REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8388 OF 2017

Shanti Bhushan (D) thr. Lr. & Ors. …Appellants

v.
State of U.P. & Ors. ...Respondents

JUDGMENT
ABHAY S. OKA, J.

FACTUAL ASPECTS
1. The dispute involved in this appeal is about the
determination of the market value of a property at Allahabad
purchased by the appellants under a registered sale deed dated
29th November 2010 (the sale deed) from Hari Mohan Das
Tandon (the vendor). The property has been described in the
Schedule to the sale deed which reads thus:

“SCHEDULE OF THE PROPERTY”

Civil Appeal No.8388 of 2017

Page 1 of 26
 Part Portion of Free Hold Site No. 49
Civil Station, Allahabad of which Nagar
Nigam No. is 19 Old, 77/29 New, and
19­A Old 79/31 New, Lal Bahadur
Shastri Marg (Elgin Road), Allahabad
measuring 7818.00 sq.mts. land
alongwith construction and super
structure standing thereon shown in
Red Colour in the annexed map and
bounded as under:­
BOUNDARIES
East : Part Portion of Freehold Site No.
49 Civil Station, Allahabad, facing
Strachey Road which has been released
in the favour of the Sellers­ 1st Party as
per the compromise.
West : Site No. 50 Civil Station,
Allahabad

North : Elgin Road (Lal Bahadur

Shastri Marg)

South : Site No. 30 Civil Station,

Allahabad”

This property is hereinafter referred to as the sale deed property.

2. According to the case of the appellants, Bungalow No.19

and Cottage No.19­A existed on the larger property. According
to their case, in the year 1939, Bungalow No.19, together with
appurtenant land and outhouse as well as cottage no.19­A, was
taken on rent by the first appellant’s father. The appellants
claimed to be protected tenants under the United Provinces

Civil Appeal No.8388 of 2017

Page 2 of 26
 (Temporary) Control of Rent and Eviction Act, 1947 and
subsequently under the U.P. Urban Buildings (Regulation of
Letting, Rent and Eviction) Act 1972. According to the case
made out by the appellants, by two letters dated 2 nd September
1966 and 10th September 1966, the vendor agreed to sell the
sale deed property to the first appellant’s father for a total sale
consideration of Rs. 1 lakh. A sum of Rs. 5000/­ was paid to
the vendor as earnest money. The land was a leasehold land. It
was converted into a freehold land on 8th June 2000 by virtue of
a freehold deed executed in favour of the vendor. The first
appellant filed a suit for specific performance in the same year.

3. On 29th September 2010, a compromise was arrived at

between the vendor and the appellants under which the
appellants agreed to give up approximately 1/3 rd of the land
which was a part of the original agreement for sale covered by
the aforesaid two letters, and agreed to take land measuring
7818 sq. meters along with existing structures for the same
consideration which was fixed in the year 1966. An application
to record compromise was made in the pending suit on 5 th
October 2010. On the basis of the said compromise, on 12 th
October 2010, an agreement for sale was executed by and
between the parties. A compromise decree was passed by the
Civil Court on 16th November 2010.

Civil Appeal No.8388 of 2017

Page 3 of 26
 4. Prior to the execution of a fresh agreement for sale, on 29 th
September 2010, the appellants filed an application under
Section 31 r/w 32 of the Indian Stamp Act, 1899 (for short ‘the
Stamp Act’) for adjudication of the stamp duty payable on the
sale deed by forwarding a copy of the proposed sale deed.
However, no adjudication was made. On 29 th November 2010,
the sale deed was executed by the vendor in favour of the
appellants.

5. Two notices were issued to the appellants on 8 th February

2011 and 15th April 2011 by the Assistant Stamp Commissioner
in the exercise of powers under Section 47­A of the Stamp Act,
informing the appellants that the Assistant Stamp Collector was
considering the question of payment of appropriate stamp duty
on the sale deed.

