Promod Kumar v. 1. The State of Andhra Pradesh

the affidavit filed in support of the petition, the High court may bt: preased to stay all further proceedings pursuant to the impugned notice dated 02-0g-2009, pending disposal of the main writ petition in the interest of justice Counsel for the Petitioner: SRI pRATAp NARAYAN SANGHI Counsel for the Respondents : Gp FOR ASSIGNMENT The Court made the following ORDER THE HON'B LE SRI JUSTICE N.V.SHRAVAN KUMAR Writ Petition No.1414 of 20lO ORDER: Questioning the impugned notice dated O2'O9'2OO9 and the very impugned circular memo dated 29 'O5 '2007 as being arbitrary, illegal and contrar5r to Section 2 ( 1O) and Article 46 and 49 of Schedule 1A of Indian Stamp Act, i899, the present writ petition is filed'

2. The facts in brief are that the petitioner's mother Smt. Lalita Bai inherited a total extent of house property bearing No.3191(old) H.No.7-2-533 to 7-2-546 (new) admeasuring 421 sq'yds., at Buruguchetty Bazar, Secunderabad from her maternal grandparents under a Deed of Settlement uide Doc.No.1142 ol 1956' Thereafter, petitioner's mother died on 30.08.1988 leaving behind 5 sons and 4 daughters. Petitioner is the 5th son and whereabouts of 3'd son is not knor'vn since long time ' Thereafter, a portion of the property inherited by the petitioner was released in favour of wife of 3'd son under deed of partial partition registered ulde Doc'No'179512OO8 dated 17.10.2008. It is further submitted that the 3'd sister 2 Smt.Usha Khatri died on 19.04.1994 leaving behind two legal heirs. It is further submitted that petitioner,s eldest brother uiz., Sri Ananth Prasad along rvith 4 sisters, 2 legai heirs of 3.d sister who are all 8 co-owners har.: executed a release deed dated 18.10.2008 ulde Doc.No.1l33 1/2OOg in favour of petitioner herein; and 2 brothers of petitioner retained tl-reir respective portions. Thereaftr:r, the said release deed was presented before respondent No.3 for registration.

3. Rr:spondent No.3 after examination tf the entire contents of the documents and after having r;atisfied that the said dr:ed was released in favour of petitioner, imposed the duty as contemplated under Article 46 of Schedule 1A of Indian Stamp Act, 1899. The petitioner further submits that as per the recitals of the document, marl:et value was assessed by the petitioner at Rs.3O,O0, OOO I _, whereas respondent No.3 after verifying the specifications of the property did not agree with the market value rnentioned by the petitioner and fixed a market value of Rs,.45,00,000/_ and directed the petitioner to deposit a sum of Rs.1,07,450/- as stamp duty and registration charges and J I on payment of the same, the document was registered and released in favour of the petitioner. Thereafter, respondent No.3 within 10 days of registration of the document, based on an rnternal audit, issued notice dated 02.09.2009 under Article 4 1A of Schedule IA of Stamp Duty on Certain Instruments under the Stamp (Andhra Pradesh Amendment) Act, 1922 to the petitioner claiming a deficit stamp duty of Rs.9,02,025/-.

4. Subsequently, petitioner approached respondent N o. 3 and stated that the subj ect document \.vas a relinquishment deed which is between family members artd not a sale deed. However, without hearing the contention of the petitioner, respondent No. 1 on 02.Oq .2OO9 , has calculated the market value of the subject property at Rs. 1,06,25,000/ and claimed stamp duty of Rs.9,02,025/ . Thereafter, petitioner approached respondent No.1 and cxplained the contents of the documents, however, respondent No.1 clearly stated that said notice under Article 41A of Indian Stamp Act, 1899 rvas issued based on the circular issued by respondent No.2 on 29.O5.2OO7 and hence insisted the petitioner either to pay the deficit stamp 4 'q duty or the rnatter will be disposed of on merits and furthcr action u,ill be taken to recover the deficit stamp dutl,under the provisions of Indian Stamp Act. Having lelt with no other option, petitioner had given an underttrl<ing to pay tl.re entire dcficit stamp duty. It is lurther submitted Ll-rat the said undertaking was given under coercio;t and thrcal of compliczrtions for the reason that after the release deed got registered, petitioner got entered into a )evelopment Agreement dated 08.12.2008 with M/s.Sneha Constructi,tns and also demolished the existing structures. Questioning the said notice dated 02.Og.2OOg and also tl.re Circular dated 29.05 .2007, tlle present u,rit petition is filed.

