Case Note & Summary
The petitioner, M/s. Padmavati Construction Co., a partnership firm, was developing a plot of land in Chembur, Mumbai. The registered owner, Bombay Construction and Engineering Company Limited, had entered into a Memorandum of Understanding with Kritika Properties and Developers Pvt. Ltd. for development. The petitioner entered into flat purchase agreements with individual purchasers for flats in the building to be constructed. The agreements contained a stipulation that the owner may form separate cooperative societies for the retained and balance portions. The petitioner presented the agreements for adjudication of stamp duty under Section 31 of the Bombay Stamp Act, 1958. The Collector of Stamps assessed the agreements as 'agreements to sell' under Article 25(a) of Schedule I and levied stamp duty on the consideration stated in the agreements. However, the Chief Controlling Revenue Authority, by an order dated 30th June 2004, held that the agreements were 'conveyances' under Article 25 and directed reassessment of stamp duty on the market value of the property as per the ready reckoner. The petitioner challenged this order by way of a writ petition. The High Court examined the nature of the agreements and held that they were agreements to sell, not conveyances, as they did not transfer title immediately. The court further held that the Collector had no jurisdiction to reassess stamp duty based on market value under Section 31A of the Act. The court quashed the order of the Chief Controlling Revenue Authority and directed that the stamp duty be assessed on the consideration stated in the agreements.
Headnote
A) Stamp Duty - Agreement to Sell vs. Conveyance - Article 25, Schedule I, Bombay Stamp Act, 1958 - Flat purchase agreements for under-construction flats are agreements to sell, not conveyances, as they do not transfer title immediately - Held that the agreements are chargeable to stamp duty under Article 25(a) as agreements to sell, and the duty is to be computed on the consideration stated in the agreement, not on the market value of the property (Paras 1-10). B) Stamp Duty - Assessment of Market Value - Section 31A, Bombay Stamp Act, 1958 - The Collector cannot reassess stamp duty based on market value under Section 31A when the instrument is an agreement to sell and not a conveyance - Held that the impugned order demanding additional stamp duty based on market value was without jurisdiction (Paras 11-15).
Issue of Consideration
Whether the flat purchase agreements entered into by the petitioner with flat purchasers are liable to stamp duty as 'agreements to sell' under Article 25 of Schedule I to the Bombay Stamp Act, 1958, or as 'conveyances' under Article 25, and whether the stamp duty should be assessed on the market value of the property as per the ready reckoner or on the consideration stated in the agreements.
Final Decision
The High Court allowed the writ petition, quashed the order of the Chief Controlling Revenue Authority dated 30th June 2004, and directed that the stamp duty on the flat purchase agreements be assessed as agreements to sell under Article 25(a) of Schedule I to the Bombay Stamp Act, 1958, on the consideration stated in the agreements.
Law Points
- Stamp duty
- Agreement to sell
- Conveyance
- Bombay Stamp Act
- 1958
- Article 25
- Article 25(a)
- Article 25(b)
- Development agreement
- Flat purchase agreement
- Market value
- Ready reckoner
