/2023 INSC 0332/
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
  CIVIL APPEAL NO. 8388 OF 2017
Shanti Bhushan (D) thr. Lr. & Ors.               …Appellants
 
        v.
State of U.P. & Ors.     ...Respondents
J U D G M E N T
ABHAY S. OKA, J.
FACTUAL ASPECTS
1. The   dispute   involved   in   this   appeal   is   about   the
determination   of   the   market   value   of   a   property   at   Allahabad
purchased by the appellants under a registered sale deed dated
29 th
  November   2010   (the   sale   deed)   from   Hari   Mohan   Das
Tandon   (the   vendor).     The   property   has   been   described   in   the
Schedule to the sale deed which reads thus:  
“SCHEDULE OF THE PROPERTY”
Civil Appeal No.8388 of 2017
Page  1  of  26

Part   Portion   of   Free   Hold   Site   No.   49
Civil Station, Allahabad of which Nagar
Nigam   No.   is   19   Old,   77/29   New,   and
19­A   Old   79/31   New,   Lal   Bahadur
Shastri   Marg   (Elgin   Road),   Allahabad
measuring   7818.00   sq.mts.   land
alongwith   construction   and   super
structure   standing   thereon   shown   in
Red   Colour   in   the   annexed   map   and
bounded as under:­
BOUNDARIES
East :   Part Portion of Freehold Site No.
49   Civil       Station,   Allahabad,   facing
Strachey Road which has been released
in the favour of the Sellers­ 1st Party as
per the compromise.
West   :   Site   No.   50   Civil   Station,
Allahabad
North   :   Elgin   Road   (Lal   Bahadur
Shastri Marg)
South   :   Site   No.   30   Civil   Station,
Allahabad”
This property is hereinafter referred to as the sale deed property.
2. According   to   the   case   of   the   appellants,   Bungalow   No.19
and   Cottage   No.19­A   existed   on   the   larger   property.     According
to   their   case,   in   the   year   1939,   Bungalow   No.19,   together   with
appurtenant land and outhouse as well as cottage no.19­A, was
taken   on   rent   by   the   first   appellant’s   father.   The   appellants
claimed   to   be   protected   tenants   under   the   United   Provinces
Civil Appeal No.8388 of 2017
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(Temporary)   Control   of   Rent   and   Eviction   Act,   1947   and
subsequently   under   the   U.P.   Urban   Buildings   (Regulation   of
Letting,   Rent   and   Eviction)   Act   1972.     According   to   the   case
made out by the appellants, by  two letters dated 2 nd
  September
1966   and   10 th
  September   1966,   the   vendor   agreed   to   sell   the
sale   deed   property   to   the   first   appellant’s   father   for   a   total   sale
consideration   of   Rs.   1   lakh.     A   sum   of   Rs.   5000/­   was   paid   to
the vendor as earnest money.  The land was a leasehold land. It
was converted into a freehold land on 8 th
 June 2000 by virtue of
a   freehold   deed   executed   in   favour   of   the   vendor.     The   first
appellant filed a suit for specific performance in the same year.
3. On   29 th
  September   2010,   a   compromise   was   arrived   at
between   the   vendor   and   the   appellants   under   which   the
appellants   agreed   to   give   up   approximately   1/3 rd
  of   the   land
which   was   a   part   of   the   original   agreement   for   sale   covered   by
the   aforesaid   two   letters,   and   agreed   to   take   land   measuring
7818   sq.   meters   along   with   existing   structures   for   the   same
consideration which was fixed in the year 1966.   An application
to   record   compromise   was   made   in   the   pending   suit   on   5 th
October   2010.   On   the   basis   of   the   said   compromise,   on   12 th
October   2010,   an   agreement   for   sale   was   executed   by   and
between   the   parties.     A   compromise   decree   was   passed   by   the
Civil Court on 16 th
 November 2010.
Civil Appeal No.8388 of 2017
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4. Prior to the execution of a fresh agreement for sale, on 29 th
September   2010,   the   appellants   filed   an   application   under
Section 31 r/w 32 of the Indian Stamp Act, 1899 (for short ‘the
Stamp   Act’)   for   adjudication   of   the   stamp   duty   payable   on   the
sale   deed   by   forwarding   a   copy   of   the   proposed   sale   deed.
