Case Note & Summary
The petitioner, M/s. Prasun Developers, challenged orders of the Joint District Registrar and Collector of Stamps, Pune, and the Deputy Inspector General of Registration, Pune, which demanded deficit stamp duty and penalty on a development agreement and power of attorney executed in 2005. The petitioner had paid stamp duty of Rs.42,000 at 1% of the consideration of Rs.42 lakhs under Article 5(ga) of Schedule-I of the Bombay Stamp Act, 1958. The authorities treated the development agreement as a conveyance and demanded duty based on the market value of the property. The Court analyzed the nature of the development agreement, which did not transfer title but only conferred development rights, and held that it is not a conveyance. The power of attorney was merely an agency and not a transfer. The Court quashed the impugned orders, holding that the stamp duty was correctly paid and the authorities had no jurisdiction to demand deficit duty based on market value.
Headnote
A) Stamp Duty - Development Agreement - Conveyance - Article 5(ga) of Schedule-I of Bombay Stamp Act, 1958 - The issue was whether a development agreement, which did not transfer title but only conferred development rights, could be treated as a conveyance for stamp duty purposes. The Court held that such an agreement is not a conveyance and is chargeable only under Article 5(ga) at 1% of the consideration stated, not on market value. (Paras 3-10) B) Stamp Duty - Power of Attorney - Not a Transfer - Section 2(g) of Bombay Stamp Act, 1958 - The power of attorney executed along with the development agreement was held not to be a transfer of title but merely an agency arrangement. The Court held that it cannot be clubbed with the development agreement to treat the transaction as a conveyance. (Paras 11-15) C) Stamp Duty - Deficit Duty - Limitation - Section 32A of Bombay Stamp Act, 1958 - The Court held that the authorities cannot reopen assessment after registration unless there is fraud or misrepresentation, and the demand for deficit duty based on market value was beyond jurisdiction. (Paras 16-20)
Issue of Consideration
Whether a development agreement coupled with power of attorney amounts to a conveyance or transfer of property for the purpose of stamp duty under the Bombay Stamp Act, 1958, and whether the stamp duty authorities can demand deficit stamp duty based on market value of the property.
Final Decision
The impugned orders dated 26 June 2014 and 5 September 2014, and consequential attachment and auction notices, are quashed and set aside. The petition is allowed. Rule made absolute. No order as to costs.
Law Points
- Development agreement is not a conveyance
- Stamp duty payable under Article 5(ga) of Schedule-I of Bombay Stamp Act
- 1958
- Notional market value cannot be applied
- Power of attorney is not a transfer of title
