S. P. GNANESH BABU V. THE REGIONAL COMMISSIONER

WP/18/2021

AI Insights

The case revolves around a dispute concerning the stamp duty assessed on a Joint Development Agreement dated 11.11.2016, involving property in Chitradurga. The District Registrar, after an audit, initiated proceedings under the Karnataka Stamp Act, 1957, leading to a revised stamp duty assessment. The petitioner, S.P. Gnanesh Babu, contested this assessment, arguing procedural improprieties and the lack of credible information to initiate such proceedings. The High Court dismissed the petition, affirming the assessment and the procedural validity of the actions taken by the registration authorities.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 690617 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 18-09-2024
• Assessment Year: misc
• Other Referred Cases: M/s. Indian and Eastern Newspapers Society, New Delhi vs. The Commissioner of Income-tax, New Delhi
• Laws Referred To: Karnataka Stamp Act, 1957, Karnataka Stamp (Prevention Of Undervaluation of Instruments) Rules, 1977, Karnataka Registration Act, 1908
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: SPOORTHY
• Assessee Lawyers: DORE RAJ
• Keywords: Audit report; Joint Development Agreement; Stamp Duty; Suo Moto Proceedings; Writ petition
• Section: 226; 227; 45-A(3); 45-A(5); 45-A(2); 80(A)

