Ezhilarasi v. The Inspector General of Registration

COMMON JUDGMENTTwo appeals have been filed by the petitioners challengingthe order of the first respondent upholding the order of the secondrespondent.2. The brief facts are- as follows: C.M.A.No.2418 of 2008:- (i) The appellant Ezhilarasi purchased 0.68 cents ofagricultural land in Chidambaram Town, Ward No.4, Block No.6,T.S.No.555 at the rate of Rs.6.75 per square foot = Rs.2,943/- percent. The document was executed on 15.4.1998 and presented on thesame date (i.e.) on 15.4.1998. It was registered as documentNo.484/2001 on 7.3.2001. The value as per the instrument wasRs.2,00,000/-.(ii) The respondent Department was of the view that theappellant has not set forth the true market value of the property inthe instrument. Therefore, proceedings were initiated under Section47A of the Indian Stamps Act read with Tamil Nadu Stamps (Preventionof Undervaluation of Instrument) Rules 1968 (herein after referred toas The Act and The Rules). Form-I notice was issued on 17.9.2001 inC.P.No.2644/2001-02. The Department initially contended that theguideline value was Rs.253.50 per square foot. Appellant submittedher objections to the Special Deputy Collector (Stamps) and pleadedthat the true market value has been declared. Considering theobjections raised, the Special Deputy Collector (Stamps) fixed themarket value of the property at Rs.18,000/- per cent = Rs.41.28 persquare foot. The deficit stamp duty was demanded on the differentialvalue. (iii) Aggrieved by the order of Special Deputy Collector(Stamps), the second respondent herein, an appeal was filed to thefirst respondent, the Inspector General of Registration. When theappeal was pending before the authority, the appellate authority wasof the view that the actual market value of the property wasRs.18,16,900/- per acre = Rs.18,169/- per cent. He was guided by theinspection report dated 7.6.2003 and the three documents of sale ofthe years 1995, 1996 and 2000. The District Registrar also opinedthat the market value of the property was Rs.18,16,900/- per acre =Rs.41.67 per square foot. Therefore, a notice dated 25.9.2003 wasissued to the appellant to show-cause as to why the market value ofthe property should not be fixed at Rs.18,16,900/- per acre. A finalnotice was also issued to the appellant and the first respondentpassed the impugned order fixing the market value of the property atRs.18,16,900/- per acre = Rs.18,169/- per cent = Rs.41.67 per square https://hcservices.ecourts.gov.in/hcservices/ foot. On the differential value, stamp duty was demanded by theDepartment. Aggrieved thereby the Civil Miscellaneous Appeal hasbeen filed.3. C.M.A.No.2419 of 2008:- (i) The appellant Kaliaperumal, purchased the agricultural landto an extent of 0.53 cents in Kothangudi village in Survey No.11/3and the property falls within the jurisdiction of the thirdrespondent herein. The vendor signed and executed the sale documenton 13.12.1997 and was presented for registration on 1.2.1998. Theproperty was, however, registered on 20.6.2000 as documentNo.1485/2000. The value of the document was Rs.1,00,000/- =Rs.1,886/- per cent = Rs.4.33 per square foot.(ii) Proceedings were initiated by the Department in terms ofSection 47-A of the Indian Stamps Act stating that the market valueof the property has not been truly set forth in the instrument.Form-I notice was issued on 17.9.2001 in C.P.No.2643/2001-02.According to the Department, the guideline value of the property wasRs.25.70 per square foot. The appellant objected to the valuation ascontended by the Department and the Special Deputy Collector (Stamps)fixed the value at Rs.20/- per square foot = Rs.8,720/- per cent orRs.8,72,000/- per acre. As per the order of the Deputy Collector(Stamps), the market value of the property sought to be registeredwould be Rs.4,62,160/-.(iii) Aggrieved by the order of the Deputy Collector (Stamps),the second respondent, appellant filed an appeal before theInspector General of Registration, the first respondent herein. Theappellate authority had a doubt as regards market value of theproperty as determined by the authority below and also in theregistered documents. Therefore, a notice dated 25.9.2003 wasissued to the appellant to show-cause as to why the value of theproperty should not be fixed at Rs.12,70,000/- per acre. For issuingthe notice, the first respondent was guided by the inspection reportof the District Registrar and the guideline value taken in theprevious case at Rs.18,16,900/-. The authority also took note of thereport in which it is stated that the property and its location wasdifficult to access and needed substantial amount to levelling it foruse. It is indicated that the property as such cannot be used as anhouse site. Taking into consideration the nature of property, itsterrain and location, 30% reduction was granted and the value wassought to be fixed as Rs.12,70,000/- per acre as stated earlier.