such deficit amount of stamp duty in the prescribed manner, the registering officer shall register the instrument.
(7) Where the concerned person makes payment, in the manner prescribed, of the deficit amount of stamp duty determined under sub-section (5) together with the interest, if any, charged under sub-section (6), the registering officer shall, upon furnishing by the concerned person a copy of receipted challan or bank draft in proof of such payment, register the instrument within such time as may be prescribed.
Schedule I-A has been appended to the principal Act by the Bengal Stamp (Amendment) Act, 1922. Since then, several amendments have been effected thereto providing for stamp duty on instruments in West Bengal. Items 5 and 23, to the extent relevant, read as follows:
Agreement or Memorandum of an Agreement:--
(a) ****
(b) ****
(c) ****
(d) if relating to sale or lease-cum-sale of immovable property;
(e) ****
Explanation--The expression ''Agreement or Memorandum of an Agreement'', if relating to a sale, shall include an agreement to sell or any memorandum or acknowledgement in relation to transfer or delivery of possession of immovable property with an intent to transfer right, interest in, or title to, such property at any future date.
The same duty as a conveyance (No. 23) for market value.
Conveyance as defined by section 2(10), not being a transfer charged or exempted under No. 62.
(a) six per centum of the market value, in case the market value of the property does not exceed rupees twenty-five lakh, and seven per centum of the market value, in case the market value of the property exceeds rupees twenty-five lakh, when the property is situated in the areas to which the Kolkata Improvement Act 1911 or the Howrah Improvement Act, 1956, extends}
(b) six per centum of the market value, in case the market value of the property does not exceed rupees twenty-five lakh, and seven per centum of the market value, in case the market value of the property exceeds rupees twenty-five lakh, when the property is situated in the areas of any Municipal Corporation or Municipality or a notified area other than those included in clause (a)]
(c) Five per centum of the market value, in case the market value of the property does not exceed rupees twenty-five lakh and six per centum of the market value, in case the market value of the property exceeds rupees twenty-five lakh) when the property is situated in the areas other than those included in clause (a) or clause (b).
What is CORD referred to in Circular No. 3 of 2012? It appears from Notification dated May 19, 2008, published in the Kolkata Gazette dated May 21, 2008 that in exercise of the power conferred by sub-sections (1) and (2) of section 69 of the 1908 Act, amendments were effected in the West Bengal Registration Rules, 1962. Such amendments were necessitated for introduction of document registration through the system of Computerisation of Registration of Documents (CORD). CORD means computerized registration by using the software designed for performing various functions associated with the act of registration of a deed through electronic devices to ensure speedy delivery of registered deeds or documents to the members of the public presenting the deeds for registration. Contents of Chapter XIX of the Rules of 1962 were substituted by the title ''Registration of Documents through the system of Computerisation of Registration of Documents (CORD)''. It is in terms of Rule 123 under Chapter XIX, as amended, that market value/chargeability assessment slip is generated by the data entry operator on being directed by the registering officer to do so, which is valid for a month from date of issue, and upon payment of stamp duty and registration charges as printed in the market value/chargeability assessment slip that the instrument presented for registration is processed in the manner laid down in the Rules of 1962.
Having regard to the aforesaid statutory provisions, I shall now examine the rival contentions one by one.
The contention of Mr. Dutta that an agreement for sale is not an instrument within the meaning of section 2(14) of the principal Act and is not compulsorily registrable is taken up for consideration first. A complete answer to the aforesaid contention is found in the decision of Hon''ble Bhaskar Bhattacharya, J. (as His Lordship then was) reported in (1999) 2 CLJ 259: Dr. Swapnadib Lahiri v. Tridip Das Roy. The relevant passages from the said decision are reproduced hereunder:
The aforesaid two definitions make it abundantly clear that in order to become an instrument, what is necessary is that by such document, any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded. It is not necessary that any right or interest must be created in the immovable property as contended by Mr. Chatterjee.
The explanation added to Item No. 5 of Schedule I-A states in clear term that the expression agreement or memorandum of an agreement, if relating to a sale, shall include an agreement to sell or any memorandum or acknowledgement in relation to transfer or delivery of possession of immovable property with intent to transfer right, interest or title to such property at any future date.