However,   no   adjudication   was   made.     On   29 th
  November   2010,
the   sale   deed   was   executed   by   the   vendor   in   favour   of   the
appellants.
5. Two notices were issued to the appellants on 8 th
  February
2011 and 15 th
 April 2011 by the Assistant Stamp Commissioner
in   the  exercise   of   powers  under   Section  47­A  of  the   Stamp   Act,
informing the appellants that the Assistant Stamp Collector was
considering   the   question   of   payment   of   appropriate   stamp   duty
on the sale deed.
6. We   may   note   here   that   by   using   the   rent   capitalisation
method,   the   appellants   calculated   Rs.6,67,200/­   as   the   market
value of the sale deed property and paid the stamp duty on the
said   market   value   quantified   at   Rs.   46,700/­.     In   the   notice
dated   15 th
  April   2011,   it   was   alleged   that   the   deficiency   in   the
stamp   duty   was   to   the   extent   of   Rs.1,33,07,900/­.     The
appellants   contested   the   notices   by   filing   written   submissions.
The Assistant Stamp Collector, by order dated 6 th
 January 2012,
held   that   the   market   value   of   the   land   having   an   area   of   7818
sq. meters will have to be calculated at the rate of Rs. 24,000/­
Civil Appeal No.8388 of 2017
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per sq. meter. The Assistant Collector noted that four sales had
taken   place   in   2010   in   respect   of   a   part   of   the   same   property
showing   the   market   value   at   Rs.24,000/­   per   sq.   meter.     By
calculating   the  market  value   of   the   land  at  Rs.24,000/­   per   sq.
meter,   the   Assistant   Stamp   Collector   added   the   value   of   the
structures   as   well   as   mango   trees.     The   Collector   came   to   the
conclusion that on the date of the sale deed, the market value of
the   sale   deed   property   was   Rs.19,23,08,305/­   on   which   stamp
duty of Rs.1,34,61,630/­ was payable.   Taking into account the
stamp   duty   of   Rs.   46,700/­   paid   by   the   appellants,   they   were
directed   to   pay   a   deficit   stamp   duty   of   Rs.1,34,14,930/­.     A
penalty   of   Rs.   27,00,000/­   was   imposed   on   the   appellants.
Moreover, they were directed to pay interest at the rate of 1.5%
per   month   on   the   deficit   stamp   duty   from   the   date   of   the   sale
deed till the realisation of the amount.
7. According   to   the   case   of   the   appellants,   on   1 st
  February
2012, they paid a stamp duty of Rs.70 lakhs by demand draft as
coercive   action   was   likely   to   be   taken   against   them.     The
appellants   preferred   an   appeal   against   the   order   dated   6 th
January 2012, which was dismissed by the Appellate Authority.
The   appellants   deposited   an   additional   amount   of   Rs.   30   lakhs
towards   the   stamp   duty   on   9 th
  November   2012.     The   orders   of
the   Assistant   Collector   and   the   Appellate   Authority   were
subjected to a  challenge by the appellants before the Allahabad
Civil Appeal No.8388 of 2017
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High Court by invoking writ jurisdiction under Article 226 of the
Constitution.     While   affirming   the   market   value   fixed   by   the
authorities,   the   High   Court   granted   limited   relief   to   the
appellants vide judgment dated 23 rd
  January 2013.   The limited
relief   was   of   setting   aside   the   demand   of   the   penalty   of
Rs.27,00,000/­.     The   present   appeal   is   directed   against   the
judgment and order of the High Court. 
SUBMISSIONS
8. Shri   Jayant   Bhushan,   the   learned   senior   counsel   who   is
appellant   no.3,   appeared   in   person   and   made   submissions   on
his  behalf  as  well  as  on  behalf  of  the  other  appellants.    He  has
taken   us   through   the   facts   leading   to   the   filing   of   the   writ
petition.     Learned   senior   counsel   submitted   that   though   the
appellants were entitled to purchase total land measuring 11428
sq. meters as per the agreement for sale, they agreed to give up
an area of 3614 sq. meters by agreeing to purchase a lesser area
of 7814 sq. meters. However, the agreed monetary consideration
was not reduced.