(iv) The appellant in both the cases appears to have challengedthe notice dated 25.9.2003 and this Court directed them to submittheir objections to the authority and the authorities to decide theissue on merits. Accordingly, the parties were granted opportunity https://hcservices.ecourts.gov.in/hcservices/ to submit their objections. (v) First respondent authority, in the case of appellantKaliaperumal, taking note of the various factors set out in theshow-cause notice fixed the value at Rs.12,70,000/- per acre =Rs.12,700/- per cent or Rs.29/- per square foot. The total marketvalue of the property was fixed as Rs.6,73,100/-. The differentialduty was demanded. Aggrieved thereby the present appeal has beenfiled.4. Learned counsel for the appellants submitted that thedocuments were executed by the vendors on a particular date andpresented for registration in the year 1998 itself in both the cases.However, it was the respondents, who kept the matter pending for along period of time and registered the documents in the case ofEzhilarasi in March 2001 and in the case of Kaliaperumal in June2000. There was no delay on the part of the appellants. It wasfurther contended that the documents were signed by the parties andpresented in April 1998 and February 1998 respectively. The executionof the instrument of sale was completed in the year 1998 itself.Therefore, the relevant date for determination of the market valuewill be 1998 only. The authorities have proceeded to refix themarket value on the basis of the guideline value and documents whichhave no relevance to the facts of the appellants case. In any event,the guideline value cannot form the sole basis for determining themarket value. Further, the authorities/ Deputy Collector of stamps,who passed the order at the first instance, placed reliance on thedata documents viz., sale deeds executed in the year 1995, 1996 and2000 which is not comparable and not contemporaneous. The detailsof the sale in the documents referred to are vague and in any eventrelated to sale of individual house plots. The respondents proceededon the premise that the property in question is capable of fetchinghigher value if sold as house sites as some of the nearby lands areresidential sites. The respondents failed to note that the sale ofthe land in the present cases is agricultural lands and not houseplots. This is a basic error in the approach of the authority. 5. Without prejudice, it was contended that even if theguideline value is to be taken as one of the para meters, therelevant date should have been in the year 1998 and not in the year2000. On this premise, the order of the respondents are challenged.6. Mr. V. Sreekanth, learned Additional GovernmentPleader appearing for the respondents submitted that even on the dateof the execution of the documents, the guideline value is higher thanthe value shown in the documents. He reiterated the findings of theauthority stating that it is based on documentary evidence and afterinspection. https://hcservices.ecourts.gov.in/hcservices/

7. In this case, a doubt has crept into the mind of theauthority that the market value of the property has not been trulyset forth in the instrument of conveyance and the proper duty payablehas not been paid. The Act and the Rules prescribe the basis onwhich such proceedings can be initiated and the manner it should bedone. The provision of the Tamil Nadu Stamp Act Section 47 A (1) (2)and explanation to Section 47-A of the Act which are relevant to thecase reads thus:- " 47-A. Instruments of conveyance etc., undervaluedhow to be dealt with:-(1) If the registering officer appointed under theIndian Registration Act 1908 (Central Act XVI of 1908)while registering any instrument of conveyance, exchange,gift, release of benami right or settlement has reason tobelieve that the market value of the property of which isthe subject matter of conveyance, exchange, gift, releaseof benami right or settlement, has not been truly set forthin the instrument he may, after registering suchinstrument, refer the same to the Collector fordetermination of the market value of such property and theproper duty payable thereon. (2) On receipt of a reference under sub-section (1),the Collector shall, after giving the parties a reasonableopportunity of being heard and after holding an enquiry insuch manner as may be prescribed by rules made under thisAct, determine the market value of the property which isthe subject matter of conveyance, exchange, gift release ofbenami right or settlement, and the duty as aforesaid. Thedifference, if any, in the amount of duty, shall be payableby the person liable to pay the duty. Explanation:- For the purpose of this Act, marketvalue of any property shall be estimated to be the pricewhich, in the opinion of the Collector or the ChiefControlling Revenue Authority or the High Court, as thecase may be, such property would have fetched or wouldfetch, if sold in the open market on the date of executionof the instrument of conveyance, exchange, gift, release ofbenami right or settlement."8. The Tamil nadu Stamp (Prevention of Undervaluation ofInstruments) Rules 1968, provides the manner and method in which themarket value has to be determined if the department has reason tobelieve that the market value of the property has not been truly setforth in the instrument. Rule 3 and 5 of the Tamil nadu Stamp(Prevention of Undervaluation of Instruments) Rules 1968 which isrelevant