Case Note & Summary
The petitioner, Yashwantrao Chavan Shetkari Sahakari Soot Girni Maryadit, a cooperative society registered under the Maharashtra Cooperative Societies Act, established a cooperative spinning mill in Taluka Miraj, Sangli District. It required funds for purchasing land, buildings, and machinery to start a new industrial unit. The Maharashtra State Cooperative Bank Limited agreed to advance a sum of Rs. 437 lacs as a medium-term loan. The petitioner executed an indenture of mortgage of their properties, both immovable and movable, to secure the repayment of the loan. The mortgage deed was lodged on 5.7.1993 with the Collector, Mumbai, for determination of stamp duty. In exercise of his powers under Section 32(2) of the Bombay Stamp Act, 1958, the Collector exempted the mortgage deed from stamp duty in accordance with the Government order for remission dated 19.3.1990. The Government order remitted, with effect from 1.10.1988, the stamp duty chargeable under the Bombay Stamp Duty Act on mortgage deeds executed by any person for securing repayment of money advanced by way of loan by any financial agency specified in Schedule I thereto, provided the loan was availed for purchasing fixed assets such as machinery, lands, and buildings for the purpose of starting any new industrial unit in specified talukas and districts. After about seven years, on 23.6.2000, Respondent No.3 called upon the petitioner to pay a sum of Rs. 17,48,000 and Rs. 5,000 towards stamp duty and registration charges respectively on the mortgage deed lodged on 5.7.1993. This notice was issued as directed by the auditor of the respondents for recovery of the amount from the petitioner. The petitioner challenged the notices. The court held that the Collector had validly exempted the mortgage deed from stamp duty under the Government remission order, and the respondents could not subsequently demand stamp duty based on an audit objection. The court quashed the notices and directed the respondents to refund any amount recovered from the petitioner.
Headnote
A) Stamp Duty - Remission of Stamp Duty - Government Order Binding - The Government order dated 19.3.1990 remitted stamp duty on mortgage deeds executed for loans from specified financial agencies for new industrial units in specified talukas. The Collector, under Section 32(2) of the Bombay Stamp Act, 1958, exempted the petitioner's mortgage deed from stamp duty in accordance with that order. The respondents could not subsequently demand stamp duty based on an audit objection, as the remission order was binding and the exemption was validly granted. (Paras 1-3) B) Stamp Duty - Recovery Notice - Limitation - The notice issued after seven years for recovery of stamp duty was held to be unsustainable as the exemption was already granted under a valid Government order. The court quashed the notice and directed the respondents to refund any amount recovered. (Para 3)
Issue of Consideration
Whether the respondents could recover stamp duty on a mortgage deed which was already exempted from stamp duty under a Government remission order dated 19.3.1990, after a lapse of seven years, based on an audit objection.
Final Decision
The court quashed the notices issued by the respondents for payment of stamp duty and registration charges on the mortgage deed dated 8.7.1993. The respondents were directed to refund any amount recovered from the petitioner.
Law Points
- Remission of stamp duty
- Government order binding
- Bombay Stamp Act
- 1958
- Section 32(2)
- Cooperative society
- Mortgage deed
- Recovery notice
- Audit objection