6. We may note here that by using the rent capitalisation

method, the appellants calculated Rs.6,67,200/­ as the market
value of the sale deed property and paid the stamp duty on the
said market value quantified at Rs. 46,700/­. In the notice
dated 15th April 2011, it was alleged that the deficiency in the
stamp duty was to the extent of Rs.1,33,07,900/­. The
appellants contested the notices by filing written submissions.
The Assistant Stamp Collector, by order dated 6 th January 2012,
held that the market value of the land having an area of 7818
sq. meters will have to be calculated at the rate of Rs. 24,000/­

Civil Appeal No.8388 of 2017

Page 4 of 26
 per sq. meter. The Assistant Collector noted that four sales had
taken place in 2010 in respect of a part of the same property
showing the market value at Rs.24,000/­ per sq. meter. By
calculating the market value of the land at Rs.24,000/­ per sq.
meter, the Assistant Stamp Collector added the value of the
structures as well as mango trees. The Collector came to the
conclusion that on the date of the sale deed, the market value of
the sale deed property was Rs.19,23,08,305/­ on which stamp
duty of Rs.1,34,61,630/­ was payable. Taking into account the
stamp duty of Rs. 46,700/­ paid by the appellants, they were
directed to pay a deficit stamp duty of Rs.1,34,14,930/­. A
penalty of Rs. 27,00,000/­ was imposed on the appellants.
Moreover, they were directed to pay interest at the rate of 1.5%
per month on the deficit stamp duty from the date of the sale
deed till the realisation of the amount.

7. According to the case of the appellants, on 1 st February

2012, they paid a stamp duty of Rs.70 lakhs by demand draft as
coercive action was likely to be taken against them. The
appellants preferred an appeal against the order dated 6 th
January 2012, which was dismissed by the Appellate Authority.
The appellants deposited an additional amount of Rs. 30 lakhs
towards the stamp duty on 9th November 2012. The orders of
the Assistant Collector and the Appellate Authority were
subjected to a challenge by the appellants before the Allahabad

Civil Appeal No.8388 of 2017

Page 5 of 26
 High Court by invoking writ jurisdiction under Article 226 of the
Constitution. While affirming the market value fixed by the
authorities, the High Court granted limited relief to the
appellants vide judgment dated 23rd January 2013. The limited
relief was of setting aside the demand of the penalty of
Rs.27,00,000/­. The present appeal is directed against the
judgment and order of the High Court.

SUBMISSIONS

8. Shri Jayant Bhushan, the learned senior counsel who is

appellant no.3, appeared in person and made submissions on
his behalf as well as on behalf of the other appellants. He has
taken us through the facts leading to the filing of the writ
petition. Learned senior counsel submitted that though the
appellants were entitled to purchase total land measuring 11428
sq. meters as per the agreement for sale, they agreed to give up
an area of 3614 sq. meters by agreeing to purchase a lesser area
of 7814 sq. meters. However, the agreed monetary consideration
was not reduced.

9. The learned senior counsel submitted that the first

appellant’s father was already inducted in the sale deed property
as a tenant. He submitted that when a property is in possession
of a tenant, the market value considerably diminishes. He
stated that when a willing purchaser acquires a property in
possession of a tenant, he is aware that he will have to follow a
Civil Appeal No.8388 of 2017
Page 6 of 26
 long process of law to evict the tenant. Therefore, the value
fetched by such property is less than the market value of a
comparable property which is in possession of the owners. He
urged that the sale, in this case, was of an encumbered property
which was on “as is where is” basis.

10. The learned senior counsel submitted that the market

value of a property is ascertained by applying the test of what a
willing buyer would pay. He submitted that while determining
the market value of a property in possession of a tenant, when
the property is sold to the tenant, the market value has to be
apportioned as per the principles laid down in several decisions
of this Court in connection with fixation of the market value of
the acquired land under the Land Acquisition Act, 1894. He
relied upon decisions of this Court in the case of Special Land
Acquisition & Rehabilitation Officer, Sagar v. M.S.
Seshagiri Rao & Another1 and Mangat Ram and Others v.
State of Haryana and others2. He submitted that the market
value is liable to be reduced if there are encumbrances on the
property. The market value will be the real market value minus
the value of encumbrances or liabilities. He relied upon a
decision of the Delhi High Court in the case of O.N. Talwar v.
The Collector of Stamps3.

