# Smt. Pushpa Sarin v. State of U.P

- **Citation:** (2015) 1 ILRA 129
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2015-02-12
- **Case number:** Reference against Misc. Act No. 1 of 1993
- **Bench:** Dr. Dhananjaya Yeshwant Chandrachud, C.J. Dilip Gupta, Suneet Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/smt-pushpa-sarin-v-state-of-u-p-43255
- **Pages:** 13

## Headnote

Act,
1899-Section47(i)(A)-Power of Registry officer to refer a
document-contingencies and circumstances
explained.
Held: Para-13
We, therefore, answer question 1 by
holding that a finding that the market
value of the property as set forth in the
instrument is less than even the minimum
market value determined in accordance
with the rules made under the Act applies
to a situation governed by sub-section (1)
and not to a situation governed by subsections (2) and (4).
(B)Indian
Stamp
Act,
1899-Section
47(A)(3)-Power of collector stamp-to fix
the valuation of property-on assumption of
future prospective use-held-stamp duty is
levy imposed and not on transactionpotential of land to be considered on date
of execution of sale and not future use.
Held: Para-30
Where, however, the potential of the
land can be assessed on the date of the
execution of the instrument itself, that is
clearly a circumstance which is relevant
and germane to the determination of the
true market value. At the same time, the
exercise before the Collector has to be
based on adequate material and cannot
be a matter of hypothesis or surmise.
The Collector must have material on the
record to the effect that there has been a
change of use or other contemporaneous
sale deeds in respect of the adjacent
areas that would have a bearing on the
market value of the property which is
under
consideration.
The
Collector,
therefore, would be within jurisdiction in
referring to exemplars or comparable
sale instances which have a bearing on
the true market value of the property
which is required to be assessed. If the
sale instances are comparable, they
would also reflect the potentiality of the
land
which
would
be
taken
into
consideration in a price agreed upon
between a vendor and a purchaser.
(C)Indian Stamp Act, 1899-Section 57(i)
Power of review by Chief Controlling
officer-held no substantive power-except
limited power of procedural review.
Held:Para-37
In this view of the matter, we hold that
the Chief Controlling Authority does not
possess a substantive power to review its
own
decision.
However,
a
limited
procedural
review
in
terms
of
the
judgments of the Supreme Court referred
to above would be maintainable.
Case Law discussed:
AIR (37) 1950 SC 218; (1968) 1 SCR 685=AIR
1968 SC 497; 1986 ALL.L.J. 49; (1972) 1 SCC
726: AIR 1972 SC 899; 2003 (4) AWC 3342,
para 21; 2010 (2) AWC 1720, para5; 2012 (3)
AWC 2343; AIR 1999 SC 2126, para 5; (2012)
5 SCC 566.