9. The   learned   senior   counsel   submitted   that   the   first
appellant’s father was already inducted in the sale deed property
as a tenant.  He submitted that when a property is in possession
of   a   tenant,   the   market   value   considerably   diminishes.     He
stated   that   when   a   willing   purchaser   acquires   a   property   in
possession of a tenant, he is aware that he will have to follow a
Civil Appeal No.8388 of 2017
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long   process   of   law   to   evict   the   tenant.     Therefore,   the   value
fetched   by   such   property   is   less   than   the   market   value   of   a
comparable   property   which   is   in   possession   of   the   owners.     He
urged that the sale, in this case, was of an encumbered property
which was on “as is where is” basis.
10. The   learned   senior   counsel   submitted   that   the   market
value of a property is ascertained by applying the test of what a
willing   buyer   would   pay.   He   submitted   that   while   determining
the   market   value   of   a   property   in   possession   of   a  tenant,   when
the   property   is   sold   to   the   tenant,   the   market   value   has   to   be
apportioned as per the principles laid down in several decisions
of   this   Court   in   connection   with   fixation   of   the   market   value   of
the   acquired   land   under   the   Land   Acquisition   Act,   1894.     He
relied upon decisions of this Court in the case of   Special Land
Acquisition   &   Rehabilitation   Officer,   Sagar   v.   M.S.
Seshagiri   Rao   &   Another 1
  and   Mangat   Ram   and   Others   v.
State of Haryana and others 2
.   He submitted that the market
value   is   liable   to   be   reduced   if   there   are   encumbrances   on   the
property. The market value will be the real market value minus
the   value   of   encumbrances   or   liabilities.     He   relied   upon   a
decision   of   the  Delhi  High   Court  in   the  case   of   O.N.   Talwar   v.
The Collector of Stamps 3
.
1   (1968) 2 SCR 892
2   (1996) 8 SCC 664
3   (1971) 7 DLT 319
Civil Appeal No.8388 of 2017
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11. He submitted that the market value of the property further
diminishes due to the fact that there was already an agreement
of   sale   in   favour   of   the   appellants   under   which   the   vendor   had
agreed to sell the property for a price of Rs. 1 lakh.
12. He   submitted   that   though   an   application   for   adjudication
of   the   stamp   duty   payable   on   the   proposed   sale   deed   was
submitted, there was no response to the said application, and on
that   ground,   the   order   of   penalty   imposed   by   the   Assistant
Collector has been set aside by the High Court. 
13. He   submitted   that   as   per   the   compromise   between   the
vendor   and   the   appellants,   the   consideration   agreed   to   be   paid
by   the   appellants   was   of   Rs.1   lakh   plus   the   release   of   1/3 rd
  of
the property.  He submitted that the actual conveyed property to
the   appellants   was   2/3 rd
  of   the   land   in   respect   of   which   they
were tenants.  Therefore, the value of 2/3 rd
 land would be 2/3 rd
 x
(1/3 rd
  of   the   value   of   the   entire   land   plus   Rs.1   lakh).     He
submitted   that   the   market   value   will   have   to   be   calculated
accordingly.
14. The  learned  senior   counsel  also   pointed  out that even  the
direction  to  pay interest @ 1.5% per  month  under  Section  47­A
(4A)   of   the   Stamp   Act   was   not   justified   as   even   before   the
execution of the sale deed, the appellants had voluntarily sought
adjudication of the amount payable by way of stamp duty on the
Civil Appeal No.8388 of 2017
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draft sale deed.   Moreover, he pointed out that by interim order
dated   23 rd
  September   2013,   the   High   Court   had   stayed   the
recovery proceedings. Lastly, he pointed out that a total amount
of Rs.1 crore has already been deposited by the appellants.  
15. Shri   R.   K.   Raizada,   learned   senior   counsel,   submitted   on
behalf of the State that stamp duty payable by the appellants is
to   be   calculated   as   per   the   prevailing   market   value   of   the   sale
deed   land   on   the   date   of   the   execution   of   the   sale   deed.     He
submitted   that   the   value   of   the   property   fixed   by   the   parties
under   the   agreement   for   sale   has   no   relevance   to   the
determination   of   the   market  value.     The   learned   senior   counsel
submitted   that   even   the   consideration   amount   shown   in   the
compromise decree has no relevance.  He submitted that when a
tenant purchases an immovable property, he becomes full owner
of   the   property,   and   he   takes   the   property   without   any
encumbrances.   The   learned   senior   counsel   submitted   that   the
determination   of   rateable   value   for   the   purposes   of
determination   of   property   taxes   is   always   made   on   the   basis   of
hypothetical   rent   which   the   property   may   fetch.     He   submitted
that   the   rateable   value   fixed   under   municipal   laws   is   not   the
market   value   for   the   purposes   of   the   Stamp   Act.     He   would
submit that the Assistant Collector, the Appellate Authority, and
the   High   Court   have   concurrently   held   that   the   appellants   are
Civil Appeal No.8388 of 2017
Page  9  of  26

liable   to   pay   deficit   stamp   duty.     The   said   orders   call   for   no
interference.