1 (1968) 2 SCR 892

2 (1996) 8 SCC 664
3 (1971) 7 DLT 319

Civil Appeal No.8388 of 2017

Page 7 of 26
 11. He submitted that the market value of the property further
diminishes due to the fact that there was already an agreement
of sale in favour of the appellants under which the vendor had
agreed to sell the property for a price of Rs. 1 lakh.

12. He submitted that though an application for adjudication

of the stamp duty payable on the proposed sale deed was
submitted, there was no response to the said application, and on
that ground, the order of penalty imposed by the Assistant
Collector has been set aside by the High Court.

13. He submitted that as per the compromise between the

vendor and the appellants, the consideration agreed to be paid
by the appellants was of Rs.1 lakh plus the release of 1/3 rd of
the property. He submitted that the actual conveyed property to
the appellants was 2/3rd of the land in respect of which they
were tenants. Therefore, the value of 2/3 rd land would be 2/3rd x
(1/3rd of the value of the entire land plus Rs.1 lakh). He
submitted that the market value will have to be calculated
accordingly.

14. The learned senior counsel also pointed out that even the
direction to pay interest @ 1.5% per month under Section 47­A
(4A) of the Stamp Act was not justified as even before the
execution of the sale deed, the appellants had voluntarily sought
adjudication of the amount payable by way of stamp duty on the

Civil Appeal No.8388 of 2017

Page 8 of 26
 draft sale deed. Moreover, he pointed out that by interim order
dated 23rd September 2013, the High Court had stayed the
recovery proceedings. Lastly, he pointed out that a total amount
of Rs.1 crore has already been deposited by the appellants.

15. Shri R. K. Raizada, learned senior counsel, submitted on

behalf of the State that stamp duty payable by the appellants is
to be calculated as per the prevailing market value of the sale
deed land on the date of the execution of the sale deed. He
submitted that the value of the property fixed by the parties
under the agreement for sale has no relevance to the
determination of the market value. The learned senior counsel
submitted that even the consideration amount shown in the
compromise decree has no relevance. He submitted that when a
tenant purchases an immovable property, he becomes full owner
of the property, and he takes the property without any
encumbrances. The learned senior counsel submitted that the
determination of rateable value for the purposes of
determination of property taxes is always made on the basis of
hypothetical rent which the property may fetch. He submitted
that the rateable value fixed under municipal laws is not the
market value for the purposes of the Stamp Act. He would
submit that the Assistant Collector, the Appellate Authority, and
the High Court have concurrently held that the appellants are

Civil Appeal No.8388 of 2017

Page 9 of 26
 liable to pay deficit stamp duty. The said orders call for no
interference.

16. As far as the determination of market value is concerned,

learned senior counsel appearing for the appellants relied upon
the decision of Karnataka High Court in the case of The
Commissioner of Wealth Tax Mysore, Bangalore v. V.C.
Ramachandran4.

CONSIDERATION OF SUBMISSIONS AND OUR VIEWS

17. It is not in dispute that stamp duty on a conveyance will

be payable as per the market value prevailing on the date of
conveyance. In fact, the appellants themselves have relied upon
Article 23 of Schedule IB of the Stamp Act as applicable to the
State of Uttar Pradesh. They have placed reliance on the said
provision in their written submissions filed before the Assistant
Collector. Paragraphs 2 to 4 of their written submissions read
thus:
“2. The stamp duty payable on a sale deed
is governed by Article 23 of Schedule I of the
Indian Stamp Act. In the Central Act, Article
23 a stamp duty is payable on the value of
the consideration of such conveyance as set
forth in the sale deed. The consideration as
contained in the sale deed is Rs.1 lakh and
therefore, if the sale deed was governed by
the Central Act only, without the UP

4 (1966) 60 ITR 103.

