STATE OF RAJASTHAN AND ORS. v. M-S KHANDAKA JAIN JEWELLERS

Citation: [2007] 12 S.C.R. 105

Court: Supreme Court of India

Bench: A.K. MATHUR, MARKANDEY KATJU

Case summary

STATE OF RAJASTHAN AND ORS. v. M-S KHANDAKA JAIN JEWELLERS.pdf

Judgment text

}- / STATE OF RAJASTHAN AND ORS. • v. MIS KHANDAKA JAIN JEWELLERS NOVEMBER 16, 2007 (A. K. MATHUR AND MARKANDEY KATJU, JJ. ) . , Stamp Act, 1899: ss. 2(12), 3, 17, ands. 47A(as inserted by RajasthanAct JO of1982 in Rajasthrm Stamp Law (Adaptation) Act, 1952)-Sale deed- Registration of-Valuation for assessment ofstamp duty-HELD: stamp duty on sale has to be assessed on market value ofproperty at the time ofregistration ofsale and not when parties entered into an agreement to sell nor when suitfor specific performance ofcontract isfiled. Interpretation ofStatutes: Provisions ofStamp Act-Interpretation of-HELD: Stamp Act is in nature ofa taxing statute and has to be construed strictly. Deeds and documents-Difference between agreement to sell and sale-Explained. In execution of decrees passed in two suits for specific performance of contract arising out of agreements to sell entered ) into on 20. 10. 1983, the court executed the sale deeds and sent the same on 17. 3.

1995 for registration before the Sub-Registrar, who, exercising his powers u/s. 47-A (1) as inserted by Rajasthan Act 10 of1982 in Rajasthan Stamp Law (Adaptation) Act, 1952 sent the sale deeds to the Collector for determining market value ofthe properties and to assess the charge ofstamp duty. The Collector assessed the value ofthe properties and raised deficient stamp duty and deficient registration fees and also levied the penalty. The order of the Collector was challenged in a writ petition before the High Court. The single Judge held that the relevant date for assessment of the market value would be the date on which the suit for specific performance ofagreement to sell was filed. The Division Bench of the High Court having affirmed the view ofthe single Judge, the State Government filed the instant appeal.

The question for consideration before the Court was: Whether valuation should be assessed on the market rate prevailing at the time of registration ofthe sale deed or when the parties entered into the agreement to sell. Allowing the appeal, the Court HELD: 1. 1. There is a difference between an agreement to sell and a sale. An agreement to sell is not a sale. An agreement to sell becomes a sale after both the parties signed the sale deed. What is relevant in fact is the actual valuation ofthe property at the time of the sale. The crucial expression used in Section 17 ofthe Stamp Act, 1899 is "at the time ofexecution". Therefore, stamp duty on a sale has to be assessed on the market value of the property at the time ofexecution ofsale deed, and not at the time ofthe prior agreement to sell, nor at the time offiling ofthe suit. [Para 10)(115-E; 116-D, E] 1. 2.

The Stamp Act, 1899 is in the nature of a taxing statute, and it has to be construed strictly; and cohsiderations of hardship or equity have no role to play in its construction. It is true that no one should suffer on account ofthe pendency ofthe matter in court but this consideration docs not affect the principles ofinterpretation ofa taxing statute. A taxing statute has to be construed as it is. The contingencies that the matter was under litigation and the value of the property by that time shot up cannot be taken into account for interpreting the provisions of a taxing statute. [Para 10and14] [116-E; 118-D, EJ Sub Registrat. Kodad Town and Manda! v. Amaranaini China \ Venkat Rao and Ors. , AIR (1998) Andhra Pradesh 252, disapproved. 1. 3. Literal rule of interpretation applies to the taxing statute. Construing section 17 read with section 2(12) of the Stamp Act in } STATE v.

