Stamp Duty on Antecedent Documents Chargeable or Not? – Is Judgment of Bombay High Court a stare-de

Recently in the matter of Lajwanti vs Shyam R. Godhwani And Vinay Jindal, a flat was auctioned through Court Receiver and Mr.Jindal was successful auction purchaser. In this certain issues came up for consideration for Hon’ble Court on subject of Stamp Duty on antecedent titles of the document. This Judgment hit headlines of all the national news papers that past unstamped documents. Whether this contention or news-line is true or false. Let us see the Judgment and analyze with existing provisions of law viz. The Maharashtra Stamp Act,1958. Following issue was framed: contention by the government authorities/stamp authorities that antecedent title documents were insufficiently stamped Facts: There were three antecedent documents of 31st August,1979, 27th June,1980 and 12th March,1994 relating to auctioned flat were insufficiently stamped or at least one of it were insufficiently stamped. Notice was issued to Sub Registrar who did not remain present. In between Jindal’s document was registered on 30th November,2018. Contention of Society: “Tahnee Heights CHSL is one of four structures on a very large piece of land on the western side of Nepean Sea Road. The entire land vested or vests even now in one of the old Petit Family Trusts. The four societies, Silver Arch, Urvashi, Rambha and Tahnee Heights do not appear to have been sub-divided, but that is not the question since it seems to be common ground that there is no conveyance of ownership from this Petit Family Trust to the Federation or partnership of these four societies that has been formed. Ms Mistry for the Tahnee Heights CHSL says that the society now anticipates, as it has long done, that when that conveyance is executed there will be a significant stamp duty liability. This will of course have to be shared by the four societies pro rata, but each society will necessarily have to recover the stamp duty liability that falls to its share from its own members. It is for this reason that Tahnee Heights seems to have insisted on a provision being made either in the form of a deposit or some order of the Court in the present matter for this anticipated liability. The figure proposed by the society is based on an opinion rendered by a consultant that it engaged for this purpose.” On this Bombay High Court observed, “Prima facie, I am unable to see how stamp can be levied on an underlying transaction or even how a flat transfer can be said to be an ‘underlying transaction’. Stamp is always attracted by an instrument and not by transaction that underlies it. Therefore if there is conveyance between the Petit Family Trust and the federation or partnership of societies or the individual societies it is that document that will attract stamp and not any other document to which it may refer or which may be attached, annexed or appended to it.” Matter thereafter was adjourned. On next date court recorded that , As regards the question of stamp duty on antecedent documents there is no clear or well considered response from that office.” Court finally observed that, “I think not; and the authority should remember that what is submitted to it is the instrument of 2018, not the instrument of 1970; the latter is only an accompaniment to trace a history of the title of the property, not to effectuate a transfer. Stamp is attracted by the instrument, not the underlying transaction, and not by any historical narrative in the instrument.” My Notes and Observations : Matter was not argued by the Stamp department and hence this was observation on the basis of facts and law put up before the Hon’ble Court. Let us discuss status of Law as on today is: Under Section 32A instruments executed on or after 4th July,1980 can be assessed for True Market Value.In given case two documents were prior to the said cut-off date. As far as document of 1994 is concerned collector has power under Section 32A to reopen the assessment. See Padma Nair vs Collector of Stamps ( AIR 1994 BOM 160, 1994 (1) BOMCR 298, 1994 (1) MHLJ 497) in which it was held that ,” it is only after the amendment made with effect from 9-12-1985 that even on agreement to sell falling within the Explanation to Item 25, stamp duty is leviable at the same rate as applicable to conveyance.” Under Article 25 stamp duty paid on such Agreements of Flats shall be adjusted at the time of executing Conveyance or Deemed Conveyance as he case may be of Land in favour of Society. Conclusion: Therefore it is erroneous to state that, past documents are not liable to scrutiny of Stamp Collector. The newspaper analysis and headlines were fallacious and misguiding. Shruti Desai 8th January,2019 Mumbai