The Bombay High Court has quashed a demand notice issued for deficit stamp duty and penalty. The Court held that where a property is sold under a court-monitored auction, the value at which the property is sold is to be considered as the market value for stamp duty, not any re-evaluated value imposed by the stamp authorities.

1. Introduction and Petitioner's Grievance:

The petition was filed by Trident Estate Private Limited and Ms. Sanjana Goenka challenging a demand notice from the Joint District Registrar, Pune, which called for payment of deficit stamp duty of ₹83,60,550 and a penalty of ₹23,41,000. The dispute arose over the valuation of the property, which was sold to the petitioner through a Supreme Court-monitored auction process.

2. Background of the Auction:

The sale of the property, comprising plots in Ambey Valley City, Pune, was carried out by a Sale-cum-Monitoring Committee appointed by the Supreme Court as part of liquidation proceedings. The property was sold to the petitioners for ₹2,51,00,000 in a public e-auction, and a Sale Certificate was issued accordingly. However, the stamp authorities based the duty on a significantly higher valuation of ₹16,72,11,000.

3. Petitioner's Argument:

The petitioners contended that since the sale was conducted transparently under the supervision of the Supreme Court, the sale price should be accepted as the true market value. They argued that the stamp authorities had no basis to re-evaluate the property at a higher value and levy additional stamp duty.

4. Respondent's Stand:

The State, represented by the Additional Government Pleader, maintained that the stamp authorities were within their rights to independently assess the market value of the property and levy stamp duty based on that assessment, under the Maharashtra Stamp Act.

5. Court's Analysis:

The Court referred to earlier rulings, including Spectrum Constructions and Developers LLP v. State of Maharashtra and ASL Vyapar Pvt Ltd v. Registrar of Assurances, to establish that in judicial auctions, the value fixed through the auction process is the market value. The Court emphasized that the stamp authorities cannot sit in appeal over a court-monitored sale.

6. Judgment and Relief Granted:

The Bombay High Court ruled in favor of the petitioners, quashing the impugned demand notice. It held that the value determined through the auction must be accepted as the market value for stamp duty purposes, and no further independent assessment by the authorities was permissible.

Relevant Acts and Sections:

• Maharashtra Stamp Act, 1958: Section 33 (Power to call for records) and Section 32A (Determination of market value for stamp duty purposes) were central to the arguments.
• Bombay Stamp (Determination of True Market Value) Rules, 1995: Specifically, Rule 4(6), which relates to the determination of market value in cases of government or court-monitored sales.

Ratio:

The Court reiterated that sales conducted through judicial or court-monitored processes, particularly auctions, reflect the market value, which must be accepted for stamp duty purposes. Any revaluation by the stamp authorities would undermine the transparent nature of such processes and cannot be permitted.