Civil Appeal No.8388 of 2017

Page 10 of 26
 Amendment the Stamp Duty would have
been payable on the amount of Rs.1 lakh.
3. However, the Indian Stamp Act in its
application to UP has been amended by the
UP (Stamp Amendment Act 1952) and
Article 23 of Schedule IB as applicable to UP
provides as below:­
"Article 23 conveyance (as defined by
Section 2 (10) not being a transfer
charge or exempt under No.62. Where
the amount or value of the
consideration of such conveyance
as set forth therein or market value
of the property which is the subject
of such conveyance, whichever is
greater…….”
4. So this provision which is applicable to
the case in hand provides that if the market
value of the immovable property is higher
than the value of the consideration as set
forth in the deed of conveyance, the stamp
duty will be payable on the market value of
the immovable property which is the subject
matter of the conveyance deed.”
(emphasis added)
Article 23 of Schedule IB applicable to the State of Uttar
Pradesh, reads thus: ­

“Description of Instrument Proper Stamp­duty

23. Conveyance [as defined Sixty rupees.

by section 2(10)] not being a
Transfer charged or

Civil Appeal No.8388 of 2017

Page 11 of 26
 exempted under No.62 –
(a) if relating to immovable
property where the amount
or value of the consideration
of such conveyance as set
forth therein or the market
value of the immovable
property which is the subject
of such conveyance,
whichever is greater does not
exceed Rs.500.
Where it exceeds Rs.500 One hundred and
but does not exceed twenty­five rupees.
Rs.1,000.
and for every Rs.1,000 One hundred and
or part thereof in excess twenty­five rupees.
or Rs.1,000.
Provided that the
duty payable shall
be rounded off to the
next multiple of ten
rupees.

(b) if relating to movable Twenty rupees

property where the amount
or value of the consideration
of such conveyance as set
forth therein does not exceed
Rs.1,000.
and for every Rs.1,000 Twenty rupees”
or part thereof in excess
of Rs.1,000.

18. At this stage, we may note that the Stamp Act is a taxing
statute. In interpreting such a statute, equitable considerations

Civil Appeal No.8388 of 2017

Page 12 of 26
 cannot be applied. A taxing statute has to be interpreted in
accordance with what is clearly expressed therein. While
interpreting such a statute and determining the liability to pay
tax, the provisions are required to be construed strictly. In other
words, the rule of literal construction must be applied while
interpreting a taxing statute. It must be interpreted in terms of
the natural construction of the words used. There is no scope to
imply anything which is not expressly provided.

19. In view of Article 23 of Schedule I of the Stamp Act, the

stamp duty payable on a conveyance will be in accordance with
the market value of the subject property on the date of the
conveyance unless the consideration shown therein is more than
the prevailing market value. A useful reference can be made to
a decision of this Court in the case of the State of Rajasthan
and others v. Khandaka Jain Jewellers5. Paragraphs 18 and
19 of the said decision read thus:

“18. The contention of the learned

counsel for the State that as per Section
17 of the Act, the market value has to be
taken into consideration because Section
17 stipulates that all the instruments
chargeable with duty and executed by
person of India shall be stamped before or
“at the time of execution”. The word
“execution” has been defined in Section
2(12) of the Act which says that
5 (2007) 14 SCC 339

Civil Appeal No.8388 of 2017

Page 13 of 26
 “execution” used with reference to the
instruments, mean “signed” and
“signature”. Therefore, it shows that the
document which is sought to be
registered has to be signed by both the
parties. Till that time the document does
not become an instrument for
registration. A reading of Section 2(12)
with Section 17 clearly contemplates that
the document should be complete in all
respects when both the parties should
have signed it with regard to the transfer
of the immovable property. It is irrelevant
whether the matter had gone in for
litigation.

19. It may be mentioned that there is a

difference between an agreement to
sell and a sale. Stamp duty on a sale
has to be assessed on the market value
of the property at the time of the sale,
and not at the time of the prior
agreement to sell, nor at the time of
filing of the suit. This is evident from
Section 17 of the Act. It is true that as
per Section 3, the instrument is to be
registered on the basis of the valuation
disclosed therein. But Section 47­A of
the Rajasthan (Amendment) Stamp
Duty Act contemplates that in case it
is found that properties are
undervalued then it is open for the
Collector (Stamps) to assess the
correct market value. Therefore, in the
present case when the registering

Civil Appeal No.8388 of 2017

Page 14 of 26
 authority found that valuation of the
property was not correct as mentioned in
the instrument, it sent the document to
the Collector for ascertaining the correct
market value of the property.”