## Text

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1 All] Smt. Pushpa Sarin Vs. State of U.P.
129
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 12.02.2015
BEFORE
THE HON'BLE DR. DHANANJAYA YESHWANT
CHANDRACHUD, C.J.
THE HON'BLE DILIP GUPTA, J.
THE HON'BLE SUNEET KUMAR, J.
Reference against Misc. Act No. 1 of 1993
Smt. Pushpa Sarin
 ...Appellant
Vers us
State of U.P.
...Respondent
Counsel for the Appellant:
Sri Ajay Kumar Singh, Sri Ashish Kumar
Singh, Sri Rajendra Kumar
Counsel for the Respondent:
S.C., C.B. Yadav, Additional General, Sri
Sashank Sekhar Singh, Additional Chief
Standing Counsil
(A)Indian
Stamp
Act,
1899-Section47(i)(A)-Power of Registry officer to refer a
document-contingencies and circumstances
explained.
Held: Para-13
We, therefore, answer question 1 by
holding that a finding that the market
value of the property as set forth in the
instrument is less than even the minimum
market value determined in accordance
with the rules made under the Act applies
to a situation governed by sub-section (1)
and not to a situation governed by subsections (2) and (4).
(B)Indian
Stamp
Act,
1899-Section
47(A)(3)-Power of collector stamp-to fix
the valuation of property-on assumption of
future prospective use-held-stamp duty is
levy imposed and not on transactionpotential of land to be considered on date
of execution of sale and not future use.
Held: Para-30
Where, however, the potential of the
land can be assessed on the date of the
execution of the instrument itself, that is
clearly a circumstance which is relevant
and germane to the determination of the
true market value. At the same time, the
exercise before the Collector has to be
based on adequate material and cannot
be a matter of hypothesis or surmise.
The Collector must have material on the
record to the effect that there has been a
change of use or other contemporaneous
sale deeds in respect of the adjacent
areas that would have a bearing on the
market value of the property which is
under
consideration.
The
Collector,
therefore, would be within jurisdiction in
referring to exemplars or comparable
sale instances which have a bearing on
the true market value of the property
which is required to be assessed. If the
sale instances are comparable, they
would also reflect the potentiality of the
land
which
would
be
taken
into
consideration in a price agreed upon
between a vendor and a purchaser.
(C)Indian Stamp Act, 1899-Section 57(i)
Power of review by Chief Controlling
officer-held no substantive power-except
limited power of procedural review.
Held:Para-37
In this view of the matter, we hold that
the Chief Controlling Authority does not
possess a substantive power to review its
own
decision.
However,
a
limited
procedural
review
in
terms
of
the
judgments of the Supreme Court referred
to above would be maintainable.
Case Law discussed:
AIR (37) 1950 SC 218; (1968) 1 SCR 685=AIR
1968 SC 497; 1986 ALL.L.J. 49; (1972) 1 SCC
726: AIR 1972 SC 899; 2003 (4) AWC 3342,
para 21; 2010 (2) AWC 1720, para5; 2012 (3)
AWC 2343; AIR 1999 SC 2126, para 5; (2012)
5 SCC 566.
(Delivered by Hon'ble Dr. Dhananjaya
Yeshwant Chandrachud, C.J.)
130
 INDIAN LAW REPORTS ALLAHABAD SERIES
1. The present reference to a bench
of three Judges is in pursuance of the
provisions of Section 57 (1) of the Indian
Stamp Act 18991. The questions which
have been referred to this Full Bench for
determination by the Chief Controlling
Revenue Authority are as follows:
"(1) Whether the registering officer
can refer a document even if he does not
find that the market value of the property
as set forth in the instrument is less than
even the market value determined in
accordance with the rules made under this
Act;
(2) Whether the Collector Stamps
has power to fix the valuation of a plot on
the assumption that the same is likely to
be used for commercial purposes, and
whether the presumed future prospective
use of the land can be a criterion for
valuation by the Collector;
(3) What should be the norms for
fixing the valuation of a free-hold land
viz-a-vis lease land;
(4) Whether the Collector can
demand stamp duty under Section 47-A of
the Stamp Act without a finding of fact
that the market value as stated in the
document is less than that which was
actually agreed upon between the parties;
(5) Whether the orders passed by the
Chief Controlling Revenue Authority can
be reviewed if it is shown that the known
norms of valuation have not been
followed in the case."
2. An agreement to sell was entered
into on 11 November 1982 for the sale of
certain immovable property, admeasuring
17377 sq.ft. equivalent to 1615 sq. mtrs.,
more particularly described as J-13/93,
Chauka Ghat, Cotton Mills Compound at
Varanasi for a consideration of Rs.
2,96,660/-. A deed of conveyance was
executed on 30 August 1985. When the
document was presented for registration,
registration was postponed because no
map was attached to the sale deed. In the
meantime, a complaint was addressed to
the Additional Collector (Finance and
Revenue) stating that the valuation of the
plot together with structure standing
thereon would not be less than Rs.13 lacs
and that there was a willful attempt to
evade stamp duty.
3. The Additional Collector called
for a report together with the original
documents. On 26 December 1985, the
Joint Sub-Registrar, Varanasi made a
reference under Section 47-A (1) of the
Stamp Act. Following the receipt of the
reference, a notice to show cause was
issued to the purchasers who filed their
objections. On behalf of the purchasers, it
was urged that the rate which was
reflected in the agreement to sell was
higher than the market rate and the stamp
duty had been paid on a much higher
valuation of Rs.3,70,000/- as compared to
the rate of Rs.1,44,000/- fixed under the
United Provinces Stamp Rules, 19422.
The Additional Collector (Finance and
Revenue), by an order dated 21 October
1987, adjudicated upon the case and
directed the purchasers to pay a deficit of