MIS KHANDAKAJAIN JEWELLERS 107 this back-ground, there is no manner ofdoubt that the registering authority is under an obligation to ascertain the correct market value at that time ofregistration and should not go by the value mentioned in the instrument. It is true that as per Section 3, which is the charging section, the instrument is to be registered on the basis ofthe valuation disclosed therein. But Section 3 cannot be read in isolation and has to be read along with Section 17ofthe Act. From a composite reading of Sections 3, 17 and 27, it becomes abundantly clear that the valuation given in an instrument is not conclusive. Ifany doubt arises in the mind ofthe registering authority that the instrument is undervalued then as per Section 47-A as inserted by Rajasthan Act 10 of 1982 in Rajasthan Stamp Law (Adaptation) Act, 1952, the instrument can be sent to the Collector for determination ofthe correct market value.

Under Section 47-A read with Sections 3, 17 and 27, it becomes clear that the registering authority has to ascertain the correct valuation given in the instrument regarding market value of the property at the time of the sale. [Para 11, 12 and 13] (117-E, F, G, H; 118-A, BJ A. V. Fernandez v. State ofKera/a, AIR (1957) SC 657, relied on. 1. 4. The view taken by the single Judge as well as by the Division Bench ofthe High Court cannot be sustained and the same is set aside. The Collector shall determine the valuation of the property mentioned in the instrument on the basis ofits market value , on the date when the document was tendered by the respondent for registration, and the respondent shall pay the stamp duty charges and surcharge, if any, as assessed by the Collector as per the provisions ofthe Act. [Para 16] [119-B, CJ CIVIL APPELLATE illRISDICTION: Civil Appeal No. 5273 of 2007. From the Judgment and Order dated 23. 11.

2005 ofthe High Court ofRajasthan at Jaipur Bench, Jaipur in D. B. Civil Special Appeal (Writ) No. 427 of 2002. V. Madhukar, Sumit Ghosh and Aruneshwar Gupta for the ( Appellants. Dr. Manish Singhvi and P. V. Yogeswaran for the Respondents. The Judgment ofthe Court was delivered by A. K. MATHUR, J. 1. Leave granted. 2. This appeal is directed against the judgment dated 23. 11. 2005 passed by the Division Bench ofthe High Court ofJudicature for Rajasthan at Jaipur Bench, Jaipur in SBCWP No. 133/1997 and DBCSA No. 427/ 2002 whereby the division bench has affirmed the order ofthe learned Single Judge. 3. Brieffacts which are necessary for the disposal ofthis appeal are as under: The S. B. Civil writ petition No. 133/97 was filed by Mis Khandaka Jain Jewellers, petitioner (respondent he;ein) in the High Court of Judicature for Rajasthan, Jaipur Bench, Jaipur who prayed that a direction may be issued to the respondent Nos.

2&3 to register the sale deeds sent by the Court ofadditional district Judge No. 1, Jaipur city in execution application No. 15/94 and 16/94 and to send back the same to the Court immediately after registration. It was also prayed that the respondents may be directed to register the sale deeds on the stamps on which it is executed by the executing court and not to charge more stamp duty from respondent (herein). It was further prayed to quash and set aside the proceedings taken under Section 47A(2) of the Stamps Act, 1952 in case No. 442/ 95 and 443/95 on 4th March, 1997 for detem1ination ofthe valuation of the sale deed for registration. The respondent is a registered firm and it entered into two agreements for purchase of properties with Shri Prem Chand Ajmera, resident of2148, Haldiyon Ka Rasta Jaipur by one agreement dated 20th October, 1983. The property was agreed to be purchased for a sum of Rs. 1,41,000/- out of which Rs. 20,000/- were paid at the time of the agreement.

As t'ie vendor failed to comply with the terms ofthe agreement, the respondent vendee filed a suit for specific perfom1ance ofthe contract in the Court of district Judge, Jaipur city which was later on transferred > STATE v. MIS KHANOAKA JAIN JEWELLERS I09 to the Court ofadditional district Judge No. I, Jaipur city under registration No. 216/86. The suit was decreed by the Judgment and decree dated 2nd February, 1994. In pursuance ofthe said decree, the respondent firm deposited an amount of Rs. 1,21,000/- in the Court on 9th May, 1994. Since the vendor did not execute the sale deed, therefore, the respondent firm filed the execution application No. 16/90 before the Court of additional district Judge No. I, Jaipur city. In another agreement dated 2orn October, 1983 the vendor Premchand agreed to sell a portion of property for a sum of Rs. 50,0001- out of which Rs. I0,000/- was paid at the time of agreement. The respondent firm purchased the stamp papers and got the sale deed typed.