(emphasis added)
Ultimately in paragraph 22, this Court held thus:

“22. In this background, if we construe

Section 17 read with Section 2(12) then
there is no manner of doubt that at the
time of registration, the registering
authority is under an obligation to
ascertain the correct market value at
that time, and should not go by the
value mentioned in the instrument.”
(emphasis added)

20. Hence, when a sale deed is presented for registration, the

registering authority must ascertain the correct market value of
the property subject matter of the document on the date of
execution of the document. The stamp duty is payable on the
basis of such market value and not on the consideration
mentioned in the document. If the consideration mentioned is
more than the market value, the stamp duty will be payable on
the consideration shown. Moreover, the market value
mentioned in the agreement for sale or the market value
prevailing on the date of the agreement or the market value
prevailing on the date on which the bargain was struck is of no
relevance for deciding the stamp duty. The relevant market

Civil Appeal No.8388 of 2017

Page 15 of 26
 value is the one which prevails on the date of execution of the
conveyance. Therefore, we have no manner of doubt that the
appellants were under an obligation to pay stamp duty
calculated on the market value of the sale deed property on the
date of execution of the sale deed.

21. As stated earlier, stamp duty was paid by the appellants by

taking the market value of the sale deed property at
Rs.6,67,200/­. This market value was fixed by adopting method
used for levy of property tax under the Municipal laws. Such a
value cannot be taken as the basis for determining the market
value for the purposes of Article 23.

22. Now we turn to the provisions of Section 47­A of the Stamp

Act as applicable to the State of Uttar Pradesh at the relevant
time. Section 47­A reads thus:

"47A. Instruments of conveyance etc., if

undervalued, how to be dealt with: – (1)(a)
If the market value of any property which is
the subject of any instrument on which
duty is chargeable on the market value of
the property as set forth in such instrument
is less than even the minimum value
determined in accordance with the rules
made under the Act, the registering officer
appointed under the Registration Act, 1908
shall, notwithstanding anything contained
in the said Act, immediately after
presentation of such instrument and before
accepting it for registration and taking any
Civil Appeal No.8388 of 2017
Page 16 of 26
 action under section 52 of the said Act,
require the person liable to pay stamp duty
under section 29, to pay the deficit stamp
duty as computed on the basis of the
minimum value determined in accordance
with the said rules and return the
instrument for presenting again in
accordance with section 23 of the
Registration Act, 1908.
(b) When the deficit stamp duty required to
be paid under clause (a), is paid in respect
of any instrument and the instrument is
presented again for registration, the
registering officer shall certify by
endorsement thereon, that the deficit stamp
duty has been paid in respect thereof and
the name and the residence of the person
paying them and register the same.
(c) Notwithstanding anything contained in
any other provisions of this Act, the deficit
stamp duty may be paid under clause (a) in
the form of impressed stamp containing
such declaration as may be prescribed.
(d) If any person does not make the
payment of deficit stamp duty after
receiving the order referred to in clause (a)
and presents the instrument again for
registration, the registering officer shall,
before registering the instrument, refer the
same to the Collector for determination of
the market value of the property and the
proper duty payable thereon.
(2) Without prejudice to the provisions of
sub­section (1), if such Registering Officer,
while registering any instrument on which