for this case reads as follows:-Rule (3) furnishing of statement of market value: https://hcservices.ecourts.gov.in/hcservices/ "(2) the registering officer shall, before registering aninstrument, satisfy himself that the party or his legalrepresentative, assignee or authorised agent has attachedwith the instrument a statement (attached with theinstrument duly signed by the party executing theinstrument) giving the market value for each of theproperties separately as required by sub rules (1) and(1-A) (2-A) If the market value of the property asrequired by section 27 of the Indian Stamp Act, 1899(Central Act II of 1899) is not set forth in the instrumentwhere the property dealt with therein is a single item orthe statement giving the market value of each propertyseparately as required by sub rules (1) and (1-A) above isnot attached to the instrument (duly signed by the partyexecuting the instrument) the registering officer shallrefuse the registration of the document. (3) The registering officer may, for the purpose offinding out whether the market value has been correctlyfurnished in the instrument, make such enquiries as he maydeem fit. He may elicit from the parties concerned anyinformation bearing on the subject and call for and examineany records kept with any public officer or authority. (4) The registering officer may also look into the"Guidelines Register" containing the value of propertiessupplied to them for the purpose of verifying the marketvalue. Explanation:- The " Guidelines Register"supplied to the officers is intended merely to assist themto ascertain prima facie, whether the market value has beentruly set forth in the instruments. The entries madetherein regarding the value of properties cannot be asubstitute for market price. Such entries will notforeclose the enquiry of the Collector under Section 47-Aof the Act or fetter the discretion of the authoritiesconcerned to satisfy themselves on the reasonableness orotherwise of the value expressed in the documents. "Rule 5 :- Principles for determination of marketvalue:-The Collector shall, as far as possible, have alsoregard to the following points in arriving, at theprovisional market value,- https://hcservices.ecourts.gov.in/hcservices/ (a) In the case of lands-(i) classification of the land as dry, manavari, wetand the like;(ii) classification under various tarams in thesettlement register and accounts;(iii)the rate of revenue assessment for eachclassification;(iv) other factors which influence the valuation ofthe land in question;(v) points, if any, mentioned by the parties to theinstrument or any other person which requires specialconsideration;(vi) value of adjacent lands or lands in the vicinity;(vii) average yield from the land, nearness to roadand market, distance from village site, level of land,transport facilities, facilities available for irrigationsuch as tank, wells and pumpsets;(viii) the nature of crops raised on the land; and ((ix) the use of land, domestic, commercial,industrial or agricultural purposes and also theappreciation in value when an agricultural land is beingconverted to a residential, commercial or an industrialland, )(b) In the case of house sites--(i) the general value of house sites in the locality;(ii) nearness to roads, railway station, bus route;(iii) nearness to market, shops and the like;(iv) amenities available in the place like publicoffices, hospitals and educational institutions;(v) development activities, industrial improvements in the vicinity;(vi) land tax valuation of sites with reference to taxation records of the local authorities concerned;(vii) any other features having a special bearingon the valuation of the site; and (viii) any special feature of the case represented by the parties. 9. On going through the impugned order of the firstrespondent in both the cases, it is apparent that the authority hasproceeded to refix the market value mainly on the basis of the guideline value. Though reference is made to certain documents which arebereft of details and particulars, the main stay of the departmentscase is the guideline value. The Guideline value, as such, cannot https://hcservices.ecourts.gov.in/hcservices/ be the market value and the respondents have proceeded on that wrongpremise. As to the relevance of the guideline value in determiningthe market value, the following decision need to be considered. Collector of Nilgiris v. M/s.Mahavir Plantations Pvt. Ltd.,reported in A.I.R. 1982 Madras 138, it is held as follows:-"The valuation guidelines prepared by theRevenue Officials at the instance of the Board ofRevenue were a vowedly intended merely toassist the Sub-Registrars to find out, primafacie, whether the market value set out in theinstruments had been set forth correctly. Theguidelines were not intended as a substitute formarket value or to foreclose the inquiry by theCollector which he is under a duty to make underSec.47-A. The valuation guidelines were notprepared on the basis of any open hearing of theparties concerned or of any documents. They werebased on date gathered broadly with reference toclassification of lands, grouping of lands andthe like. This being so, the Collector actingunder