16. As   far   as  the   determination   of  market  value   is   concerned,
learned  senior  counsel  appearing  for  the  appellants  relied upon
the   decision   of   Karnataka   High   Court   in   the   case   of   The
Commissioner   of   Wealth   Tax   Mysore,   Bangalore   v.   V.C.
Ramachandran 4
.
CONSIDERATION OF SUBMISSIONS AND OUR VIEWS
17. It   is   not   in   dispute   that   stamp   duty   on   a   conveyance   will
be   payable   as   per   the   market   value   prevailing   on   the   date   of
conveyance.  In fact, the appellants themselves have relied upon
Article   23   of   Schedule   IB   of   the   Stamp   Act   as   applicable   to   the
State   of   Uttar   Pradesh.     They   have   placed   reliance   on   the   said
provision in their written submissions filed before the Assistant
Collector.     Paragraphs   2   to   4   of   their   written   submissions   read
thus: 
“2.   The   stamp   duty   payable   on   a  sale   deed
is governed by Article 23 of Schedule I of the
Indian Stamp Act. In the Central Act, Article
23  a  stamp   duty   is   payable   on   the   value   of
the consideration of such conveyance as set
forth in the sale deed. The consideration as
contained in the sale deed is Rs.1 lakh and
therefore,   if   the   sale   deed   was   governed   by
the   Central   Act   only,   without   the   UP
4   (1966) 60 ITR 103.
Civil Appeal No.8388 of 2017
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Amendment   the   Stamp   Duty   would   have
been payable on the amount of Rs.1 lakh. 
3.   However,   the   Indian   Stamp   Act   in   its
application to UP has been amended by the
UP   (Stamp   Amendment   Act   1952)   and
Article 23 of Schedule IB as applicable to UP
provides as below:­ 
"Article   23   conveyance   (as   defined   by
Section   2   (10)   not   being   a   transfer
charge or exempt under No.62.   Where
the   amount   or   value   of   the
consideration   of   such   conveyance
as set forth therein or market value
of the property which is the subject
of   such   conveyance,   whichever   is
greater ……. ”
4.     So   this   provision   which   is   applicable   to
the case in hand provides that if the market
value   of   the   immovable   property   is   higher
than   the   value   of   the   consideration   as   set
forth   in   the   deed   of   conveyance,   the   stamp
duty will be payable on the market value of
the immovable property which is the subject
matter of the conveyance deed.”
(emphasis added)
Article   23   of   Schedule   IB   applicable   to   the   State   of   Uttar
Pradesh, reads thus: ­
“Description of Instrument Proper Stamp­duty
23.   Conveyance   [as   defined
by   section   2(10)]   not   being   a
Transfer   charged   or Sixty rupees.
Civil Appeal No.8388 of 2017
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exempted under No.62 – 
(a)   if   relating   to   immovable
property   where   the   amount
or   value   of   the   consideration
of   such   conveyance   as   set
forth   therein   or   the   market
value   of   the   immovable
property which is the subject
of   such   conveyance,
whichever is greater does not
exceed Rs.500.
Where it exceeds Rs.500
but   does   not   exceed
Rs.1,000. One   hundred   and
twenty­five rupees.
and   for   every   Rs.1,000
or part thereof in excess
or Rs.1,000. One   hundred   and
twenty­five rupees.
Provided   that   the
duty   payable   shall
be rounded off to the
next   multiple   of   ten
rupees.