Judgement Text

" - 1 - NC: 2024:KHC:38479 WP No. 18 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MR JUSTICE M.G.S. KAMAL WRIT PETITION NO. 18 OF 2021 (GM-ST/RN) BETWEEN: S.P. GNANESH BABU, SON OF S. PARAMESHWARAPPA, AGED ABOUT 41 YEARS, PROPRIETOR SRI SAI ASSOCIATES, NEAR D.G. OFFICE CIRCLE, CHITRADURGA - 577 501. …PETITIONER (BY SRI. DORE RAJ B.H, ADVOCATE) AND: 1. THE REGIONAL COMMISSIONER, BENGALURU REVENUE REGION, DEPARTMENT OF STAMPS AND REGISTRATION, BENGALURU REGIONAL COMMISSIONER'S OFFICE, 2ND FLOOR, BMTC BUILDING, K.H. ROAD, SHANTHINAGAR, BENGALURU - 560 027. 2. DISTRICT REGISTRAR AND DEPUTY COMMISSIONER (STAMPS), CHITRADURGA DISTRICT, DCRM COMPLEX, 1ST FLOOR, APMC YARD ROAD, CHITRADURGA - 577 501. …RESPONDENTS (BY SRI. SPOORTHY HEGDE N, HCGP) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH AND SETTING ASIDE THE FINAL ORDER DATED 14TH SEPTEMBER, 2020 IN STAMP DUTY APPEAL NO.13 OF 2019 PASSED BY R-1 PRODUCED HEREIN AS ANNEXURE-A AND ETC. Digitally signed by SUMA B N Location: High Court of Karnataka - 2 - NC: 2024:KHC:38479 WP No. 18 of 2021 THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE M.G.S. KAMAL ORAL ORDER The petitioner is before this Court being aggrieved by the order dated 14.09.2020 passed by respondent No.1/Regional Commissioner, Bengaluru Revenue Region, Department of Stamps and Registration and the order dated 12.03.2019 passed by respondent No.2-District Registrar and Deputy Commissioner (Stamps) and for issuance of a writ of mandamus directing respondent No.1 to refund Rs.2,76,000/- deposited by the petitioner with respondent No.1 on 20.03.2020 with interest at the rate of 12% per annum. 2. Brief facts of the case are that petitioner had entered into a Joint Development Agreement dated 11.11.2016 with one Mrs.Palamma and others in respect of certain immovable property situated at Chitradurga city. A case was registered on 03.08.2018 by respondent No.2 and had issued a notice to the petitioner under Rule 4 of Karnataka Stamp (Prevention Of Undervaluation of Instruments) Rules, 1977 (for short 'the Rules, 1977) read with Section 45-A(3) of the - 3 - NC: 2024:KHC:38479 WP No. 18 of 2021 Karnataka Stamp Act, 1957 (for short 'the Act, 1957) to which, the petitioner had filed his objections. However, after conducting the enquiry by order dated 12.03.2019 respondent No.2 in exercise of its powers under Section 45-A(3) of the Act, 1957 read with Rule 7 of Rules, 1977 and Section 80(A) of the Karnataka Registration Act, 1908 had adjudicated the deficit stamp duty payable at Rs.5,50,754/-. Aggrieved by the same, petitioner had filed an appeal under Section 45-A(5) of the Act before respondent No.1, who by order dated 14.09.2020, dismissed the appeal confirming the order passed by respondent No.2. Being aggrieved by the same, petitioner is before this Court. 3. Learned counsel appearing for the petitioner reiterating the grounds urged in the petition vehemently submits that the procedure adopted by respondent No.2 was erroneous. He submits that respondent No.2 without there being any credible information and without any source of information had apparently exercised the powers under Section 45-A(2) of the Act which provides for initiating suo-moto proceedings. He submits that perusal of cause title of the order would indicate the said proceedings separately having been - 4 - NC: 2024:KHC:38479 WP No. 18 of 2021 initiated at the instance of Sub-Registrar is impermissible. He submits that on perusal of the entire order, except mentioning the provision, there is nothing on record which would indicate that the suo-moto power of revision has been exercised promptly thus vitiating entire proceedings. He placed reliance on the judgment of the Hon'ble Apex Court in the case of the M/s. Indian and Eastern Newspapers Society, New Delhi vs. The Commissioner of Income-tax, New Delhi reported in 1979 SC 1960. He submits that the information purportedly relied upon by the respondent No.2 cannot be construed as information which is enough for initiating suo- moto proceedings. He further submits that respondent No.1, being the Appellate Authority without considering the grounds urged in the petition which goes to the route of the matter has merely dismissed the appeal accepting the reasons and the conclusion arrived at by respondent No.2. Hence seeks for allowing of the petition by setting aside the impugned order. 4. Learned HCGP on the other hand submits that mentioning of the name of Sub-Registrar in the cause title is only a procedural aspect. Respondent No.2 has initiated the proceedings based on the audit report in which it was found the - 5 - NC: 2024:KHC:38479 WP No. 18 of 2021 valuation of the instrument was grossly below the guidance value which was prevailing at the time of presentation of the document and audit report is a source of information which respondent No.2 is entitled to rely upon while initiating the suo- moto proceedings. He further submits that information being validly and legally available under law has been taken into consideration by respondent No.2 to exercise its power under Section 45-A(2) of the Act. He further submits that it is not the case of the petitioner that the payment of stamp duty required to be made as determined is without any basis. Merely because of procedural error even if any, would not give any right in favour of the petitioner not to pay required stamp duty. Hence seeks for dismissal of the petition. 5. Heard, perused the record. 6. On a query by this Court, learned counsel for the petitioner submits that as against the stamp duty demanded, the petitioner has already paid the substantial amount and is due and liable to pay only a sum of Rs.3,13,000/-. He further fairly submits that determination of the market value and stamp duty payable is correct and proper and there is no error - 6 - NC: 2024:KHC:38479 WP No. 18 of 2021 in that regard. However, his only grievance is, even if determination of stamp duty payable on the instrument is to be accepted, the same cannot be thrusted upon the petitioner in an irregularly initiated proceedings. He submits that suo-moto proceedings ought to have been taken by respondent No.2 on the credible information and not on the basis of the complaint of the Sub-Registrar or on the basis of audit report. 