Section 47-A cannot regard the valuationguidelines as the last word on subject marketvalue. To do so would be to surrender hisstatutory obligation to determine market value onthe basis of evidence which is a judicial or aquasi judicial function which he has to perform"In S.P.Padmavathi's case reported in 1997 (II) C.T.C. 617, it isheld as follows:-"It is also further held that the marketvalue under Section 47-A would not be the marketvalue, as determined under the Land AcquisitionAct. Open market is an objective standard whichlays down that the market value to be adopted bythe Collector and the market value which theparties are required to adopt in theirinstruments must be a fair market value in thesense that there are no economic shackles orinhibitions of any kind which prevent the pricelevel from finding its level. Thus theconception of open market rules out, at one end,fancy prices, and at the other end, distresssales. Economic equilibrium is the hall mark ofopen market." 10. In R.Sai Bharathi – vs. - J.Jayalalitha and others reported https://hcservices.ecourts.gov.in/hcservices/ in 2003-4 L.W. 825, the relevance of guideline value was consideredby the Apex Court and stated that guideline value alone is not afactor to fix the market value of the property. The relevant portionin the said decision reads thus:-"23. The guideline value has relevance onlyin the context of Section 47-A of the IndianStamp Act (as amended by TN Act 24 of 1967) whichprovides for dealing with instruments ofconveyance which are undervalued. The guidelinevalue is a rate fixed by authorities under theStamp Act for purposes of determining the truemarket value of the property disclosed in aninstrument requiring payment of stamp duty. Thusthe guideline value fixed is not final but only aprima facie rate prevailing in an area. It isopen to the registering authority as well as theperson seeking registration to prove the actualmarket value of property. The authorities cannotregard the guideline valuation as the last wordon the subject of market value. This position ismade clear in the explanation to Rule 3 ofPrevention of Undervaluation of InstrumentsRules. The said Explanation reads as follows:"Explanation – the 'GuidelinesRegister' supplied to the officers isintended merely to assist them toascertain prima facie, whether themarket value has been truly set forthin the instruments. The entries madetherein regarding the value ofproperties cannot be a substitute formarket price. Such entries will notforeclose the enquiry of the Collectorunder Section 47-A of the Act or fetterthe discretion of the authoritiesconcerned to satisfy themselves on thereasonableness or otherwise of thevalue expressed in the documents."24. This explanation also will have to beread in conjunction with explanation to Section47-A of the Indian Stamp Act (as amended by TNAct 24 of 1967) which reads:"Explanation – For the purpose ofthis Act, market value of any propertyshall be estimated to be the price https://hcservices.ecourts.gov.in/hcservices/ which, in the opinion of the Collectoror the Chief Controlling RevenueAuthority or the High Court, as thecase may be, such property would havefetched or would fetch, if sold in theopen market on the date of execution ofthe instrument of conveyance, exchangegift, release of benami right orsettlement."25. This Scheme of the enactment and Rulescontemplate that guideline value will only afforda prima facie basis to ascertain the true orcorrect market value undue emphasis on theguideline value without reference to the settingin which it is to be viewed will obscure theissue for consideration. It is clear, therefore,that guideline value is not sacrosanct as urgedon behalf of the appellant, but only a factor tobe taken note of if at all available in respectof an area in which the property transferredlies. In any event, therefore, if for thepurpose of Stamp Act guideline value alone isnot a factor to determine the value of property,its worth will not be any higher in the contextof assessing the true market value of propertiesin question to ascertain whether the transactionhas resulted in any offence so as to give apecuniary advantage to one party or the other."11. On a reading of the provisions of the Indian Stamp Act andthe Rules and the decisions of the Court as stated above, it is clearthat the guideline value, which forms the main plank of theDepartment's contention in this case, is only a guiding factor toascertain the market value prima facie, if there is a doubt that themarket value has not been truly set forth in the instrument. It hasbeen clearly stated by the Apex Court that guideline value is not afinal authority on the market value of the property. The Departmentwill have to go by the various parameters set down in the Rules fordetermination of the market value if they have a reasonable beliefthat the market value of the property has not been truly set forth inthe instrument. In other words the data land which is sought to becompared in this case should contain details which will throw lightas to how the data land, its nature, extent and value is comparableto that of the property which is subject matter of registration. Theonus