Report No. 67
13.8. Courses open to the Registrar.-
Although the Registrar cannot embark on an independent enquiry regarding the value of property, yet he has power, under section 36 of the Stamp Act, to refuse registration if the document is not duly stamped, from which it would follow that he can require the person seeking registration to furnish the particulars required for the calculation of the duty payable. In other words, as the law stands,1 two courses are open when a document is sought to be registered on an under-valikation. First of all, if the Registrar, either from his own information or otherwise, suspects that the valuation given is an under-valuation with intent to cheat the Government of the legitimate duty, he can ask for particulars from the party and if satisfied with its under-valuation, can refuse to register the document unless proper duty was paid. Secondly, in cases where the document gets registered and the information is subsequently received that the valuation shown is an under-valuation and that the legitimate stamp duty has been intentionally evaded to defraud the State, it will be open to the Registrar to move for a prosecution under section 27, read with section 64, Stamp Act.2
1. See Venkatszvami (in re:), AIR 1953 Mad 942.
2. On this point see Mahabrami, AIR 1960 Pat 470 and Sitaram, AIR 1960 Pat 210.
13.9. Change not recommended.-
The question that arises is whether it is necessary to introduce any amendment in the law to empower the registering officer to hold a formal inquiry on the lines on which some States have done.1 On the one hand, it can be argued that the scope for evasion of stamp duty should be checked by giving such a power. On the other hand, it should be remembered that such an inquiry will prolong the proceedings for registration, and, while, in some cases, there may be fruitful result, there might be many cases where the inquiry may result in nothing useful. Having regard to the fact that there may be complications resulting from a provision for elaborate inquiries on the lines of the Orissa amendment, we are not inclined to suggest such amendment of the Stamp Act.
1. Para. 13.3., supra.
13.10. Section 27-Facts and circumstances affecting chargeability with duty to set forth in the instrument.-
We may note that in our Questionnaire1 a question was included on the subject. The question was put in these terms-
"The question has been raised whether the law should be amended to empower the registering officer to hold an inquiry on the question whether the consideration stated in the instrument was the true value? Have you any suggestion in this regard?"
The replies reveal a sharp difference of view. The important replies may be thus summarised:
(a) One State Government2 was of the view that the registering officer should be so empowered, and that the stamp duty should be charged not on the consideration but on the value of the property. One High Court3 suggested that an inquiry of the nature contemplated may be authorised.
(b) Some of the replies did not go so far. For example, one High Court Judge4 was of the view that the decision of the registering officer in the proposed inquiry should not be final.
One State Government5 was opposed to giving any power to the registering officer to hold an inquiry. That Government would merely like section 27 to be amended to incorporate "including, where relevant, the market value of the subject-matter".
One Union Territory Administration6 suggested that in section 27, the words "as set forth in the instrument" should be deleted. Duty should be made chargeable on the market value, and.not on the value set forth in the instrument. For determining the value of the property, however, it would prefer rules to be made.
One Administration7 would limit the powers of the registering officer to hold an inquiry regarding the consideration, but it suggested that the property should be subject to valuation by persons to be authorised by Government.
(c) Two District Judges8-9 were opposed to giving the Registrar the power.
They were of the view that if necessary the Registrar should report to the Collector if he feels that the true valuation has not been stated. They expressed an apprehension that an inquiry by the Registrar would give chance to unhealthy practices and would delay the transaction and would, therefore, be undesirable. Registration should be made immediately, an inquiry may follow in due course where necessary.
One State Government10 was opposed to any inquiry by the Registrar. Two Bar Councils11-12 were strongly opposed to the suggested change, and so also is one Incorporated Law Society.13 The Incorporated Law Society stated that a procedure of the nature contemplated in the question would complicate, and thereby delay, the registration of the document. One of the Bar Councilsi14 pointed out that if under-valuation is discovered which affects the amount of stamp, section 64 can always be invoked. However, it has suggested that a section such as section 47A of the Andhra Pradesh Stamp Act could be incorporated. We may state that we find considerable weight in some of the objections put forth and are not inclined to recommend any amendment.