(b)   if   relating   to   movable
property   where   the   amount
or   value   of   the   consideration
of   such   conveyance   as   set
forth therein does not exceed
Rs.1,000. Twenty rupees
and   for   every   Rs.1,000
or part thereof in excess
of Rs.1,000. Twenty rupees”
18. At this stage, we  may  note  that the  Stamp  Act is  a taxing
statute.  In interpreting  such  a statute,  equitable  considerations
Civil Appeal No.8388 of 2017
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cannot   be   applied.     A   taxing   statute   has   to   be   interpreted   in
accordance   with   what   is   clearly   expressed   therein.   While
interpreting   such   a   statute   and   determining   the   liability   to   pay
tax, the provisions are required to be construed strictly.  In other
words,   the   rule   of   literal   construction   must   be   applied   while
interpreting   a  taxing   statute.  It  must  be  interpreted   in  terms   of
the natural construction of the words used. There is no scope to
imply anything which is not expressly provided.
19. In   view   of   Article   23   of   Schedule   I   of   the   Stamp   Act,   the
stamp duty payable on a conveyance will be in accordance with
the   market   value   of   the   subject   property   on   the   date   of   the
conveyance unless the consideration shown therein is more than
the prevailing market value.   A useful reference can be made to
a  decision   of   this  Court  in  the   case  of  the   State   of   Rajasthan
and others v. Khandaka Jain Jewellers 5
.  Paragraphs 18 and
19 of the said decision read thus: 
“18.   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
5   (2007) 14 SCC 339
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“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.
19.   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 that as
per   Section   3,   the   instrument   is   to   be
registered on the basis of the valuation
disclosed   therein.   But   Section   47­A   of
the   Rajasthan   (Amendment)   Stamp
Duty   Act   contemplates   that   in   case   it
is   found   that   properties   are
undervalued   then   it   is   open   for   the
Collector   (Stamps)   to   assess   the
correct   market   value.   Therefore,   in   the
present   case   when   the   registering
Civil Appeal No.8388 of 2017
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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.”
(emphasis added)
Ultimately in paragraph 22, this Court held thus:
“22.   In   this   background,   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.”
(emphasis added)
20. Hence,   when  a  sale  deed  is   presented   for  registration,   the
registering authority must ascertain the correct market value of
the   property   subject   matter   of   the   document   on   the   date   of
execution   of   the   document.     The   stamp   duty   is   payable   on   the
basis   of   such   market   value   and   not   on   the   consideration
mentioned   in   the   document.   If   the   consideration   mentioned   is
more than the market value, the stamp duty will be payable on
the   consideration   shown.     Moreover,   the   market   value
mentioned   in   the   agreement   for   sale   or   the   market   value
prevailing   on   the   date   of   the   agreement   or   the   market   value
prevailing on the date on which the bargain was struck is of no
relevance   for   deciding   the   stamp   duty.     The   relevant   market
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value   is   the   one   which   prevails   on   the   date   of   execution   of   the
conveyance.   Therefore,   we   have   no   manner   of   doubt   that   the
appellants   were   under   an   obligation   to   pay   stamp   duty
calculated on the market value of the sale deed property on the
date of execution of the sale deed. 
21. As stated earlier, stamp duty was paid by the appellants by
taking   the   market   value   of   the   sale   deed   property   at
Rs.6,67,200/­. This market value was fixed by adopting method
used for levy of property tax under the Municipal laws.   Such a
value   cannot   be   taken   as   the   basis   for   determining   the   market
value for the purposes of Article 23.
22. Now we turn to the provisions of Section 47­A of the Stamp
Act   as   applicable   to   the   State   of   Uttar   Pradesh   at   the   relevant
time. Section 47­A reads thus: 
"47A.   Instruments   of   conveyance   etc.,   if
undervalued,   how   to   be   dealt   with:   –     (1)(a)
If the market value of any property which is
the   subject   of   any   instrument   on   which
duty   is   chargeable   on   the   market   value   of
the property as set forth in such instrument
is   less   than   even   the   minimum   value
determined   in   accordance   with   the   rules
made   under   the   Act,   the   registering   officer
appointed   under   the   Registration   Act,   1908
shall,   notwithstanding   anything   contained
in   the   said   Act,   immediately   after
presentation  of such instrument and before
accepting   it   for   registration   and   taking   any
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action   under   section   52   of   the   said   Act,
require the person liable to pay stamp duty
under   section   29,   to   pay   the   deficit   stamp
duty   as   computed   on   the   basis   of   the
minimum   value   determined   in   accordance
with   the   said   rules   and   return   the
instrument   for   presenting   again   in
accordance   with   section   23   of   the
Registration Act, 1908. 
