2023 (9) TMI 1544 - HC - Indian Laws

Imposition of stamp deficiency together with penalty - industrial land or commercial land - the proceedings under Section 33 read with Section 47 A has been initiated on the ground that property in question is having commercial value therefore deficiency of stamp duty has been imposed - HELD THAT - It is not in dispute that the petitioner had purchased vacant plot and paid the stamp duty thereof. The plot in question was not only vacant but also has been declared as industrial land and no commercial activity was being undertaken adjacent to the property in question - The record further reveals that while passing the impugned order a finding has been recorded that at the time of execution of sale deed plot in question was vacant and no construction was standing thereon and the land was declared as industrial use still the deficiency of stamp has been levied on the ground that the land in question can be used for commercial purpose. The deficiency of stamp can neither be determined on the value of future use of the property nor it can be levied on the ground that property can fetch good market value nor in the absence of any declaration made by the State Government changing the nature of the land from industrial to commercial. The judgement referred by the counsel for the petitioner clearly indicates for determination the stamp duty only on the date of execution of deed. This Court in the case of Sunny Motors 2008 (8) TMI 1030 - ALLAHABAD HIGH COURT has held that proceedings can be initiated on the basis of report but decision cannot be relied upon on the basis of said report until and unless the Collector has made the inspection himself or through some authorized person. Further the Court has observed that until and unless area in question has been declared as commercial by the State Government the land use cannot be changed from industrial to commercial and no stamp deficiency can be levied. The case in hand the property in question was purchased as vacant industrial plot and no material has been brought on record to treat the same as commercial plot. The authorities below have failed to bring on record that nature of the land in question has been changed by passing appropriate order under the relevant Act converting its use from industrial to commercial. In view of above facts as well as law laid down as aforesaid the impugned orders cannot be sustained in the eyes of law. The impugned orders are set aside. Any amount deposited by the petitioner during pendency of the present litigation shall be refunded to the petitioner within 15 days from the date of production of a certified copy of this order before the concerned authority - petition allowed.

Issues Involved:

1. Validity of the stamp duty deficiency and penalty imposed on the petitioner.
2. Classification of the land as industrial or commercial.
3. Legality of the proceedings under Section 33/47 A of the Stamp Act.
4. Impact of future potential use of the land on stamp duty assessment.
5. Authority of the State Government in changing land use classification.

Issue-wise Detailed Analysis:

1. Validity of the stamp duty deficiency and penalty imposed on the petitioner:
The petitioner challenged the orders dated 27.11.2007 and 28.7.2010, which imposed a stamp deficiency of Rs. 1,49,19,900/- and a penalty of Rs. 14,92,000/-. The petitioner argued that the land was purchased as vacant industrial land and the due stamp duty was paid accordingly. The court observed that the land was indeed vacant and declared as industrial land, and no commercial activity was being undertaken nearby. The court held that the deficiency and penalty were imposed without proper basis, as the land was industrial at the time of purchase.

2. Classification of the land as industrial or commercial:
The petitioner asserted that the land was classified as industrial in the master plan and was purchased as such. The court noted that the Assistant Commissioner (Stamp) had accepted that the land was vacant industrial land but still treated it as commercial without any basis. The court emphasized that the use of the land at the time of the sale deed execution should be considered, not its potential future use.

3. Legality of the proceedings under Section 33/47 A of the Stamp Act:
The petitioner contended that the proceedings under Section 33/47 A were initiated without proper inspection and based on an auditor's report declaring the land as commercial. The court referred to the case of Sunny Motors Pvt. Ltd. Vs. State of U.P., which held that proceedings could be initiated based on a report but the decision must be based on an inspection by the Collector or an authorized person. The court found that no such inspection was conducted, and the proceedings were not justified.

4. Impact of future potential use of the land on stamp duty assessment:
The petitioner argued that the future potential use of the land should not affect the stamp duty assessment. The court cited several judgments, including Haridwar Hotels Pvt. Ltd. Vs. Chief Revenue Commissioner and Shakumbari Sugar and allied Industries Ltd. Vs. State of U.P., which held that stamp duty should be determined based on the land's use at the time of sale, not its future potential. The court concluded that the deficiency and penalty were wrongly imposed based on the land's potential future use.

5. Authority of the State Government in changing land use classification:
The court highlighted that only the State Government has the authority to change the land use classification from industrial to commercial. The court referred to the case of Kishore Chandra Agarwal v. State of U.P., which held that the Collector cannot declare agricultural land as residential or commercial for stamp duty purposes. The court found that no such declaration was made by the State Government in this case, and the land remained industrial.

Conclusion:
The court allowed the writ petition, setting aside the impugned orders and directing the refund of any amount deposited by the petitioner during the litigation. The court emphasized that the stamp duty should be assessed based on the land's use at the time of sale and not its potential future use. The court also clarified that the State Government has the sole authority to change land use classification.

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