Therefore, in view of the said explanation added to Item No. 5 of Schedule 1A even in case of a pure agreement for sale where there is no promise to deliver possession immediately after or before execution of the agreement, even if it is a more (sic mere) agreement to transfer or delivery of possession of immovable property with an intention to transfer right, interest or title to such property at such a future date by executing a separate conveyance, such agreement is to be stamped as if is a conveyance as mentioned in Item No. 23 of the said Schedule. Therefore, I find substance in the contention of Mr. Mukherjee that the disputed agreement should be stamped according to Item No. 23 of Schedule IA and as such the document is required to be impounded accordingly before it is marked as exhibit****
The said decision has been approved by the Supreme Court in its decision reported in Shyamal Kumar Roy Vs. Sushil Kumar Agarwal, It has been held therein as follows:
In Tridip Das Roy v. Chitta Raman Jana the question which arose for consideration was: "As to whether an agreement for sale is an instrument within the meaning of section 2(14) of the Stamp Act?" It was held to be so, inter alia, having regard to the Explanation appended to Item 5 of Schedule 1-A.
There is no quarrel with the aforementioned proposition of law.
I, therefore, have no hesitation in holding that the contention urged by Mr. Dutta is not at all sound.
In addition to what have been observed in the aforesaid two decisions, I am also inclined to hold the view, as contended by Mr. Mitra, that if no right is created by an agreement for sale no suit for specific performance shall lie. Reference to section 53A of the T.P. Act by Mr. Talukdar is also apt. The contention of Mr. Dutta, therefore, must fail.
Now, I shall proceed to consider the scheme of the principal Act. In this regard, the worth of Mr. Talukdar''s contention in relation to the effect and import of section 4 of the principal Act has also to be examined. On the anvil of the statutory provisions extracted supra, I am not persuaded to hold that Mr. Talukdar''s contention deserves acceptance.
Whenever an instrument is presented for registration, it is the duty of the registering authority to ascertain whether the market value of the property, which is the subject matter thereof, has been truly set forth therein or not. If not, it is for him to determine the market value according to the provisions contained in the West Bengal Stamp (Prevention of Undervaluation of Instruments) Rules, 3001. As noticed above, it is only upon payment of the chargeable duty that the registering officer shall proceed for registration of the instrument. Now, take the instance of an outright sale of an immovable property. It is only at the stage of registration of the conveyance that the aforesaid exercise would have to be undertaken. However, if there is no outright sale but an agreement for sale precedes the conveyance, the exercise contemplated by sub-section (1) of section 47A of the principal Act has to be undertaken twice to ascertain the price the property is likely to fetch if sold in the open market on the date of its execution. There could be a case where the time gap between execution of an agreement for sale and a subsequent sale deed in respect of the same property is substantial, say five years. The hiatus may be for genuine reasons, or it could be part of a clever strategy that is not always perceivable. Whatever be the reason, it is not anybody''s concern for payment of duty. However, price of an immovable property wherever it is situate (be it urban or rural area) would not remain static. It is bound to escalate with lapse of time. If the agreement for sale is allowed to be determined to be the principal instrument by the parties thereto instead of the sale deed, as contended by Mr. Talukdar, the market value of the property would obviously be less on the date the agreement for sale was executed than the date on which the sale deed is executed. Since the duty chargeable on an instrument has a direct relation with the market value of the property forming its subject matter and consequently the duty payable for having registration of the agreement for sale would be on the lower side, none would be willing to pay the higher duty that could be charged based on the market value of the property ascertained on the date the sale deed is executed. The first question that would arise in the circumstances is should the State lose out on revenue? Next question that arises is should the statute be interpreted in a manner contrary to the object for which it was enacted? I think not. Mr. Talukdar''s contention could have been accepted if there was no proviso after sub-section (2) of section 4 of the principal Act. The proviso, however, makes the position absolutely clear that the duly chargeable on the principal instrument shall be the highest duty that is chargeable in respect of any of the instruments employed for completing the transaction. Acceptance of Mr. Talukdar''s contention would lead to anomalous and absurd results and the very object of the principal Act and purpose of revenue generation would stand frustrated.