is on the Department to establish that the market value of theproperty has not been truly set forth and the market value as claimedby the Department is contemporaneous to the document tendered for https://hcservices.ecourts.gov.in/hcservices/ registration. In the present case, the main plank of the Departmentappears to be the guideline value and that too it is of the year2000. The date of presentation in both the cases is of the year1998. Therefore, taking the guideline value of the year 2000 maynot be justified, in view of the Apex Court's decision in State ofRajasthan & others – v. - Khandaka Jain Jewellers reported in 2008(1)CTC 60,. Further, the Department has proceeded on the guidelinevalue, which is not final as held by the apex Court in R.Sai Bharathi– vs. - J.Jayalalitha and others (203 (4) L.W. 825) cited supra. Itis only a prima facie material for determination of the true marketvalue. 12. In this case, the respondent Department has reliedupon a few documents in both the cases stating that the market valueof the property in and around the property which is the subjectmatter of registration and stated that the market value is higher.However, in the impugned order except stating the number of document,year of registration and the square foot value, no other details arefound. It is not clear whether the land which is sought to becompared to the present one are agricultural land or house sites.The extent is also not stated. There is no discussion as to how thedata land is comparable to the land which is the subject matter ofthe lis in the present case. Since the respondent Department havetaken into consideration the documents which are bereft of details,vague in particulars and on the basis of the guideline value of theperiod subsequent to the date of presentation for registration, thewhole exercise appears to be arbitrary. There is no properapplication of mind. 13. The respondent department has proceeded to determine themarket value of the instrument on a subsequent date, in view of thedelay caused in registering the documents. In this case, the date ofsubmission of the document by the appellant would be the relevantdate for determination of the market value of the property. The ApexCourt in a recent decision in State of Rajasthan & others – v. -Khandaka Jain Jewellers reported in 2008(1) CTC 60, has held that themarket value of the property will be on the date when the documentwas tendered for registration. Paragraph 16 of the said decisionreads as follows:-"16. Accordingly, we are of the opinion thatthe view taken by the learned Single Judge aswell as by the Division Bench cannot be sustainedand the same is set aside. The Collector shalldetermine the valuation of the instrument on thebasis of the market value of the property at thedate when the document was tendered by therespondent for registration, and the respondentshall pay the stamp duty charges and surcharge, https://hcservices.ecourts.gov.in/hcservices/ if any, as assessed by the Collector as per theprovisions of the Act. The Appeal of the Stateis allowed. No corder as to costs."Therefore, the impugned order of the first respondent confirming theorder of the second respondent deserves to be set aside as they havetaken into consideration the documents of the year 2000 and 2001 whenthe documents were tendered for registration in April, 1998 andFebruary 1998 respectively. The market value of the property, ifany, has to be determined based on the date when the documents weretendered for registration. Further, the determination of marketvalue by the authorities is not in accordance with the provisions ofSection 47A of the Act and the 1968 Rules as stated above. Since theimpugned orders of the respondents are not in conformity with theabove position of law they are liable to be set aside. 14. The payment of Stamp duty is revenue to State. However,this court is unable to decide the appeals on merits as the relevantdata has not been properly set out in the impugned proceedings andthe details are missing in the order of the first respondent as wellas the second respondent. The true market value if at all can befixed only on the basis of data which has to be furnished andanalysed in terms of the Rules. Such exercise has to be done by therespondents by following the procedure prescribed as per law.Therefore, the order of the first respondent confirming the order ofthe second respondent has to be set aside and are set aside and thematter has to be remitted back for fresh consideration on merits.The second respondent shall consider the entire issue afresh andproduce the necessary data to the appellant and decide the case onmerits and in accordance with law. 15. In the result, both the Civil Miscellaneous are allowedby way of remand. Consequently, connected miscellaneous petitionsare closed. No costs.Sd/Asst.Registrar/true copy/Sub Asst.Registrarra https://hcservices.ecourts.gov.in/hcservices/ To1. The Inspector General of Registration, Chennai.28.2. The Special Deputy Collector (Stamps), Cuddalore.3. Joint Sub Registrar, Chidambaram.+2ccs to Govt. Pleader Sr 61492 and 61661+2ccs to M/s.Srinath Sridevan,Advocate Sr 61718SSN(CO)km/25.2.CMA Nos. 2418 & 2419 of 2008