Case Note & Summary
The petitioner, M/s Vaibhav Corp. Pvt. Ltd., filed a petition under Article 226 of the Constitution of India read with the Gujarat Stamp Act, 1958, challenging two orders dated 03.11.2023 passed by respondent No.3 and respondent No.1 (in Stamp Appeal No. 165/23). The dispute pertained to land bearing Survey No.77 & 78 of Village Akota, which was given Final Plot No.76 under Town Planning Scheme No.1 and reserved for development of a neighbourhood. The Municipal Corporation carved out plots, and the land in question was given plot No.1 and 2 admeasuring 875 square meters. These plots were allotted to Hemaben Sureshbhai Shah, who acquired leasehold rights for 99 years via registered lease deed no.6949 dated 10.10.2001. Since Hemaben lacked expertise in construction, she entered into a development agreement with the petitioner on 13.03.2010, permitting the petitioner to develop residential property, while ownership of leasehold rights remained with Hemaben. The stamp authorities levied stamp duty on the development agreement as if it were a conveyance. The petitioner contended that the development agreement did not transfer any ownership or interest in land and thus was not liable to stamp duty. The Court analyzed the definition of 'conveyance' under Section 2(g) of the Gujarat Stamp Act, 1958, and held that a development agreement that does not transfer property or any interest therein is not a conveyance. The Court quashed the impugned orders and directed the respondents to refund any stamp duty collected, if not already refunded. The petition was allowed.
Headnote
A) Stamp Act - Conveyance - Development Agreement - Section 2(g) and Section 3 of Gujarat Stamp Act, 1958 - The issue was whether a development agreement that permits a developer to construct on leasehold land without transferring ownership of leasehold rights is chargeable to stamp duty as a conveyance. The Court held that such an agreement is not a conveyance and does not attract stamp duty under the Act, as there is no transfer of property or interest in land. (Paras 1-5) B) Stamp Act - Levy of Stamp Duty - Instrument of Development - Section 3 of Gujarat Stamp Act, 1958 - The Court held that stamp duty is leviable only on instruments that effect a transfer of property. A development agreement that merely grants permission to develop and does not transfer ownership or leasehold rights is not an instrument of conveyance and cannot be subjected to stamp duty. (Paras 3-5)
Issue of Consideration
Whether a development agreement entered into between a leaseholder and a developer, which does not transfer ownership of leasehold rights, is liable to stamp duty as a conveyance under the Gujarat Stamp Act, 1958.
Final Decision
The petition is allowed. The impugned orders dated 03.11.2023 passed by respondent No.3 and respondent No.1 in Stamp Appeal No. 165/23 are quashed and set aside. The respondents are directed to refund the stamp duty collected, if not already refunded, within a period of eight weeks from the date of receipt of this order.
Law Points
- Development agreement does not amount to conveyance
- Stamp duty payable only on actual conveyance
- Section 2(g) of Gujarat Stamp Act
- 1958 definition of conveyance
- Section 3 of Gujarat Stamp Act
- 1958 charge of stamp duty