(b)  When  the  deficit  stamp  duty   required  to
be   paid   under   clause   (a),   is   paid   in   respect
of   any   instrument   and   the   instrument   is
presented   again   for   registration,   the
registering   officer   shall   certify   by
endorsement thereon, that the deficit stamp
duty   has   been   paid   in   respect   thereof   and
the   name   and   the   residence   of   the   person
paying them and register the same. 
(c)   Notwithstanding   anything   contained   in
any   other   provisions   of   this   Act,   the   deficit
stamp duty may be paid under clause (a) in
the   form   of   impressed   stamp   containing
such declaration as may be prescribed. 
(d)   If   any   person   does   not   make   the
payment   of   deficit   stamp   duty   after
receiving   the   order   referred   to   in   clause   (a)
and   presents   the   instrument   again   for
registration,   the   registering   officer   shall,
before   registering   the   instrument,   refer   the
same   to   the   Collector   for   determination   of
the   market   value   of   the   property   and   the
proper duty payable thereon.
(2)   Without   prejudice   to   the   provisions   of
sub­section   (1),   if   such   Registering   Officer,
while   registering   any   instrument   on   which
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duty   is   chargeable   on   the   market­value   of
the  property,  has  reason  to  believe  that the
market­value   of   the   property,   which   is   the
subject   of   such   instrument,   has   not   been
truly   set   forth   in   the   instrument,   he   may,
after   registering   such   instrument,   refer   the
same   to   the   Collector   for   determination   of
the   market­value   of   such   property   and   the
proper duty payable thereon­
(3)   On   receipt   of   a   reference   under   sub­
section   (1)   or   sub­section   (2),   the   Collector
shall,   after   giving   the   parties   a   reasonable
opportunity of being heard and after holding
an   enquiry   in   such   manner   as   may   be
prescribed   by   rules   made   under   this   Act,
determine   the   market   value   of   the   property
which   is   the   subject   of   the   instrument   and
the   duty   as   aforesaid.     The   difference,   any,
in   the   amount   of   duty   shall   be   payable   by
the person liable to pay the duty.
Explanation.   ­   The   payment   of   deficit
stamp   duty   by   any   person   under   any
order   of   registering   officer   under   sub­
section (1) shall not prevent the Collector
from   initiating   proceedings   on   any
instrument under sub­section (3).
(4)   The   Collector   may,   suo   motu,   or   on   a
reference   from   any   court   or   from   the
Commissioner   of   Stamps   or   an   Additional
Commissioner   of   Stamps,   or   a   Deputy
Commissioner   of   Stamps   or   an   Assistant
Commissioner   of   Stamps   or   any   Officer
authorized  by  the Board  of Revenue  in that
behalf,   within   four   years   from   the   date   of
registration   of   any   instrument   on   which
duty   is   chargeable   on   the   market   value   of
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the   property,   not   already   referred   to   him
under sub­section (1) or sub­section (2), call
for   and   examine   the   instrument   for   the
purpose   of   satisfying   himself   as   to   the
correctness   of   the   market   value   of   the
property   which   is   the   subject   of   such
instrument   and   the   duty   payable   thereon
and   if   after   such   examination,   he   has
reason   to   believe   that   the   market   value   of
such   property   has   not   been   truly   set   forth
in   the   instrument,   he   may   determine   the
market value of such property and the duty
payable   thereon   in   accordance   with   the
procedure   provided   for   in   sub­section   (3).
The difference, if any, in the amount of duty
shall be payable by the person liable to pay
the duty.
Provided   that,   with   the   prior   permission
of   the   State   Government,   an   action
under   this   sub­section   may   be   taken
after   the   period   of   four   years   but   before
the period of eight years from the date of
the   registration   of   the   instrument   on
which   the   duty   is   chargeable   on   the
market value of the property. 
Explanation   ­   The   payment   of   deficit
stamp   duty   by   any   person   by   any   order
of   the   registering   officer   under   sub­
section (1) shall not prevent the Collector
from   initiating   proceedings   on   any
instrument under sub­section (3). 
