Revenue Cannot Indirectly Reopen Stamp Duty After Six Years: Bombay High Court

The Bombay High Court has barred state revenue authorities from indirectly reassessing stamp duty on historical development agreements under the guise of taxing subsequent conveyance deeds after the six-year statutory limitation period has lapsed.

In a judgment delivered by Justice Amit Borkar, the Single Bench quashed a short-levy demand of Rs. 41.24 lakh issued by the revenue authorities, holding that the state cannot shift the starting point of limitation to a subsequent document when the underlying demand stems entirely from re-evaluating an earlier, fully-adjudicated instrument.

Court's Rationale on Revisional Powers and Limitation

The court observed that the revenue authority attempted to revisit the 2004 Development Agreement by treating it as an agreement to sell deemed to be a conveyance under Explanation I to Article 25 of Schedule I of the Bombay Stamp Act, 1958. The court held that since the original agreement had been adjudicated voluntarily and stamped under Article 5(g-a) in 2004, any exercise to revise that determination had to occur within six years of the certificate issued under Section 41.

The Court, in its reasoning, observed: "The authority cannot, for the purpose of limitation, say that the proceeding concerns only the Conveyance Deed and for calculating the stamp duty, go back and hold that the Development Agreement was a deemed Conveyance chargeable at the rate applicable in the year 2004."

It further noted: "A quasi judicial order which creates a demand of stamp duty against a party must identify the instrument in respect of which the revisional power is being exercised, the earlier certificate which is sought to be revised or reconsidered, the legal provision under which such exercise is permissible, and the date from which limitation is required to be calculated."

The Court has following directions:
"(i) The Writ Petition is allowed;
(ii) The impugned order dated 18 June 2016 passed by Respondent No.2, the Chief Controlling Revenue Authority, insofar as it holds that the Conveyance Deed in Adjudication Case No. ADJ/816/M/07 was short levied by an amount of Rs.41,24,000/-, and directs the Petitioner to pay the said amount, is quashed and set aside;
(iii) Consequently, the demand for recovery of stamp duty of Rs.41,24,000/- pursuant to the impugned order shall not survive;
(iv) Rule is made absolute in the aforesaid terms.
(v) There shall be no order as to costs."

Background

On January 16, 2004, the petitioner entered into a Development Agreement for property in Mumbai for a consideration of Rs. 10.31 crore. Prior to execution, the developer applied for adjudication under Section 31 of the Bombay Stamp Act, 1958. The Collector of Stamps determined stamp duty under Article 5(g-a) of Schedule I at Rs. 10,31,000/-, which was paid, and an endorsement under Section 41 was made on January 3, 2004.

In May 2007, the parties proposed to execute a Conveyance Deed and again sought adjudication under Section 31. The Collector of Stamps determined the duty at 5% under Article 25(b), amounting to Rs. 51,55,000/-, which was paid, and the deed was registered. However, during an audit in 2007, the Audit Team of the Accountant General raised an objection, stating that the 2004 Development Agreement was actually a conveyance with possession, attracting 10% duty prevailing in 2004. Deducting the duties paid in 2004 and 2007, the audit claimed a short levy of Rs. 41,24,000/-.

On July 1, 2011, the Chief Controlling Revenue Authority issued a notice under Section 53A of the Bombay Stamp Act, 1958. The petitioner challenged the proceedings under Articles 226 and 227 of the Constitution of India, contending that the six-year period to revise the 2004 endorsement under Section 53A(1) had expired on January 2, 2010, rendering the 2011 notice time-barred. Accepting the petitioner's contentions, the High Court set aside the impugned demand order dated June 18, 2016.

Case Details:
Case No.: WRIT PETITION NO.1856 OF 2017
Case Title: Kalpataru Properties Private Limited Vs. The State of Maharashtra & Ors.
Appearances:
For the Petitioner(s): Mr. Mayur Khandeparkar with Mr. Sarthak Utangale, and Mr. Dinesh Parmar i/by M/s. Utangale & Co.
For the Respondent(s): Smt. Mamta S. Shrivastava, AGP

Source: 2026 CaseBase(BOM) 3907