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CASE NO.: Appeal (civil)  5273 of 2007

PETITIONER: STATE OF RAJASTHAN & ORS

RESPONDENT: M/S KHANDAKA JAIN JEWELLERS

DATE OF JUDGMENT: 16/11/2007

BENCH: A.K. MATHUR & MARKANDEY KATJU

JUDGMENT: J U D G M E N T  

CIVIL APPEAL NO.  5273         OF 2007 [Arising out of S.L.P.(C) No.19439 of 2006]

A.K. MATHUR, J.

1.      Leave granted.          2.      This appeal is directed against the judgment dated 23.11.2005  passed by the  Division Bench of the High Court  of Judicature for  Rajasthan at Jaipur Bench, Jaipur  in  SBCWP No. 133/1997 and DBCSA  No. 427/2002 whereby the  division bench has affirmed the order of the  learned Single Judge.   3.      Brief facts which are necessary for the disposal of this appeal  are as under:         The S.B. Civil writ petition No. 133/97  was filed by M/s  Khandaka Jain Jewellers,  petitioner (respondent herein) in the High  Court of Judicature for Rajasthan, Jaipur Bench, Jaipur  who  prayed   that a direction may be issued to the respondent Nos. 2&3    to  register the sale deeds  sent  by the  Court of additional district  Judge No. 1, Jaipur city in execution  application No. 15/94 and 16/94  and to  send back the same to the Court immediately after  registration.   It was also prayed that the respondents may be  directed to register the sale deeds on the stamps  on  which it is  executed by the executing court and  not to charge more stamp duty  from  respondent (herein).  It was  further prayed to quash and set  aside the  proceedings  taken under Section 47A(2) of the Stamps Act,  1952 in case No. 442/95 and 443/95 on 4th March, 1997 for determination  of the valuation of the  sale deed for registration.         The respondent is a registered firm and it entered into two  agreements  for purchase of properties with Shri Prem Chand Ajmera,  resident of 2148, Haldiyon Ka Rasta Jaipur by one agreement dated 20th  October, 1983.  The property was agreed to be purchased for a sum of  Rs. 1,41,000/- out of which Rs. 20,000/- were paid at the time  of the  agreement.  As the vendor failed to comply  with the terms of the  agreement,  the  respondent vendee filed a suit for specific  performance of the contract in the Court of district Judge, Jaipur  city which was later on transferred to  the Court of additional  district Judge No.1, Jaipur city under registration No. 216/86.    The  suit was decreed by  the Judgment and decree dated 2nd February,1994.    In pursuance of the said decree, the respondent firm deposited an  amount of Rs. 1,21,000/- in the Court on 9th May, 1994.   Since  the  vendor did not execute the sale deed,  therefore, the respondent firm  filed the execution application No. 16/90 before the Court of  additional district Judge No. 1, Jaipur city.                  In another agreement  dated 20TH October, 1983 the  vendor  Premchand agreed to sell a portion of property  for a sum of Rs.