5. Mr-.Pratap Narayan Sanghi, learned sr:nior cournscl appearing on behalf of the petitioners wo uld refer to Circular Memo issued by respondent No.2 dated

29.O5.2OO'i q,hich reads as follows: "Dunng the course of Reuieut of AG o bj ec tio ns ceft ain misclas sification of d.o cume nt u.tas noticed, resulting in loss of reuenue, to the Gouernment. There tuere tuto cases or.e was pertoining to Doc.No.26SB/ 2OO5 of SRq 5 Azampura and Doc.No.3427/2005 o/ SRO, Dharmauaram. Both the documents dealt with the release of shares among the coparceners. What u.tas to be taken as 'Coruuegance on Sale' was taken as 'Release'. The mistake that utas noticed was that all the ingredients of 'Release raas not in the document but still the Registeing autLtoitg failed to notice this. Such glaing and serious omissions result in heaug loss of reuenue to the Gouernment. To curb sucLr euasion of stamp dutg and to protect the state reueftues, all the internal Audit Olficers are aduised to conduct audit keeping in uieut the follotuing explanation. While determining the nature of instrument as release, tlrc follotuing facts must be auailable in the document;

1. Thot all the coparcners/ co-otuners haue joined in the instntment either as Releaser(s) or Releasee(s) and that no coparceners/ co-owner is left outside the instrument and;

2. That there must be a clear and the instrument ambiguous statement in regarding joining of all coparceners/ co-otuners and;

3. AU the properties in which the coparceners/ co-ou-) ners hauing the interest are included in the instrument. All the field Officers are requested to follou the instractions scrupulouslg and ensure I 6 -.1. ,t that no mistake takes place certain conueAance of sale otherutise. " in miscLassifuing as'Release'or

6. Learned senior counsel would submit that the said circular is not applicable to the present case iln halld and is contrarlr to the provisions of Article 46A of S:hedule IA or Stamp Duty on Certain Instruments under the Stamp (Andhra Pradesh Amendment) Act, 1922.

7. Ar,icle 46,4 ts extracted hereunder "46. RELEASE, that is to sag: A) Ang instrument (not being such a relea.;e as is prouided, for by section 23 A) tuhercbg a person. renounces a claint u1.ton anotlrcr person or against ang specified- propertA a) Where the omount or ualue of the claim does not exceed Rs. |OOO : Three rupe:es for euery one hundred rupees or part thereof on the consirleration for such release as set forth thereirr or the market ualue of the propertg uthiclrcuer is higher, ouer tuhich clc,.im js relinqt.tished. b) Where it exceeds Rs. 1,000/- : The same dutg as under the Clause (a) for ttrc first Rs.1,00O and for euery Rs.S0O or part thereofin exces.s o/ Rs l OOO/ - ftfieen nlpees 6n the 1 consideration or market ualue of the propertg, whicheuer ls higher ouer tuhich claim is relinquish.ed."

8. Learned senior counsel would submit that in terms of Article 46A, any person may either out of their own interest retain the property or release in favour of family members. However, in the said Memo dated 29.O5.2OO7, the Commissioner and Inspector General has not taken factual aspects of releasing the property in case of joint family properties where there could be possibility that some members may retain and some may release the property in favour of coparceners. Learned senior counsel r.r,ould draw attention of this Court to release deed dated

18.10.2008 and would submit that said Vinod Kumar one of the brothers of the petitioner, who retained the property, has signed the document ald is well aware of the recitals of the document. Learned senior counsel would further submit that subsequent to the notice dated O2.O9.2OO9, the petitioner has addressed a letter to Sub-Registrar, Hyderabad requesting for payment of deficit stamp duty in 6 instalments. i { I I I j{ .i I"t 8 g. Leat'ned senior counsel for the petitioner' 1n support of his contentions, would rely on a judgment of this Court rn D.Prqueen v, State of Andhra Pradesh and anotherl r,,'herein this Court has clarified and distinguished the difference between the s'a1e and release' The relevant paragraph Nos 6 to 8 are extractecl herein for the purpose of reference: "6. The petitioner had two sisters' l'll the three inherited the premises mentioned aboue from their mother' The sisters of the pet'tioner intencled to release their share in his fauour on pagment of consideration of Rs'2,SO,OOO/-' and accorclinglg executed a deed of release on 16.10 2OOB. The said deed was preseni'ed for regist.ration. The respondents took the uietu that the transaction euidenced by the docur 'rcnt is the one of sale and insisted on pagnrcnt of stamp duty, registration charges on tha t basis' Therefore, it becomes necessary to take note of ttw cli.stinction bettueen the transactions of 'sale' and 'release'.