7. Since the learned counsel for the petitioner has fairly admitted that payment of stamp duty is proper and correct, the consideration issue regarding the procedure adopted would remain academic. Nevertheless, the information available in the audit report is generally one of the sources based on which suo-moto proceedings are initiated under Section 45-A(2) of the Act. Needless to state, the suo-moto proceedings by the authorities could be initiated based on credible information from any credible source and thus one such source of information is the audit reportnprovided procedure contemplated under law has been duly complied by giving sufficient opportunity of being heard to the affected party. Section 45-A of the Act reads as under: - 7 - NC: 2024:KHC:38479 WP No. 18 of 2021 45-A. Instrument of conveyance, etc., undervalued how to be dealt with.__ [(1) If the registering officer appointed under the Registration Act, 1908 (Central Act XVI of 1908), while registering (any instrument of.__ (a) Conveyance [Section 2(1)(d)]; (b) Gift [Article 28(a)]; (c) Exchange of property [Article 26]; (d) Settlement [Article 48-A(1)]; (e) Reconstitution of Partnership [Article 40-B(a)]; (f) Dissolution of Partnership [Article 40-C(a)]; (g) An agreement to sell covered under sub- clause (i) of clause (e) of article 5; (h) A lease covered under item [(vi) of Article 30]; (i) A power of attorney covered [under clause (e), clause (ea) and clause (eb) of Article 41; (j) Release [Article 45(a)]; (k) Conveyance under decree or final order of any Civil Court, has reason to believe] (l) Agreement [Article 5(f)] (m) Award [Article 11(a)] (n) Trust [Article 54(A)(iii)] (o) Transferable development Rights (Article 20(7))] having regard to the estimated market value published by the Committee constituted under Section 45-B, if any, or otherwise, that the market value of the property which is the subject-matter of such instrument has not been truly set forth, he shall after arriving at the estimated market value, communicate the same to the parties and unless the parties pay the duty on the basis of such valuation, shall keep pending the process of registration and refer the matter along with a copy of such instrument to the Deputy Commissioner for determination of the market value of the property and the proper duty payable thereon.] (2) On receipt of a reference under sub-section (1), the Deputy Commissioner shall, after giving the parties reasonable opportunity of being heard and after holding an - 8 - NC: 2024:KHC:38479 WP No. 18 of 2021 inquiry in such manner as the State Government may by rules prescribe, determine by order [as far as may be within ninety days from the date of receipt of such reference] the market value of the property which is the [subject-matter of instrument specified in sub-section (1) and the duty payable thereon]. The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty [with interest at twelve per cent per annum if he does not pay within ninety days from the date of order of the Deputy Commissioner]: [Provided that the payment of interest is not applicable to instruments executed prior to 31st day of March, 2006.] (3) The Deputy Commissioner may, suo motu within two years from the date of registration of [any instrument specified in sub-section (1)] not already referred to him under sub-section (1), call for and examine the instrument for the purpose of satisfying himself as to the correctness of the market value of the property which is the [subject-matter of any instrument specified in sub-section 91) and the duty payable thereon] in accordance with the procedure provided for in sub-section 92). The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty [with interest at twelve per cent per annum if he does not pay within ninety days from the date of order of the Deputy Commissioner]: Provided that nothing in this sub-section shall apply to any instrument registered before the commencement of the Karnataka Stamp (Amendment) Act, 1975: [Provided further that the payment of interest is not applicable to instruments executed prior to 31st day of March, 2006.] (4) The order of the Deputy commissioner under sub-section 92) or (3) shall be communicated to the person liable to pay the duty. A copy of every such order shall be sent to the registering officer concerned. (5) Any person aggrieved by an order of the Deputy Commissioner under sub-section (2) or sub-section (3) may, prefer an appeal before the [Regional Commissioner] and all such appeals shall be preferred within such time and be heard and disposed of in such manner as the State Government may by rules prescribe. [Provided that no appeal shall be admitted unless the person aggrieved has deposited, in the prescribed manner, fifty per cent of the difference in the amount of duty as determined by the Deputy Commissioner under sub-section (2) or (3): - 9 - NC: 2024:KHC:38479 WP No. 18 of 2021 Provided further that, whereafter the determination of the market value by the Appellate Authority or determined again by the Deputy Commissioner on a remand of the case, the stamp duty borne is found to be sufficient, the amount deposited shall be returned to the person concerned. [Provided also that such person shall bay the difference in duty along with interest at twelve per cent per annum if he does not pay within ninety days from the date of order of the Deputy Commissioner or sixty days from the date of order of the Appellate Authority, so however, the payment of interest is not applicable to instruments executed prior to eighteen day of August 1999.] 8. In the instant case there is no allegation of petitioner not having been given any opportunity of being heard. Merely because the name of the Sub-Registrar is shown in the cause title even while exercising the power under Section 45-A(2) of the Act, the same cannot be found fault with. Reliance placed as the judgment in the case of M/s. Indian and eastern Newspapers Society, New Delhi (supra) is not applicable to the facts of the present case. Petition lacks merits. Accordingly, the same is dismissed. SD/- (M.G.S. KAMAL) JUDGE GPG CT: BHK "