The Bombay High Court has quashed additional stamp duty demand raised on a later conveyance deed, holding that where a registered agreement for sale with possession has already suffered stamp duty as a deemed conveyance, the final conveyance is only an ancillary instrument under the Maharashtra Stamp Act. The Court clarified that where a registered agreement for sale records delivery of possession, it attracts stamp duty as a conveyance under Explanation I to Article 25 of the Maharashtra Stamp Act.
Emphasising that duty once paid cannot be revisited through a later conveyance, the High Court said that after the competent authority impounded the agreement, assessed deficit duty, and accepted payment, the transaction stood duly stamped as a deemed conveyance. If the later conveyance merely completes the same transaction between the same parties and for the same consideration, it cannot be independently charged on prevailing market value.
The Court also pointed out that increase in property value is irrelevant. Authorities cannot levy additional stamp duty on the basis that the property’s market value increased by the time the formal conveyance deed was executed. Further, a mere audit objection does not nullify an earlier determination of stamp duty unless that determination is legally set aside through appropriate statutory proceedings.
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Briefly, the petitioner, Thakkar Investment & Finance Company, had entered into a registered Agreement for Sale dated 9 July 1998 with a housing society for purchase of certain lands in Pune. The agreement specifically recorded that possession of the property was handed over to the purchaser at the time of execution. Subsequently, the document was impounded by stamp authorities, and the petitioner paid the deficit stamp duty along with penalty as determined by the Collector in October 2011. Thereafter, a formal Deed of Conveyance was executed and registered on 16 January 2012 upon payment of nominal stamp duty of Rs. 100.
Later, during an audit inspection, authorities objected to the earlier treatment of the Agreement for Sale and contended that the subsequent Conveyance Deed should be independently assessed on the market value prevailing in 2011-2012. Based on this view, a demand for additional stamp duty of more than Rs. 9.27 lakh along with penalty was raised.
A Single Judge Bench of Justice Amit Borkar observed that the Agreement for Sale expressly recorded delivery of possession to the purchaser. Therefore, under Explanation I to Article 25 of Schedule I of the Maharashtra Stamp Act, such an agreement was required to be treated as a ‘deemed conveyance’ for stamp duty purposes.
The Court noted that the competent authority had already impounded the agreement, determined the stamp duty payable, accepted payment of deficit duty and penalty, and made the necessary endorsement on the document before execution of the final conveyance. Once that process was completed, the legal consequences attached to the document could not be ignored merely because an audit objection was later raised.
The Court further observed that the Agreement for Sale and the later Conveyance Deed related to the same property, the same parties, and the same consideration. There was no change in the essential terms of the transaction. The final deed was only executed to complete the transaction already embodied in the earlier agreement.
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The Court held that an increase in the property’s market value by the time of execution of the conveyance deed could not, by itself, justify treating the subsequent deed as a fresh principal instrument for stamp duty purposes. Such an approach would defeat the scheme of Section 4 of the Maharashtra Stamp Act and ignore the legal effect of the earlier agreement being treated as a deemed conveyance.
The Court also held that an audit objection could not automatically nullify the Collector’s endorsement accepting stamp duty and penalty. Unless the earlier decision was lawfully set aside through statutory proceedings, it continued to remain effective. The mere pendency of revision proceedings under Section 53A of the Maharashtra Stamp Act could not be treated as though the earlier decision had already been overturned.