Besides the above discussion, the decision in Mendarian Enterprise (supra) seems to provide an answer to Mr. Talukdar''s contention in relation to the effect and import of section 4 of the principal Act and, therefore, it deserves consideration at this stage. An agreement for sale of an immovable property was entered into by the petitioner on November 21, 2001. Stamp duty was paid by it, which was the same as was required to be paid for a conveyance except 2% surcharge payable on account of the Calcutta Improvement Trust Act. In order to complete the transaction, being the subject matter of the said agreement for sale executed on November 21, 2001, a conveyance was executed on November 11, 2002 in favour of the petitioner. The conveyance was presented for registration along with 2% surcharge as also registration charges. Registration was declined, which resulted in the Writ Court being approached. Although the registering authority had not communicated to the petitioner in writing the reasons for declining registration of the conveyance, but in course of hearing before the Court it crystalized that the registering authority, as a pre-condition for registering the conveyance, was demanding stamp duty at the rate of 6% for the conveyance, less the stamp duty paid by the petitioner at the time of executing the agreement for sale. 6% stamp duty was demanded based on the amendments effected in the principal Act by the West Bengal Finance Act, 2002. According to the learned judge, the registering officer was seeking implementation of the proviso which was introduced by Act XVII of 1990 and had been in operation from January 31, 1994 to March 27, 1994. The verbatim reproduction of the said proviso is found in Circular No. 3 of 2012, extracted supra.
The learned judge also found as a matter of fact that by reason of publication of the West Bengal Finance Act, 1996 and the consequent amendment to Article 23 of Schedule IA to the principal Act that the doubt of introducing the proviso to Article 23 of Schedule IA to the principal Act and thereupon removing the same in the manner discussed therein stood crystallized and that in 1996 the legislature reaffirmed that the proviso had been removed from Article 23 of Schedule IA to the principal Act. Regard being had to the legal position, the learned judge formulated a short question for an answer: whether the executive could collect duty, which the legislature had not authorized it to collect. The issue was answered in the negative.
However, it cannot be overlooked that while granting relief to the petitioner on the peculiar facts of the case, the learned judge proceeded to record certain observations. The same are considered relevant for the purpose of a decision on these writ petitions. The relevant paragraphs containing the observations are 16 and 18, which are quoted below:
If the proviso is not therein the Act, then the provisions contained in section 4 of the Act are attracted. In terms of the provisions contained in the Transfer of Property Act an agreement for sale of an immovable property is not a transfer or sale of such property. In order to complete the sale, one is required to execute an instrument and to have the same registered provided the value of the property is more than Rs. 100/-. In that view of the matter, the agreement for sale as well as the Conveyance in the instant case should be deemed to be several instruments employed for completing the sale. In such circumstances, duty is payable on the principal instrument only at the applicable rate specified in Schedule 1A to the principal Act.
The learned Counsel for the State submitted that having regard to the provisions contained in the proviso to sub-section (2) of section 4 of the Act, the highest duty chargeable on the instrument to be determined as the principal instrument should be such instrument which is chargeable to highest duty. He, therefore, submitted that despite absence of the subject proviso, the petitioner would be required to pay the difference of 1% which was effected by reason of the last Finance Act as mentioned above. If that was already provided in the proviso to sub-section (2) of section 4 of the Act, there was no necessity of adding the proviso as was done and thereupon deleted I think the proviso to subsection (2) of section 4 of the Act was provided for a totally different reason. In terms of sub-section (1) of section 4 of the Act, only the principal instrument is chargeable with duty prescribed in Schedule 1A and any other instrument is chargeable with the duty of Rs. 2/-. In terms of sub-section (2) of section 4 of the Act, it is the party, who is liable to pay duty, can determine which of the instruments employed shall be deemed to be the principal instrument. Therefore, if an agreement for sale followed by a Conveyance is executed and if prior to the 1990 situation the agreement for sale had carried a duty of Rs. 5/- or Rs. 10/- and the party concerned had determined the agreement for sale to be the principal instrument, then a party could get the Conveyance on payment of Rs. 1/- only. In order to ensure that the highest duty is paid. I think, the proviso to sub-section (2) of section 4 of the Act was provided. In terms thereof in such a case the Conveyance, by reason of the mandate contained in the proviso, would become the instrument determined as the principal instrument.