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50,000/- out of which Rs. 10,000/- was paid  at the time of agreement.   The respondent firm purchased the stamp papers and got  the sale deed  typed.  In this case also the vendor failed to fulfill the condition  of  agreement and  to execute the sale deed.  Consequently,  the  respondent firm filed another suit for specific performance of the  contract in the Court of district Judge, Jaipur city. It was also  transferred to the court of additional district Judge No. 1, Jaipur  city  under registration No. 151/91.   The suit was decreed vide  judgment and decree dated 2nd February, 1994  and the respondent firm  was directed to  deposit the remaining amount of Rs. 40,000/-  and   the judgment debtor would execute the  sale deed.  If the  judgment  debtor fails  to comply with the decree,  the decree holder would be  entitled to get the sale deed registered and to get the possession. In  compliance of the judgment and decree passed by the Court,  the  respondent firm deposited an amount of Rs. 40,000/- in the court but  the judgment debtor   did not execute the sale deed.   The execution  application No. 15/94 was filed before   the Court of additional  district Judge No. 1, Jaipur city.     Both these applications No.  15/94 and 16/94 were taken up by the  executing court and the  respondent firm was directed to submit the stamp papers for the  execution of  the two sale deeds.   The stamp papers for a sum of  Rs.14,100/- and Rs. 5,000/-   for execution of the sale deeds in  respect of  properties purchased for  a sum of Rs. 1,41,000/- and    Rs. 50,000/- respectively, were  submitted by the respondent firm.  The learned executing court executed the  sale deeds and sent the  same  on 17th March, 1995   for registration before  the Sub-  registrar, Registration Department, Collectorate Bani Park, Jaipur.    The Sub-Registrar exercising its powers under Section 47A(1) of the  Stamp Act sent these two sale deeds to  Collector (Stamps) Jaipur for   determining the market value and  to assess the charge of the stamp  duty.      The Collector (stamps)   registered  these two cases No.  442/95 and 443/95 of the respondent firm  and passed the  order dated  5th March, 1997.   In case No. 442/95  he assessed value of the  property as Rs. 5,60,000/-   and deficient stamp duty was raised to  the extent of  Rs. 41,900/- and deficient registration fees as Rs  1500/- and  he also levied the penalty  of Rs. 1000/-.  Thus, the  total amount against the respondent firm  raised was Rs. 44,400/-. In  the  second  case No. 443/95  he  assessed value of the  property as  Rs. 3,87,580/-  and deficient  stamp duty to the extent of Rs.  33,758/- and  deficient registration fees as Rs. 1500/- and the  penalty of Rs. 1000/-. Thus the total amount directed to be recovered   from the respondent firm was Rs. 36,258/-.   The respondent firm   filed  writ petition  challenging  both these orders and the  contention of the respondent firm was that the  valuation of the  property should be taken when  the agreement of sale deed was  executed, and not at the time of the registration of the sale deed.   The learned  Single Judge relying on the judgment in the case of Sub  Registrat, Kodad Town and Mandal v. Amaranaini China Venkat Rao and  Others   reported in AIR 1998 Andhra Pradesh 252 allowed the writ  petition and observed that  since the vendor backed out  and did not  execute the sale deed of the property in pursuance of the  agreement  on 20th October, 1983 therefore, the respondent firm  filed  a  suit  for specific performance of contract in 1986  and the suit was  decreed.  The respondent firm was ready and willing to pay the amount,  and therefore, it was not his fault. The same was the position  regarding the second suit  which was filed in 1991.  The learned Judge  after considering the  matter directed to set aside both the orders  and held that for the purpose  of charging   stamp duty, etc, the   relevant date for assessment of the market value shall be the date on  which the suit for specific performance of the agreement to sale was  filed. Consequently the order dated 4th March, 1997  (Annexure 5 & 6)   was quashed and the authorities  were directed to  pass a fresh order  regarding the market value of the property in question for the purpose  of levy of the stamp duty as on the date of filing of the suit and  also directed to undertake this exercise keeping in view the

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observation of the judgment within a period of one month from the date  of receipt of the certified copy of the order after notice to  respondent firm. 4.      Aggrieved against this order, an  appeal was preferred before the  Division Bench of the Rajasthan High Court at Jaipur Bench and the  Division Bench affirmed the order of the  learned single Judge.   Aggrieved against the order of the Division  Bench, the present appeal  was  preferred by  the State of Rajasthan & Ors., appellants herein. 5.      We have heard learned counsel for the parties and perused the   records. 6.      The question is whether the valuation should be assessed on the  market rate prevailing at the time of registration of the sale deed or   when the parties entered into  agreement  to sell.  7.      Learned counsel for the State has submitted that the Stamp Act is  a taxing statute and a taxing statute has to be  construed  strictly.  Whatsoever may have been the consideration  for the vendor not to get  the sale deed executed   is a matter  between both  the parties, but  when the matter is before the  registering Authority the registering  Authority has to  see the valuation of the property at the market rate  at the time of  the registration as per Section 17 of the Act.   Therefore,  a notice under Section  47A of the (Rajasthan Amendment)  Stamp Duty Act was given and proper valuation was determined for  registration.  As against  this, the  learned counsel for the  respondent submitted that  Section 3  of the Act  is a charging  section.   The registering authority has to see the instrument and the  consideration mentioned therein for payment of duty as per Section 27  of the Act.  If he finds it undervalued then  he can hold an inquiry  with regard to market  value which was  prevailing at the time of  agreement to sell. 8.      In order to appreciate the  controversy involved in the matter,  it is necessary to reproduce the relevant provisions of the Stamp Act  which are as under: Section 2(12) of the Act reads as under: "(12) "Executed", and "execution", used with reference  to instruments, mean "signed" and "signature"."