7. It is too weLl-knoutn that 'sale' as d.efined, under Section 54 of the Transfer of Proltefig Act (for shorl'the TP Act'), take:s place' tuhen a person hold'ing title in an item of ' 2snpnfi.n sst 9 immouable propertg, conueA s his titte to another' for consideration' It is also permissible for a co- otuner of an item of immouable propertg ' to ffansfer his share in fauour of third party for consideration' In such a case also' the tansaction tuould be the one of sale ' Deliuery of the possession, uhether phg sical or sgmbolical' of the propertg, is an essential part of the tansaction of sale B. The uord 'release' is rtot defined either und-er the TP Act or under ang other enactment' including the Stamp Act' Hotueuer' its connotation is that, one of the ou)ners of an item of property, releases himself from the legal rights and obligations in fauour of the rest of the co-oLuners' or some of them' Such release can be ang consid-eration' Tlaugh a tuith or without resemble each other in the sale and reLease context o/ Ioss of titte of the transferor or igltts in fauour of others, tt'that differentiates the one for the other is that, the transferee under a sale title in the ProPertg, uthereas in the case of release' he happens to be ight or limited a person fresh and neLU ownershiq acquisition of propertg bg a purchaser under a sale, uheieas in tlrc case of release it tuould only result in the enlargement of the intent held bg the co-ou'tners or joint outners'" alreadg holding It would be a bereft of anA Pnor IS I i i I I It)

9. A counter affidavit has been filed br respondent No.3 i. e., 1 l-re District Registrar, Red Hills , Nampall1-, Hyderabad stating that the deficit stamp dut.,, u,as levied basing on the rate fixed under the market valr-re guidelines by the Cornmittee in respect of the property in question. Therefore, the contention of the petitioner that the market value which was imposed by respondent No.3 zLt the time of registering the document is in accordancr: to lau, is incorrect, sincc respondent No.3 has rot properlv examined the conterrts of the document u,h ether it falls under conueyance or not and calculated the s,amp dutr.. It is only during the audit of the office, the audit party noticed the said discrepancy and directed the concerned authority to collect the deficit stamp duty. 'I'he petitioner was provided witl-r ample opportunity to submit his response and utilizing the same, petitioner has made a representatron agreeing to pay the amount on 6 equal in stalments.

10. l.earned senior counsel submits r,hat the said letter dated 19.O9.2OO9 requesting to pay the: above deficit amount in 6 equal instalments u,as given under coercion and under threat of cancellation of registration of Development Agreement entered into between the petitioner and M/s.Sneha Constructions'

11. Heard learned senior counsel for.the petitioner and learned Assistant Government Pleader for Revenue for respondents. Perused the record'

12. It is pertinent to note that this Court on 16.O2.2OLO has granted an order of interim stay of further proceedings on the impugned notice dated 02 'O9 '2OO9 and the same was extended from time to time and thereafter by an order dated 15.06.20 17 was made absolute in the absence of any vacate stay petition

13. Admittedly. it appears that there is no dispute arnong the family members as far as release deed dated 18. 10.2008 is concerned. On a close examination of Article 46A of Schedule IA, it is clear that if any person renounces a claim upon another person or against any specihed property, the stamp duty is prescribed' The Circular Memo dated 29.05.2007 issued by Commissioner and Inspector General, ddr not contain any source of statute or arry !- d.5; -'.ltl-. I ( i i I i l : ! i 12 provisions of Indian Stamp Act and issuancc of notice for payment r;f deficit stamp duty basing on the said Circular Memo is not sustainable under law.