Civil Appeal No.8388 of 2017

Page 17 of 26
 duty is chargeable on the market­value of
the property, has reason to believe that the
market­value of the property, which is the
subject of such instrument, has not been
truly set forth in the instrument, he may,
after registering such instrument, refer the
same to the Collector for determination of
the market­value of such property and the
proper duty payable thereon­
(3) On receipt of a reference under sub­
section (1) or sub­section (2), the Collector
shall, after giving the parties a reasonable
opportunity of being heard and after holding
an enquiry in such manner as may be
prescribed by rules made under this Act,
determine the market value of the property
which is the subject of the instrument and
the duty as aforesaid. The difference, any,
in the amount of duty shall be payable by
the person liable to pay the duty.
Explanation. ­ The payment of deficit
stamp duty by any person under any
order of registering officer under sub­
section (1) shall not prevent the Collector
from initiating proceedings on any
instrument under sub­section (3).
(4) The Collector may, suo motu, or on a
reference from any court or from the
Commissioner of Stamps or an Additional
Commissioner of Stamps, or a Deputy
Commissioner of Stamps or an Assistant
Commissioner of Stamps or any Officer
authorized by the Board of Revenue in that
behalf, within four years from the date of
registration of any instrument on which
duty is chargeable on the market value of
Civil Appeal No.8388 of 2017
Page 18 of 26
 the property, not already referred to him
under sub­section (1) or sub­section (2), call
for and examine the instrument for the
purpose of satisfying himself as to the
correctness of the market value of the
property which is the subject of such
instrument and the duty payable thereon
and if after such examination, he has
reason to believe that the market value of
such property has not been truly set forth
in the instrument, he may determine the
market value of such property and the duty
payable thereon in accordance with the
procedure provided for in sub­section (3).
The difference, if any, in the amount of duty
shall be payable by the person liable to pay
the duty.
Provided that, with the prior permission
of the State Government, an action
under this sub­section may be taken
after the period of four years but before
the period of eight years from the date of
the registration of the instrument on
which the duty is chargeable on the
market value of the property.
Explanation ­ The payment of deficit
stamp duty by any person by any order
of the registering officer under sub­
section (1) shall not prevent the Collector
from initiating proceedings on any
instrument under sub­section (3).
(4) If on enquiry under sub­section (2) and
examination under sub­section (3) the
Collector finds the market value of the
property –

Civil Appeal No.8388 of 2017

Page 19 of 26
 (i) truly set forth and the document duly
stamped, he shall certify by endorsement
that it is duly stamped and return it to
the person who made the reference;
ii) not truly set forth and not truly
stamped, he shall require the payment of
the proper duty or the amount required
to make up the deficiency in the same
together with a penalty of an amount not
exceeding four times the amount of
proper duty or the deficit portion thereof.
(4A) The Collector shall also require along
with the deficit stamp duty or penalty
required to be paid under clause (ii) of sub­
section (4), the payment of a simple interest
at the rate of one and half per cent per
mensem on the amount of deficit stamp
duty calculated from the date of the
execution of the instrument till the date of
actual payment:
Provided that the amount of interest
under this sub­section shall be
recalculated if the amount of deficit
stamp duty is varied on appeal or
revision or by any order of a competent
Court or authority.
(4B) The amount of interest payable under
sub­section (4A) shall be added to the
amount due and be also deemed for all
purposes to be part of the amount required
to be paid.
(4C) Where realisation of the deficit stamp
duty remained stayed by any order of any
Court or authority and such order of stay is

Civil Appeal No.8388 of 2017

Page 20 of 26
 subsequently vacated, the interest referred
to in sub­section (4A) shall be payable also
for any period during which such order of
stay remained in operation.
(4D) Any amount paid or deposited by, or
recovered from, or refundable to, a person
under the provision of this Act, shall first be
adjusted towards the deficit stamp duty or
penalty outstanding against him and the
excess, if any, shall then be adjusted
towards the interest, if any, due from him.”

23. Accordingly, in this case, an adjudication was made by the

Assistant Stamp Collector. After inspection of the sale deed
property, the Assistant Stamp Collector came to the conclusion
that the description of the property in the sale deed was
incorrect. The Assistant Collector observed that in the sale
deed, the covered area of the land is shown as 970 meters, but
actually, it was found to be 995 sq. meters. The Assistant
Collector referred to four sale transactions of the year 2010
which were in relation to the properties which were a part of the
same larger property wherein the market value shown was Rs.
24,000/­ per sq. meter. The determination of market value by
taking the market value at Rs. 24,000/­ per sq. meters has been
approved by the Assistant Collector, Appellate Authority and the
High Court.

24. It appears to be an accepted position that the appellants

were tenants of the vendor in respect of the sale deed property.

Civil Appeal No.8388 of 2017

Page 21 of 26
 The test for determination of the market value is very simple.
The market value is the one which a bona fide and willing buyer
will offer. It is apparent that if the property subject matter of the
sale is in possession of the vendor himself, the bona fide
purchaser will offer more price for the property than the price
which he may offer for a similar property which is in possession
of a tenant. There is no doubt that a property in possession of a
tenant or tenants will fetch lesser value in the open market than
the market value of a similar property exclusively in possession
of the vendor. The reason is that the buyer will not get actual
possession of the portion of the property in possession of the
tenant.