Section 3 of the Act reads as under: "3. Instruments chargeable with duty -  Subject to the  provisions of this Act and the  exemptions contained  in Schedule I, the following instruments shall be  chargeable with duty of the amount indicated in that  Schedule as the proper duty therefore, respectively,  that is to say \026 (a)     every instrument mentioned in that Schedule which,  not having been previously executed by any person,  is executed in (India) on or after the first day of  July, 1899; (b)     every bill of exchange payable  otherwise than on  demand  or promissory note drawn or made out of  India on or after that  day and accepted or paid,  or presented for acceptance or payment, or  endorsed, transferred or otherwise negotiated, in  India; and (c)     every instrument (other than a bill exchange or  promissory note) mentioned in that Schedule, which,  not having been previously executed by any person,  is executed out of India  on or after that day  relates to any property  situate, or to any matter  or thing done or to be done, in India and is  received in India:

Provided that no duty shall be chargeable in respect  of- (1)     any instrument executed by, or on behalf of, or in  favour of, the Government in cases where, but for

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this exemption, the Government would be liable to  pay the duty chargeable in respect of such  instrument; (2)     any instrument for the sale, transfer or other  disposition, either absolutely or by way of  mortgage or otherwise, of any ship or vessel, or  any part, interest, share or property of or in any  ship or vessel, registered under the Merchant  Shipping Act, 1894, or under Act 19 of 1938,  or  the  Indian Registration of Ships Act, 1841 (10 of  1841) as amended by subsequent Acts. (3)     Any instrument executed, by or on behalf of, or in  favour of the Developer, or Unit or in connection  with the carrying out of purposes of the Special  Economic Zone. \005 \005"

Section 17 of the Act reads as under:

"17. Instruments executed in India \026 All instrument  chargeable with duty and executed by any person in  India shall be stamped before or at the time of  execution."

Section 27 of the Act reads as under:

"27.Facts affecting duty to be set forth in  instrument.-  The consideration (if any) and all  other facts and circumstances affecting the  chargeability of any instrument with duty,  or  the  amount of the duty with which it is chargeable,  shall be fully and truly set forth therein."

   Section 47-A inserted by  Rajasthan(Amendment)   State Stamp Act reads as under:

"S.47-A Instruments under-valued, how to be valued  \026 (1) Notwithstanding anything contained in the  Registration Act, 1908 (Central Act XVI of 1908)  and the rules made thereunder as in force in  Rajasthan where in the case of any instrument  relating to an immovable property chargeable with  an ad valorem duty on the market value of the  property as set forth in the instrument, the   registering officer has, while registering the  instruments, reason to believe that the market  value of the property has not been truly set forth  in the instrument, he may either before or after  registering the instrument, send it in original to  the Collector for determination of the market-value  and  to assess and charge the duty in conformity  with such determination together with a penalty not  exceeding ten-times the deficient stamp duty  chargeable and surcharge, if any, payable on such  instrument.

(2) On receipt of the instrument  under sub- section(1), the Collector shall, after giving the  parties a reasonable opportunity of being heard and  after holding an enquiry in the prescribed manner  determine the market-value and the duty including  penalty and surcharge, if any, payable thereon; and   if the amount of duty  including penalty and  surcharge, if any, already paid, is deficient, the

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deficient amount shall be payable by the person  liable to pay the duty including penalty and  surcharge, if any.