1. Q. 38.
2. S. No. 88.
3. S. No. 108.
4. S. No. 90.
5. S. No. 122.
6. S. No. 100.
7. S. No. 119.
8-9. S. No. 90.
10. S. No. 66.
11-12. S. No. 74, S. No. 61.
13. S. No. 69.
14. S. No. 61.
13.11. Section 28.-
So much as regards section 27. According to section 28(1), where a property has been contracted to be sold or purchased for one consideration (i.e., a consideration for the whole of the transaction), and is conveyed to the purchaser in separate parts by different instruments, then the consideration for each part as decided by the parties has to be setforth in the instruments concerned respectively, and each of the said deeds is chargeable with ad valorem duty in respect of the distract considerations mentioned therein.1
For example, A contracts to sell to B his property consisting of a house and certain,lands adjoining to the house for Rs. 10,000 and, in terms of the contract, transfers it by two separate sale deeds in respect of the house and lands for Rs. 7,000 and Rs. 3,000 respectively. A is lawfully permitted to convey his property by two distinct deeds, provided the stamp duty is paid on the deeds separately in proportion to the considerations which are distinctly set forth. In a sense, this is a qualification to the general rule in section 4 that, where several instruments are employed for carrying on a transaction, then only the principal is chargeable.
1. Section 28(1).
13.12. Further, according to section 28(2), where property contracted to be purchased for one consideration by two or more persons jointly, or by any person for himself and others, or wholly for others, is conveyed in parts by separate instruments to the persons by, or for, whom the same was purchased, then the conveyance of each part of the property is chargeable with ad valorem duty in respect of the distinct part of the consideration to be set forth in each instrument in respect of the portion of property conveyed. This also seems to constitute a qualification to the general rule in section 4.
13.13. Then also, under sub-section (3) of section 28, where a person, having contracted for the purchase of any property but not having obtained a conveyance thereof, contracts to sell the same to any other person, and the property is, in consequence, conveyed to the sub-purchaser (by the original owner), then the conveyance has to be charged with an ad valorem duty in respect of the consideration which the middleman has received from the sub-purchaser in a Bombay case1 under this sub-section, it was held that a purchaser from an official assignee in insolvency, who has not taken an actual conveyance, can also insist that the official assignee should execute the conveyance in favour of his sub-purchaser. There is no reason why the purchaser from the official assignee should be deprived of the benefit of section 28(3) of the Stamp Act.
1. Rahimtulla Lowji Damon v. Official Assignee, AIR 1935 Born 340 (Besumont C.J. and Rangnekar J.).
13.14. Then, under section 28(4), where an intermediary contracts to sell property or any part of it to any other person or persons, and the property is, in consequence, conveyed by the original owner to the ultimate purchaser or purchasers, by means of different instruments, then each of the said deeds of conveyance will be chargeable with ad valorem duty on the basis of the consideration received by the intermediary in respect of the particular part of the property conveyed. The amount or value of the original consideration, as agreed between the original owner and the intermediary, would be relevant only in respect of the conveyance of the residue, if any, in favour of the intermediary as a purchaser; and such deed would be chargeable with ad valorem duty on the basis of the excess, if any, of the original consideration over the aggregate of the considerations paid by the said sub-purchasers. But the duty on such last mentioned conveyance shall in no case be less than one rupee.
13.15. Finally, under sub-section (5), if a sub-purchaser takes an actual conveyance of the interest of the intermediary, and the conveyance has been duly stamped with ad valorem duty in respect of the consideration paid by the sub-purchaser, then any conveyance in his favour of the same property will be chargeable with a duty on the basis of the consideration obtained by the original seller. Where the duty payable on this last mentioned conveyance exceeds five rupees, then the maximum duty chargeable thereon will be only five rupees.
13.16. There is no conflict of decisions with regard to the section. The language may appear to be involved. But the section bears very little practical importance, and may be left as it is.