14. On a perusal of the impugned r_rotice dated O2.O9.2009 issued under Section 41A of the tndian Stamp Act, 1899. issued by the District Registrar, Hyderabad, with respr:ct to Doc. No. 1g3l / 2OOB wherein petitioner was a party, a stamp duty of Rs. 1,06,350/_ rvas paicl. But the market va,lue of the property in the document rvorked out to Rs.1,06,25,000/- arld the stamp duty chargcable nas Rs. 10,08,375/- as such the deficit stamp cluty was determined as Rs.9,O2,02S/_. Based on audir remarks, it is observed that out of 5 sons of late Sri Motilal, tq,o sons namely Sri Narsing prasad and Sri Vinod I{u rr_rar have not joined or included as co-o\vners or co_pal.cerrers, and the document in question was clarified as .Convel.arce on Sale, based on Circular dated 29.05 .2OO7. Acccudingly, the stamp dut1, vvas worked out and demand r'as raised to recover the deficit stamp duty as per the provisions of Indian Stamp Act. ) l3

15. This Court in the case of D,Prqueen (supro/ in paragraph 8 has took note of the difference and distinction between the transactions of 'sale' and 'release' and it is held as follows: B. The word 'release' is not defiied either under the TP Act or under ang other enactment, including the Stamp Act. Houteuer, ils connotation is that, one of the owners of an item of propertg, releases himself from the legal rights and obligations in fauour of the rest of the co-ou)ners, or some of them. Such release can be utith or without ang consideration. Though a sale and release resemble each other in the context o/ loss of title of the transferor or rights in fauour of otlrcrs, uhat differentiates the one for the other is that, the transferee under a sale is bereft of ang prior title in the propertg' tuhereas in the case of release, he happens to be a person alreadg holding right or limited outnership. It tttould be a fresh and netu acquisition of propertg bg a purchaser under a saLe, whereas in the case of release it tuould onlg result in the enlargement of the irutent held bg th.e co-otuners or joint oraners."

16. In view of the above settled legal position, the ntention that the brothers of the petitioners have not I t 14 joined the r6l63ss deed dated 1g. 1O.20Og ;rnd that the document has been entered arnong the famil-r members by releasing therr respective rights is to bc crarified as tonveyance of sale, based on circular and th,: demand for recovery oi deficit stamp duty is not sustainable.

17. In the case on hand, such release of rigltts would only resuh in enlargement of intent held by co_owners or joint owners and admittedly no third party has joined said document. As such by no.-stretci.,oof'Hugi,_,, Ltion, release deed cannot be considered as .conveyance of sale, and the impugned notice calnot be sustained in thc, eye of 1arv. Therefore, the impugned notice dated 02.09.2099 1" hereby set aside and Circular Memo is also contrar y to Section 2(1Ol of Indian Stamp Act, 1899 and accordir.rgly the u,rit petition is ajlowed. I B. Petitioner is at liberty to make appropriate application for refund of excess stamp duty ztnd on such appiication, the respondent authorities shall examine and pass appropriate orders in accordance to lzrw within a I5 Period of six (6; application. weeks from the date of receipt of such

19. Writ petition stands allowed, accordingly. Miscellaneous petitions, pending, if any, shall stand closed. However, there shall be no order as to costs. lfll*:lHlffi ffr;ff +i{".#rj,1m"*.,,,.*r:*,,Tr#r#" \ sD/-AHMED ABDUIt#rfHtH . L=_ r trRuEcopyt one rair copy to the HoN,BLE sRt.JUS.flcEJ.l.v.sr*^iiiifl,:Frrcen (For His Lordship,s xtro ,"*Jrii.^' Ii:%3$t:itislector,.Resistration and Sramp Department stare of Andhra ,1fi"l.:BTfl't"'"ner & lnspector Generar, Regislration and sramps, A.p., !;.Sistrar, Red Hills. Hyderabad. -inl"-3'b-Resistrar, The District ,IH".:rtL 3:311!T,o?fl"u' 'l 1 L.R. Copies. secunderabad at To 1 2 3 4 o il:,r'.:i,"J-tfitJetarv' union of lndia, fi/inistrv of Law, Jusrice and company ' J:i,."'""r"J:1fl l;lflxy"' Ad vocates Associatio n Li bra rv, His h court ' Iy;":8:.9,GP for Assisnment, Hish court for the state of retansana ar ?. ffi 33 ffi1"*oro" NARAYAN sANGHr, Advocare [opUC] SA MP 4 HIGH COURT DATED:20 t0212025 ORDER WP.No.1414 ot 2010 g\r lHE SI4 a 10 JUil X6 t :'spa TcP (( t- () {+ ALLOWING THE W.P WITHO']T COSTS. @qid 6- q\6\r