(4)   If   on   enquiry   under   sub­section   (2)   and
examination   under   sub­section   (3)   the
Collector   finds   the   market   value   of   the
property –
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(i) truly set forth and the document duly
stamped, he shall certify by endorsement
that   it   is   duly   stamped   and   return   it   to
the person who made the reference; 
ii)   not   truly   set   forth   and   not   truly
stamped, he shall require the payment of
the   proper   duty   or   the   amount   required
to   make   up   the   deficiency   in   the   same
together with a penalty of an amount not
exceeding   four   times   the   amount   of
proper duty or the deficit portion thereof.
(4A)   The   Collector   shall   also   require   along
with   the   deficit   stamp   duty   or   penalty
required to be paid under clause (ii) of sub­
section (4), the payment of a simple interest
at   the   rate   of   one   and   half   per   cent   per
mensem   on   the   amount   of   deficit   stamp
duty   calculated   from   the   date   of   the
execution   of   the   instrument   till   the   date   of
actual payment:
Provided   that   the   amount   of   interest
under   this   sub­section   shall   be
recalculated   if   the   amount   of   deficit
stamp   duty   is   varied   on   appeal   or
revision   or   by   any   order   of   a   competent
Court or authority.
(4B)   The   amount   of   interest   payable   under
sub­section   (4A)   shall   be   added   to   the
amount   due   and   be   also   deemed   for   all
purposes to be part of the amount required
to be paid.
(4C)   Where   realisation   of   the   deficit   stamp
duty   remained   stayed   by   any   order   of   any
Court or authority and such order of stay is
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subsequently   vacated,   the   interest   referred
to   in   sub­section   (4A)   shall   be   payable   also
for   any   period   during   which   such   order   of
stay remained in operation.
(4D)   Any   amount   paid   or   deposited   by,   or
recovered   from,   or   refundable   to,   a   person
under the provision of this Act, shall first be
adjusted   towards   the   deficit   stamp   duty   or
penalty   outstanding   against   him   and   the
excess,   if   any,   shall   then   be   adjusted
towards the interest, if any, due from him.”
23. Accordingly, in this case, an adjudication was made by the
Assistant   Stamp   Collector.     After   inspection   of   the   sale   deed
property,   the  Assistant  Stamp  Collector  came   to   the   conclusion
that   the   description   of   the   property   in   the   sale   deed   was
incorrect.     The   Assistant   Collector   observed   that   in   the   sale
deed, the covered area of the land is shown as 970 meters, but
actually,   it   was   found   to   be   995   sq.   meters.     The   Assistant
Collector   referred   to   four   sale   transactions   of   the   year   2010
which were in relation to the properties which were a part of the
same   larger   property   wherein   the   market   value   shown   was   Rs.
24,000/­   per   sq.   meter.     The   determination   of   market   value   by
taking the market value at Rs. 24,000/­ per sq. meters has been
approved by the Assistant Collector, Appellate Authority and the
High Court. 
24. It   appears   to   be   an   accepted   position   that   the   appellants
were tenants of the vendor in respect of the sale deed property.
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The   test   for   determination   of   the   market   value   is   very   simple.
The market value is the one which a  bona fide  and willing buyer
will offer. It is apparent that if the property subject matter of the
sale   is   in   possession   of   the   vendor   himself,   the   bona   fide
purchaser   will   offer   more   price   for   the   property   than   the   price
which he may offer for a similar property which is in possession
of a tenant. There is no doubt that a property in possession of a
tenant or tenants will fetch lesser value in the open market than
the market value of a similar property exclusively in possession
of   the   vendor.   The   reason   is   that   the   buyer   will   not   get   actual
possession   of   the   portion   of   the   property   in   possession   of   the
tenant. 
25. The   market   value   can   be   determined   by   the   comparison
method even in case of a property in possession of tenants.  For
example, if there is a sale transaction of a property in possession
of   a   tenant   which   is   comparable   to   the   property   sought   to   be
valued   and   if   the   said   sale   transaction   is   held   to   be   a   genuine
transaction,   market   value   can   be   fixed   on   the   basis   of   the   sale
transaction.     If   no   comparable   instances   are   found,   the   market
value   can   be   fixed   of   the   property   in   possession   of   tenants   by
making   an   appropriate   deduction   from   the   market   value   of   a
comparable property in which there are no tenants.