25. The market value can be determined by the comparison

method even in case of a property in possession of tenants. For
example, if there is a sale transaction of a property in possession
of a tenant which is comparable to the property sought to be
valued and if the said sale transaction is held to be a genuine
transaction, market value can be fixed on the basis of the sale
transaction. If no comparable instances are found, the market
value can be fixed of the property in possession of tenants by
making an appropriate deduction from the market value of a
comparable property in which there are no tenants.

26. In the written submissions, the learned counsel appearing

in person has suggested a formula for calculating the market

Civil Appeal No.8388 of 2017

Page 22 of 26
 value by taking into consideration the market value on the date
of agreement for sale (1966) and the market value of the 1/3 rd of
the land given up by the appellants by way of compromise.
However, this contention is obviously not acceptable as the
market value of the property sold will have to be determined on
the date of execution of the sale deed.

27. The Assistant Collector, the Appellate Authority, and the

High Court have not decided the issue in terms of what we have
held above. Even if the guidance value of Rs. 24,000/­ per sq.
meter is to be taken as the market value of the sale deed land,
necessary deductions will have to be made from the market
value as the appellants were already in possession of the sale
deed land as tenants. The extent to which deduction can be
made will depend upon the nature of the tenancy and other
material factors. Some tenancies may be protected under the
relevant rent control legislation, whereas some may not be
protected. That is all a matter of evidence.

28. The issue regarding the market value of the sale deed land
on the date of execution of the sale deed is required to be
decided by permitting the parties to adduce oral and
documentary evidence. The Assistant Collector will have to
ascertain whether a comparable sale instance of a property in
possession of tenants is available. If it is not available, the
Assistant Collector will have to ascertain the market value of the

Civil Appeal No.8388 of 2017

Page 23 of 26
 sale deed property on the relevant date again by comparison
method by taking market value of a comparable property which
does not have encumbrance of tenancy. Thereafter, he will have
to determine the percentage of the deduction which should be
made from the market value in the facts of this case. These
questions are to be decided by the Assistant Collector on the
basis of the evidence on record. Therefore, subject to what we
have held in the judgment, we propose to send back the case to
the Assistant Stamp Collector for determination of the market
value of the sale deed land on the date of execution of the sale
deed.

29. The appellants have already deposited a sum of Rs.1 crore

towards the amount made payable by them. The sum amount
will be subject to the final adjudication by the Assistant Stamp
Collector. If the Assistant Stamp Collector comes to the
conclusion that the market value of the land and structures is
lesser than what was determined earlier by the Assistant Stamp
Collector, the appellants will be entitled to a refund of the excess
amount paid with interest at the rate of 8% per annum from the
date on which the amount was paid till the date on which the
refund is made. If it is found that the deficit stamp duty exceeds
Rs.1 crore, the appellants will have to make good the said
amount. Sub­section 4A of Section 47A is in mandatory terms.
The use of the word ‘shall’ make it clear that the Collector has

Civil Appeal No.8388 of 2017

Page 24 of 26
 no choice but to impose interest at the rate of 1.5% per month
on the deficit amount. We are not disturbing the judgment of
the High Court insofar as it relates to penalty as the State
Government has not challenged that part.

30. Hence, we set aside the impugned judgment of the High

Court as well as the judgment of the Assistant Stamp Collector
and the Appellate Authority and remand the case for fresh
consideration to the Assistant Stamp Collector. However, we
confirm that part of the impugned judgment of the High Court,
by which it was held that the appellants are not liable to pay
penalty. The Assistant Stamp Collector shall permit the
appellants to lead evidence on the issue of valuation. The
Assistant Stamp Collector is directed to conclude the
proceedings as early as possible and preferably within a period
of six months from today.

31. The appeal is, accordingly, allowed on the above terms

with no order as to costs.

.…….….…..………J.
(Abhay S. Oka)

.…….………...……J.
(Rajesh Bindal)
New Delhi;
April 25, 2023.

Civil Appeal No.8388 of 2017

Page 25 of 26
Civil Appeal No.8388 of 2017
Page 26 of 26
 TM
This is a True Court Copy of the judgment as appearing on the Court website.
Publisher has only added the page para for convenience in referencing.