(2-A) Where it appears to a person having by law or  consent of parties authority to receive evidence or  a person in charge of a public office, during the  course of inspection or otherwise, except an  officer of a police, that an instrument is  undervalued, such person shall forthwith make a  reference to the Collector in that matter.

(3)The Collector may, suo motu, or on a reference  made under sub-section (2-A) call for and examine  any instrument not referred to him under sub- section (1), from any person referred to in sub- section (2-A)  or the executant or any other person  for the purpose of satisfying himself as to the  correctness of the market-value of such property  has not been truly set forth in the instrument, he  may determine in accordance with the procedure  provided in sub-section(2), the market-value and  the amount of stamp duty together with a penalty  not exceeding ten times the deficient stamp duty  chargeable on it, which shall be payable by the  person liable to pay the stamp duty and penalty.

(4)Where for any reason the original document  called for by the Collector under sub-section(3)   is not produced or cannot be produced, the  Collector may after recording the reasons for its  non-production call for a certified copy of the  entries of the document from the registering  officer concerned and exercise the powers conferred  on him under sub-section (3).

(5)For the purpose of enquiries under this section,  the Collector shall have power to summon and  enforce the attendance of witnesses including the  parties to the instrument or any of them, and to  complete the production of documents by the same  means, and so far as may be in the same manner, as  is provided in the case of Civil Court under Code  of Civil Procedure, 1908 (Central Act V of 1908)"

9.      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  "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.   10.     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

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that as per Section 3,  the instrument is to be registered on the  basis of the valuation disclosed therein.     But Section 47-A  of the  Rajasthan(Amendment) Stamp Duty Act  contemplates that in case it is  found that properties are under valued then it is open for the  Collector (Stamps)  to assess  the correct market value.    Therefore,  in the present case when the  registering  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.  The expression "execution"   read with Section 17 leaves no manner of  doubt that  the  current  valuation is to be seen when the instrument is sought to be  registered.  The Stamp Act is in the  nature of a taxing statute,  and   a taxing statute is not dependant  on any contingency.  Since the word  "execution"  read with Section 17 clearly says that  the instrument  has to be seen at the time when it is sought to be  registered and in  that if it is found that the instrument has  been undervalued then it  is  open  for the registering authority to enquire into its  correct  market value.    The learned single Judge as well as the Division  Bench in the present case had  taken into consideration that the  agreement to sell was entered into but  it was not executed.   Therefore, the incumbent  had to file a suit for  seeking a  decree  for execution of the agreement and that took a long time.  Therefore,  the Courts below concluded that the valuation which was in the  instrument should be taken into account.  In our opinion this is not a  correct approach.  Even the valuation at the time of the decree is  also not relevant.  What is relevant  in fact is the actual valuation  of the property at the time of the sale.   The crucial expression used   in Section 17 is "at the time of execution".     Therefore, the market   value of the  instrument has to be seen at the time of the execution  of the sale deed, and   not at the time  when agreement to sale was  entered into.  An agreement to sell is not a sale. An agreement to  sell becomes  a sale after both the parties signed the sale deed.  A  taxing  statute is not  contingent on the inconvenience of the  parties.   It is needless to emphasize  that a taxing statute has to  be construed  strictly and  considerations of  hardship or equity   have no role to play in its construction.   VISCOUNT SIMON quoted with  approval a passage from ROWLATT, J. expressing the  principle in the  following words " In a taxing Act one has to look merely at what   is clearly said.  There is no  room for any  intendment.  There is no equity about a tax.    There is no  presumption as to tax.   Nothing is  to be read in, nothing is to be implied.  One can  only look fairly at the language used."          11.      The same view was expressed by Hon’ble  Bhagwati J. in the  case of A.V. Fernandez v. State of  Kerala   reported in AIR 1957 SC  657.  The principle is as follows:           "In construing fiscal statutes and in determining  the liability of a subject to tax one must have  regard to the strict letter of the law.   If the  revenue satisfies the court that the case falls  strictly  within the provisions of the law,  the  subject can be taxed.  If on the other hand, the  case is not covered within the four corners of the  provisions of the taxing statute, no tax can be  imposed by inference or by analogy or by trying to  probe into the intention of the Legislature and by   considering what was the substance of the matter."

