Case Note & Summary
The dispute arose from an agreement for sale dated 19 March 2020, by which the petitioners agreed to purchase a flat in Karad, Satara for a total consideration of Rs. 26,00,000. They paid Rs. 4,00,000 as part payment and the balance was to be paid upon sanction of a loan. The agreement was registered and stamp duty of Rs. 1,56,000 along with registration fee was paid. However, the petitioners were unable to secure a loan and decided not to proceed with the purchase. They communicated this to the vendor and a Deed of Cancellation was executed and registered on 10 September 2020. On 15 September 2020, the petitioners applied for refund of stamp duty to the Collector of Stamps, Satara. The Collector rejected the application on 23 September 2020, relying on a covenant in the agreement that was interpreted as handing over possession of the flat, and invoking the proviso to Section 48(1) of the Maharashtra Stamps Act, 1958. The petitioners appealed to the Chief Controlling Revenue Authority, which dismissed the appeal on 24 June 2021. Hence, the petitioners filed a writ petition before the Bombay High Court. The core legal issue was whether the refusal to refund stamp duty was justified on the basis that possession had been handed over under the agreement, thereby attracting the bar under the proviso to Section 48(1). The petitioners contended that possession was never delivered, that the cancellation deed specifically recorded this, and that it was inconceivable that possession would be handed over on payment of only 15% of the consideration. Alternatively, they argued that even if possession were treated as handed over, the application for refund was made within the six-month period under sub-section (1) and the proviso would not apply. The respondents maintained that the agreement was effectively a deed of conveyance, pointing to a clause that stated the vendor had no right, title or interest and that the petitioners could enjoy possession perpetually upon payment of taxes, thereby establishing delivery of possession. The Court analyzed the contradictory covenants of the agreement. One clause provided for execution of a sale deed upon full payment of Rs. 26,00,000, while another seemed to suggest immediate conveyance. The Court noted that only Rs. 4,00,000 had been paid and found it unbelievable that possession or title would pass on such a small fraction of the consideration. There was no specific covenant confirming simultaneous delivery of possession. The Court held that no concrete inference of handing over of possession could be drawn from the recital relied upon by the authorities. Consequently, the proviso to Section 48(1) did not apply, and the petitioners were entitled to refund under the main provision. The Court set aside the impugned orders and directed refund of the stamp duty with interest at 6% per annum from the date of application. The writ petition was allowed.
Headnote
A) Stamp Duty - Refund - Cancellation of Agreement for Sale - Maharashtra Stamps Act, 1958, Section 48 - Refund of stamp duty is admissible when application is made within six months of cancellation and possession of the property has not been handed over; a mere recital in the agreement suggesting delivery of possession does not defeat the claim if the surrounding circumstances, including payment of only 15% consideration and contradictory covenants for future execution of sale deed, indicate otherwise. Held that refund must be granted (Paras 8-14). B) Evidence - Possession - Inference from Recital - Where agreement for sale contains a clause stating that the vendor has no right, title or interest, yet also provides for execution of sale deed upon full payment, and only a small fraction of consideration has been paid, a concrete inference of handing over of possession cannot be drawn. The court cannot ignore the contradictory covenant and the commercial reality that possession would not be delivered on such minimal payment. Held that possession was not handed over (Paras 10-12). C) Interpretation of Statutes - Maharashtra Stamps Act, 1958 - Proviso to Section 48(1) - The proviso to Section 48(1) bars refund only where possession has been handed over in pursuance of the agreement; if the authorities fail to establish actual delivery of possession, the main provision applies and refund is permissible. The application was maintainable under sub-section (1) as possession was not delivered (Paras 5, 13-14).
Issue of Consideration
Whether the authorities erred in refusing refund of stamp duty on the ground that possession of the flat was handed over under the agreement for sale, and whether the proviso to Section 48(1) of the Maharashtra Stamps Act, 1958 barred such refund
Final Decision
The High Court allowed the writ petition, set aside the impugned orders dated 23 September 2020 and 24 June 2021, and directed refund of the stamp duty amount of Rs. 1,56,000 with interest at the rate of 6% per annum from the date of application (15 September 2020) until payment. The Court held that a concrete inference of handing over of possession could not be drawn from the ambiguous recital and that the application for refund was maintainable under Section 48(1) of the Maharashtra Stamps Act, 1958.
Law Points
- Legal points not extracted
- Refund of stamp duty on cancellation of agreement for sale admissible under Section 48(1) of Maharashtra Stamps Act
- 1958 if application made within six months and possession not handed over
- Mere recital of possession in agreement not conclusive when only 15% consideration paid and other covenants contemplate future conveyance
- Inference of possession requires more than ambiguous contractual clause
- Proviso to Section 48(1) does not apply where factual possession not delivered