(underlining for emphasis by me)
The aforesaid observations negative the worth of the contentions raised by Mr. Talukdar on behalf of the petitioners that the market value of the property forming subject matter of the agreement for sale, as determined on the date such agreement was executed, is conclusive and binding and that they are not liable to pay the differential amount arrived at after determination of the market value of the property on the date the deed of sale, which has been presented for registration, was executed. Section 4(1) of the principal Act refers to several instruments that are employed for completing the transaction. If indeed an agreement for sale exists, it is obvious that for completing the transaction of sale, a deed of sale has to be executed and presented for registration. I entirely agree with that part of the learned judge''s observation that although in terms of subsection (2) of section 4 of the principal Act it is the party liable to pay duty who can determine which of the instruments employed shall be deemed to be the principal instrument, the proviso thereto carves out an exception to secure payment of highest duty. Authorities on how a proviso is to be interpreted are legion. It is settled law that a proviso should be interpreted In a manner which would be in conformity with the intention of the legislature and also the object of the Act in question. One may refer to the decision reported in Virendra Kumar and Others Vs. Krishi Utpadan Mandi Samiti and Others, . It is held that once the situation for applying the proviso arises and it is the deed of sale that attracts the highest duty, by reason of the mandate contained in the proviso such duty being the highest would be chargeable on the principal instrument. In view of the statutory provisions as they presently stand, even without pressing the impugned circular into service, a party who is desirous of having a sale deed registered and should there be a prior registered agreement for sale, he is liable to pay the differential amount arrived at after determination of the market value of the property, which is presented for registration, and the stamp duty that was paid upon determination of the market value of the property at the time the agreement for sale was presented for registration.
The view that I have taken also finds support from the decision in Khandaka Jain Jewellers (supra). Although the dispute reached the Supreme Court in circumstances completely different from those giving rise to the present writ petitions, the question that was formulated has a direct bearing on the decision to be rendered on the same.
Paragraph 10 of the decision is quoted hereunder:
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.
It is true, as contended by Mr. Talukdar, that the Supreme Court was considering the principal Act as applicable in the State of Rajasthan with amendments effected thereto, which is at variance with the provisions applicable in this state, and there is no reference to section 4 of the principal Act. For the reasons discussed above, section 4 does not come to the rescue of the petitioners. The Supreme Court, however, considered sections 2(12) and 17 of the principal Act, which are applicable alike in the States of Rajasthan and West Bengal. Paragraphs 18 to 22 of the decision contain statements of law, which are of general importance and apply with full force on facts and in the circumstances. Relevant portions from the said paragraphs are quoted below:
The contention of the learned counsel for the State that as per section 17 of the Act, the market value has to he 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.
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.
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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 dependent 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.... 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 sign the sale deed. A taxing statute is not contingent on the inconvenience of the parties. It is needless to emphasise that a taxing statute has to be construed strictly and considerations of hardship or equity have no role to play in its construction.****
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Therefore, a taxing statute has to be read as it is. In other words, the literal rule of interpretation applies to it
In this background, 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.
The aforesaid observations of the Supreme Court cannot simply be brushed aside on the specious ground that the facts leading to the present litigation have no similarity.
I hold that even without taking the aid of the impugned circular, which was unnecessarily issued, the respondents are justified in not registering the sale deeds unless the petitioners pay the deficit stamp duty that is payable based on the determination of the market value of the properties as reflected in the impugned market value/chargeability assessment slips, minus the quantum of stamp duty that were paid at the time the agreements for sale were registered.
Be it recorded that I have not considered it necessary to follow the decision in Jai Chand Sharma (supra) since it is not a decision on merits.
In the result, the writ petitions are dismissed making it clear that such dismissal shall not preclude the petitioners to question the assessments in respect of stamp duty payable by them, as reflected in the impugned market value/chargeability assessment slips, by requesting the registering officer to refer the issue to the Collector In terms of provisions contained in section 47A(3) of the principal Act. It is further made clear that should the Collector on a reference re-determine the market value of the properties and reassess the quantum of stamp duty that are payable by the petitioners, payment if at all made by any of them during the pendency of these writ petitions and/or in terms of any order passed by this Court shall be considered and they shall be entitled to suitable adjustments.
Mr. Banerjee, the Special Officer appointed in W.P. No. 791/2012, stands discharged.
There shall be no order as to costs.
Before parting, I wish to remind the officers instrumental in issuance of Circular No. -3 of 2012 that over-zealousness does not pay. Proper understanding of the laws and diligence are all that one expects from them. I hope and trust that in future, such conduct that has given rise to these writ petitions shall not be repeated. Photocopy of this judgment, duly countersigned by the Court Assistant/Assistant Court Officer, as the case may be, shall be retained with the records of the writ petitions except W.P. 681 of 2012.
Urgent photostat certified copy of this Judgment and order, if applied, may be furnished to the applicant at an early date.