Hon’ble Shah J has formulated the principle thus:  "In interpreting a taxing statute,  equitable  considerations are entirely out of place.  Nor  can  taxing statutes be interpreted on any presumptions  or assumptions. The court must look squarely at the  

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words of the statute and interpret them.   It must  interpret a taxing statute in the light of what is  clearly expressed;  it cannot imply anything which  is not expressed;  it cannot import provisions in  the statute so as to supply any assumed  deficiency."

Therefore, a taxing statute has to be read as it is.  In other  words,  the literal rule of interpretation applies to it. 12.    In this back-ground, 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.   

13.   Learned counsel for the respondent submitted that if we  construe Section 3 read with Section 27 of the Act then the  Registering Authority is under an obligation to  only see the  value  mentioned in the instrument.  In our opinion  Section 3 which is the  charging section cannot be read  in isolation but has  to be read  along with Section 17 of the Act.  From a composite reading of   Sections 3,17 and 27,  it becomes abundantly clear that the valuation  given in an instrument is not conclusive.  If any doubt arises in the  mind of the  Registering Authority that the instrument is under- valued then as per Section 47-A of the Rajasthan (Amendment) the  instrument can be sent to the Collector for determination  of the   correct market value.  Under Section 47-A read with Sections 3,17 and  27, it becomes clear  that the  Registering Authority has to  ascertain the correct valuation given  in the instrument regarding  market value of the  property at the time of the sale. 14.  Learned Counsel for the respondent strenuously urged before us  that in fact when the agreement to sell was not executed by the   vendor,  the respondent  had no option  but  to file a suit  and  a  long time was taken  for obtaining a decree for execution of  the  agreement. He was not at fault and as such the valuation given in the  instrument should be taken into consideration because during the  litigation the valuation of the property has shot up.  In this  connection, learned counsel  has invited our attention to the  principle "Actus curie neminem gravabit" meaning thereby that no  person shall suffer on account of litigation. Hence learned counsel  submitted that  since the  matter had been in the litigation for a  long time, the respondent cannot be made to suffer.  He invited our  attention to the decision of the Andhra Pradesh High Court  Sub- Registrar, Kodad Town and Mandal (supra).   It is true that no one  should suffer on account of the pendency of the  matter but this  consideration does  not affect the Principles of  interpretation of a   taxing statute. A taxing statute has to be construed as it is  all  these contingencies  that  the matter was under litigation and the   value of  the propeprty by that time shot up cannot  be taken into  account for  interpreting the provisions of a taxing statute.  As  already mentioned above a taxing statute has to be construed strictly  and if  it is construed strictly then the plea that the incumbent  took a long time to get a decree for execution against the vendor   that consideration cannot  weigh with the Court for interpreting the  provisions of the taxing statutes.  Therefore,  simply because the  matter have been  in the litigation for a long time  that cannot  be  a consideration to accept the market value of  the instrument when  the agreement to sale was entered. As per Section 17, it clearly says    at the time  when registration is made, the  valuation is to be seen  on that basis. 15.   In the case of Sub-Registrar, Kodad Town and Mandal (Supra),   the learned single Judge of  the Andhra Pradesh High Court felt   persuaded  on account of 30 years’ long litigation and therefore,  declined to send the papers back to the Collector for valuation at

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the market value. With great respect, the view taken by the learned  single Judge is against the principles of interpretation of a  taxing  statute.  Therefore, we are of  the opinion that the view taken by  the learned single Judge of the Andhra Pradesh High Court is not  correct. 16.   Accordingly, we are of the opinion that the view taken by the  learned single Judge  as well as by the Division Bench  cannot be  sustained and the same is set aside.    The Collector shall determine  was the  valuation of  the instrument on the basis of the market  value of the property at the date when the  document was tendered by  the  respondent for registration,   and the respondent shall pay the  stamp duty charges and surcharge,  if any, as assessed by the  Collector as per the provisions of the Act.  The appeal of  the State  is allowed.  No order as to costs.