Madhya Pradesh HC: Government Sale Value Deemed Market Value for Stamp Duty

The Madhya Pradesh High Court has delivered a significant ruling clarifying that for properties sold through government auctions, the stamp duty must be calculated based on the actual sale consideration rather than prevailing guideline rates.

In a decisive verdict, Justice Milind Ramesh Phadke quashed a demand for over Rs. 5.49 crore in deficit stamp duty, holding that a statutory legal fiction exists for conveyances executed by the State, which precludes authorities from reassessing market value in the absence of fraud.

Legal Fiction and Statutory Interpretation

The dispute reached the Court after the Collector of Stamps alleged undervaluation in a sale deed executed following a transparent e-auction by the M.P. Road Development Corporation. The petitioner had purchased the Morena Bus Depot land for Rs. 67.35 crore, which was higher than the government-fixed reserve price. Despite this, the authorities demanded additional duty based on general guidelines.

The Court, in its reasoning, observed: "A plain and literal reading of the Explanation appended to Article 25 leaves no scope for ambiguity. The Legislature has consciously carved out a special category in respect of conveyances executed by or on behalf of the Central Government or the State Government. The Explanation creates a legal fiction by declaring that for such conveyances, the market value of the property shall be the value shown in the instrument itself."

Jurisdiction and Executive Instructions

The Court scrutinized the invocation of Section 48 of the Indian Stamp Act, 1899, noting that the State cannot retrospectively apply administrative circulars to reopen concluded transactions. It specifically addressed an administrative order dated July 30, 2025, which sought to apply guideline values to government sales, noting that such instructions cannot override the Constitution of India, 1950 or its amendments.

Court Rejects Alternative Remedy Objection

Rejecting the State's preliminary objection regarding the availability of an alternative remedy under the Indian Stamp (Madhya Pradesh Amendment) Act, 2016, the Court noted that since the impugned order was passed under Section 48(b) and not Section 40(1), the statutory appeal mechanism under Section 40(1)(d) was not applicable.

The Court has the following directions:

"Accordingly, the writ petition deserves to be, and is hereby, allowed. Consequently, the impugned order dated 27.10.2025 (signed on 29.10.2025), passed by Respondent No. 3 in Case No. 56/B/103/23-24, is hereby quashed and set aside. It is further declared that, in respect of the sale deed dated 16.10.2023 executed by or on behalf of the State Government in favour of the petitioner, the market value for the purpose of levy of stamp duty shall be the value disclosed in the instrument itself, in terms of the Explanation appended to Article 25 of Schedule 1-A of the Indian Stamp (Madhya Pradesh Amendment) Act, 2014. As a necessary consequence, the demand of deficit stamp duty amounting to Rs. 5,49,46,247/- with the fine imposed under Section 40(b) of the Act at the rate of 2% per month, as contained in the impugned order, also stands quashed."

Background:

The petitioner participated in a competitive e-tender for the Morena Bus Depot land. The State had fixed a reserve price of Rs. 65.27 crore after a formal assessment of market value. The petitioner emerged as the highest bidder with an offer of Rs. 67.35 crore. Following Cabinet approval and the deposition of the full amount, a sale deed was executed on October 16, 2023.

Immediately after registration, the District Registrar alleged undervaluation. The petitioner argued that under the Indian Stamp (Madhya Pradesh Amendment) Act, 2014, the value shown in instruments executed by the Government is deemed the market value. Relying on the precedent in Samdariya Builders Pvt. Ltd. v. State of M.P., the petitioner contended that the State is estopped from alleging undervaluation after conducting a transparent auction. The Court agreed, emphasizing that the Indian Stamp Act protects such transactions from arbitrary reassessment.

Case Details:
Case No.: WRIT PETITION No. 43700 of 2025
NeutralCitation: 2026:MPHC-GWL:18690
Case Title: M/S Shri Shanti Solvex Pvt. Ltd Vs. The State Of Madhya Pradesh And Others
Appearances:
For the Petitioner(s): Shri N K Gupta - Senior Advocate with Shri Y P S Rathore- Advocate
For the Respondent(s): Shri Shiraz Qureshi - Govt. Advocate

Source: 2026 CaseBase(MP) 78