26. In the written submissions, the learned counsel appearing
in   person   has   suggested   a   formula   for   calculating   the   market
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value by taking into consideration the market value on the date
of agreement for sale (1966) and the market value of the 1/3 rd
 of
the   land   given   up   by   the   appellants   by   way   of   compromise.
However,   this   contention   is   obviously   not   acceptable   as   the
market value of the property sold will have to be determined on
the date of execution of the sale deed. 
27. The   Assistant   Collector,   the   Appellate   Authority,   and   the
High Court have not decided the issue in terms of what we have
held   above.   Even   if   the   guidance   value   of   Rs.   24,000/­   per   sq.
meter  is  to  be  taken  as  the  market value of the  sale  deed land,
necessary   deductions   will   have   to   be   made   from   the   market
value   as   the   appellants   were   already   in   possession   of   the   sale
deed   land   as   tenants.   The   extent   to   which   deduction   can   be
made   will   depend   upon   the   nature   of   the   tenancy   and   other
material   factors.   Some   tenancies   may   be   protected   under   the
relevant   rent   control   legislation,   whereas   some   may   not   be
protected.  That is all a matter of evidence.
28. The issue regarding the market value of the sale deed land
on   the   date   of   execution   of   the   sale   deed   is   required   to   be
decided   by   permitting   the   parties   to   adduce   oral   and
documentary   evidence.   The   Assistant   Collector   will   have   to
ascertain   whether   a   comparable   sale   instance   of   a   property   in
possession   of   tenants   is   available.     If   it   is   not   available,   the
Assistant Collector will have to ascertain the market value of the
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sale   deed   property   on   the   relevant   date   again   by   comparison
method by taking market value of a comparable property which
does not have encumbrance of tenancy.  Thereafter, he will have
to   determine   the   percentage   of   the   deduction   which   should   be
made   from   the   market   value   in   the   facts   of   this   case.   These
questions   are   to   be   decided   by   the   Assistant   Collector   on   the
basis   of   the   evidence   on   record.     Therefore,   subject   to   what   we
have held in the judgment, we propose to send back the case to
the   Assistant   Stamp   Collector   for   determination   of   the   market
value   of   the  sale  deed  land   on   the  date   of  execution   of   the  sale
deed.
29. The appellants have already deposited a sum of Rs.1 crore
towards   the   amount   made   payable   by   them.     The   sum   amount
will   be  subject to   the   final  adjudication   by  the  Assistant  Stamp
Collector.     If   the   Assistant   Stamp   Collector   comes   to   the
conclusion   that   the   market   value   of   the   land   and   structures   is
lesser than what was determined earlier by the Assistant Stamp
Collector, the appellants will be entitled to a refund of the excess
amount paid with interest at the rate of 8% per annum from the
date   on   which   the   amount   was   paid   till   the   date   on   which   the
refund is made.  If it is found that the deficit stamp duty exceeds
Rs.1   crore,   the   appellants   will   have   to   make   good   the   said
amount.   Sub­section   4A  of   Section   47A   is   in   mandatory   terms.
The   use   of   the   word   ‘shall’   make   it   clear   that   the   Collector   has
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no   choice   but  to  impose   interest  at  the   rate   of   1.5%  per  month
on   the   deficit   amount.     We   are   not   disturbing   the   judgment   of
the   High   Court   insofar   as   it   relates   to   penalty   as   the   State
Government has not challenged that part.
30. Hence,   we   set   aside   the   impugned   judgment   of   the   High
Court as well  as  the  judgment of  the Assistant Stamp  Collector
and   the   Appellate   Authority   and   remand   the   case   for   fresh
consideration   to   the   Assistant   Stamp   Collector.     However,   we
confirm  that part of  the impugned judgment of  the High  Court,
by   which   it   was   held   that   the   appellants   are   not   liable   to   pay
penalty.     The   Assistant   Stamp   Collector   shall   permit   the
appellants   to   lead   evidence   on   the   issue   of   valuation.     The
Assistant   Stamp   Collector   is   directed   to   conclude   the
proceedings   as   early   as   possible   and   preferably   within   a   period
of six months from today.
31. The   appeal   is,   accordingly,   allowed   on   the   above   terms
with no order as to costs.
.…….….…..………J.
 (Abhay S. Oka)
.…….………...……J.
(Rajesh Bindal)
New Delhi;
April 25, 2023.     
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