In this case also the vendor failed to fulfill the condition ofagreement and to execute the sale deed. Consequently, the respondent firm filed another suit for specific performance ofthe contract in the Court ofdistrict Judge, Jaipur city. It was also transferred to the court ofadditional district Judge No. I, Jaipur city under registration No. 151/91. The suit was 'i decreed vide judgment and decree dated 2nd February, 1994 and the respondent firm was directed to deposit the remaining amount ofRs. 40,000/- and the judgment debtor would execute the sale deed. Ifthe judgment debtor fails to comply with the decree, the decree holder would be entitled to get the sale deed registered and to get the possession. In compliance of the judgment and decree passed by the Court, the respondent firm deposited an amount of Rs. 40,000/- in the court but the judgment debtor did not execute the sale deed. The execution application No. 15/94 was filed before the Court of additional district Judge No.

I, Jaipur city. Both these applications No. 15/94 and 16/94 were taken up by the executing court and the respondent firm was directed to submit the stamp papers for the execution ofthe two sale deeds. The stamp papers for a sum ofRs. 14,100/- and Rs. 5,0001- for execution of the sale deeds in respect of properties purchased for a sum of Rs. 1,4 LOOO/- and Rs. 50,0001- respectively, were submitted by the respondent firm. The learned executing court executed the sale deeds and sent the same on 17th March, 1995 for registration before the Sub-registrar, Registration Department, Collectorate Bani Park, Jaipur. The Sub- STATEv. M/SKHANDAKAJAINJEWELLERS 115 / [A. K. MATHUR). ] ) conferred on him under sub-section (3).

(5) For the purpose of enquiries under this section, the Collector shall have power to summon and enforce the attendance of witnesses including the parties to the instrument or any of them, and to complete the production ofdocuments by the same means, and so far as may be in the same manner, as is provided in the ·/ case ofCivil Court under Code ofCivil Procedure, 1908 (Central Act V of 1908)" 9. The contention of the learned counsel for the State that as per Section 17 ofthe Act, the market value has to be taken into consideration because Section 17 stipulates that all the instruments chargeable with duty and executed by person oflndia 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 ofthe immovable property. It is irrelevant whether the matter had gone in for litigation 10. 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 ofthe 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 ofthe Act. It is true that as per Section 3, the instrument is to be registered on the basis ofthe valuation disclosed therein.

But Section 47-A ofthe Rajasthan (Amendment) Stamp Duty Act contemplates that in case it is found that properties are under valued ; then it is open for the Collector (Stamps) to assess the correct market value. TI1erefore, in the present case when the registe1ing authority found that valuation ofthe property was not correct as mentioned in the instrunlent, it sent the document to the Collector for ascertaining the correct market value ofthe property. The expression "execution" read with Section ( 17 leaves no manner ofdoubt that the current valuation is to be seen when the instrument is sought to be registered. The Stamp Act is in the nature of taxing statute, and ataxing statute is not dependant 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 ifit is found that the instrument has been undervalued then it is open for the registering authority to enquire into its correct market value. The learned single Judge as well as the Division Bench in the present case had taken into consideration that the agreement to sell was entered into but it was not executed. Therefore, the incumbent had to file a suit for seeking a decree for execution ofthe agreement and that took a long time. TI1erefore, the Courts below concluded that the valuation which was in the instrument should be taken into account. In our opinion this is not a correct approach. Even the valuation at the time ofthe decree is also not relevant. What is relevant in fact is the actual valuation ofthe property at the time ofthe sale. The crucial expression used in Section 17 is "at the time of execution''.

Therefore, the market value ofthe instrument has to be seen at the time ofthe execution ofthe 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 signed the sale deed. A taxing statute is not contingent on the inconvenience of the parties. It is needless to emphasize that a taxing statute has to be construed strictly and considerations ofhardship or equity have no role to play in its construction. VISCOUNT SIMON quoted with approval a passage from ROWLATT, J. expressing the principle in the following words "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language .. used. " 11. The same view was expressed by Hon'ble Bhagwati J. in the case ofA. V Fernandez v.

State ofKera/a, reported in AIR (1957) SC I-I > 657. The principle is as follows: "In construing fiscal statutes and in determining the liability of subject to tax one must have regard to the strict letter ofthe law. Ifthe revenue satisfies the court that the case falls strictly within the provisions ofthe law, the subject can be taxed. Ifon the other hand, the' case is not covered within the four comers of the -1 provisions ofthe taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intention of the Legislature and by considering what was the substance of the matter. " Hon'ble Shah J has fonnulated the principle thus: "In interpreting a taxing statute, equitable considerations are entirely out ofplace. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words ofthe statute and interpret them.

It must interpret a taxing statute in the light ofwhat is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any assumed deficiency. " Therefore, a taxing statute has to be read as it is. In other words, the literal rule ofinterpretation applies to it. 12. In this back-ground, ifwe construe Section 17 read with Section 2(12) then there is no manner ofdoubt that at the time ofregistration, 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. 13. Learned counsel for the respondent submitted that ifwe construe Section 3 read with Section 27 ofthe Act then the Registering Authority is under an obligation to only see the value mentioned in the instrument. In our opinionSection 3 which is the charging section cannot be read in isolation but has to be read along with Section 17 of the Act.

From a composite reading ofSections 3, 17 and 27, it becomes abundantly clear that the valuation given in an instrument is not conclusive. Ifany doubt arises in the mind ofthe Registering Authority that the instrument is under- valued then as per Section 47-A of the Rajasthan (Amendment) the <: instrument can be sent to the Collector for determination ofthe correct ,, market value. Under Section 47-A read with Sections 3, 17 and 27, it becomes clear that the Registering Authority has to ascertain the correct valuation given in the instrument regarding market value ofthe property at the time ofthe sale. 14. Learned Counsel for the respondent strenuously urged before us that in fact when the agreement to sell was not executed by the vendor, the respondent had no option but to file a suit and a long time was taken for obtaining a decree for execution ofthe agreement.

He was not at fault and as such the valuation given in the instrument should be taken into consideration because during the litigation the valuation ofthe property has shot up. In this connection, learned counsel has invited our attention to the principle "Actus curie neminem gravabit" meaning thereby that no person shall suffer on account of litigation. Hence learned counsel submitted that since the matter had been in the litigation for a long time, the respondent cannot ·be made to suffer. He invited our attention to the decision ofthe Andhra Pradesh High Court Sub-Registrar, Kodad Town and Manda! (supra). It is true that no one should suffer on account ofthe pendency ofthe matter but this consideration does not affect the Principles of inte1pretation of a taxing statute.

A taxing statute has to be construed as it is all these contingencies that the matter was under litigation and the value of the property by that time shot up cannot be taken into account for interpreting the provisions of a taxing statute. As already mentioned above a taxing statute has to be construed strictly and if it is construed strictly then the plea that the incw11bent took a long time to get a decree for execution against the vendor that consideration cannot weigh with the Court for interpreting the provisions ofthe taxing statutes. Therefore, simply because the matter have been in the litigation for a long time that cannot be a consideration to accept the market value ofthe instrument when the agreement to sale was entered. As per Section 17, it clearly says at the time when registration is made, the valuation is to be seen on that basis. 15. In the case ofSub-Registrar, Kodad Town and Manda!

(Supra), the learned single Judge ofthe Andhra Pradesh High Court felt persuaded t· on accountof 30 years' long litigation and therefore, declined to send the papers back to the Collector for valuation at the market value. With great respect, the view taken by the learned single Judge is against the principles of interpretation of a taxing statute. Therefore, we are of the opinion that the view taken by the learned single Judge of the Andhra Pradesh High Court is not correct. 16. Accordingly, we are of the opinion that the view taken by the learned single Judge as well as by the Division Bench cannot be sustained and the same is set aside. The Collector shall determine was the valuation ofthe instrument on the basis of the market value ofthe property at the date when the document was tendered by the respondent for registration, and the respondent shall pay the stamp duty charges and surcharge, if any, as assessed by the Collector as per the provisions ofthe Act.

The appeal ofthe State is allowed. No order as to costs. RP. Appeal allowed. \ • •. l'