stamp duty of Rs. 1,46,317.50 holding the
valuation of the land and building to be
Rs.17,63,032/-. The purchasers filed a
revision under Section 56 (1) of the
Stamp Act before the Chief Controlling
Revenue Authority which was dismissed
on 13 January 1990. On 1 January 1991,
the
purchasers
moved
the
Chief
Controlling Revenue Authority stating
that
the
case
involved
substantial
questions of law which should be referred
to the High Court under Section 57(1) of
the Stamp Act. Allowing the application,
1 All] Smt. Pushpa Sarin Vs. State of U.P.
131
a reference has been made of the
questions referred to above.
4. Before we deal with the questions
which have been referred to this Bench on
a reference under Section 57(1), it would
be necessary to answer a preliminary
objection which has been raised by the
learned Additional Advocate General to the
maintainability of the reference. The
submission which has been urged is that the
Chief Controlling Revenue Authority has
the power to refer a case under Section
57(1), which is pending before it. For, it is
only when a case is pending before the
authority, that Section 59(2) contemplates
that the authority would dispose of the case
on the basis of the judgment of the High
Court rendered on the reference. In the
present case, it was urged that once the
Chief Controlling Revenue Authority had
disposed of the case, there was no pending
proceeding before it and a reference could
not have been made.
5. The preliminary objection does
not raise an issue which is res integra. The
issue as to whether a reference can only
be made in a pending case was dealt with
in several judgments by the Supreme
Court.
6. In The Chief Controlling Revenue
Authority vs. The Maharashtra Sugar
Mills Ltd.3, a Constitution Bench of the
Supreme Court held that the power to
make a reference under Section 57 is not
only to the benefit of the Chief
Controlling Revenue Authority but also
enures for the benefit of a party which is
affected by the assessment. The power
which is conferred upon the Chief
Controlling Revenue Authority is coupled
with a duty which is cast on him, as a
public officer to do the right thing and
when an important and intricate question
of law in regard to the construction of a
document arises before him, the officer is
duty
bound
to
make
a
reference.
Moreover, if he was to omit to do so, it
would be open to the High Court in the
exercise of its jurisdiction to issue a
mandamus directing him to discharge the
duty and make a reference to the Court.
7. The issue as to whether the power
to make a reference in a case which is not
pending before the authority is exhausted
once the case has been disposed of stands
concluded by the decision of the Supreme
Court in Banarsi Das Ahluwalia vs. The
Chief Controlling Revenue Authority,
Delhi4. In that case, a deed of trust was
submitted
to
the
Sub-Registrar
for
registration,
where
it
came
to
be
impounded
and
forwarded
to
the
Collector under Section 38 (2) of the
Stamp Act. The Collector adjudicated the
stamp duty and penalty against which a
revision was filed before the Chief
Controlling
Revenue
Authority.
The
revisional authority reduced the deficit
duty and penalty by passing an order on
the revision. Subsequently, an application
was made to the authority to state a case
to the High Court under Section 57(1)
which was rejected and a writ petition
before the High Court was also dismissed
in limine. The Supreme Court held that
the view which had been taken inter alia
by the High Court of Allahabad holding
that a reference could be made under
Section 57 only when a case is pending
and in which a question of the amount of
stamp duty is yet to be decided proceeded
on an erroneous construction of the
decision in Maharashtra Sugar Mills
(supra). The Supreme Court held that in
Maharashtra Sugar Mills (supra), there
was no case pending before the authority
132
 INDIAN LAW REPORTS ALLAHABAD SERIES
or any other Court and yet a mandamus
granted by the High Court was confirmed.
Consequently, the principle of law which
has been stated is as follows:-
"...It also must now be taken as
settled that that duty is not affected by the
question whether the case is pending
before the Authority or not. The principle
underlying the decision is that sec. 57
affords a remedy to the citizen to have his
case referred to the High Court against an
order of a revenue authority imposing
stamp duty and/or penalty provided the
application involves a substantial question
of law and imposes a corresponding
obligation on the authority to refer it to
the High Court for its opinion. Such a
right and obligation cannot be construed
to
depend
upon
any
subsidiary
circumstance such as the pendency of the
case before the Authority. If the position
is as held in I.L.R. 25 Mad. 752 the mere
fact that the Collector has determined the
duty and closed the case would render
nugatory
not
only
the
controlling
jurisdiction of the Authority but the
remedy which sec. 57(1) gives to the
citizen as also the obligation of the
Authority to state the case. The difficulty
which the learned judges felt in I. L. R. 25
Mad. 752 and repeated in subsequent
decisions is not, in our view, a real one
because as soon as a reference is made
and the High Court pronounces its
judgment the decision of the Authority is
at large and the Authority, as required by
sec. 59(2) would have to dispose of the
case in conformity with such judgment.
The position therefore is that when a
reference has been made to the Authority
or the case has otherwise come to his
notice, if an application is made under s.
57(1) and it involves a substantial
question of law, whether the case is
pending or not, the Authority is bound to
state the case in compliance with its
obligation. The Authority is in a similar
position as the Income-tax Tribunal under
analogous provisions in the Income-tax
Act."
8. In view of this decision, the
preliminary objection cannot be accepted.
9. Undoubtedly, once a decision is
rendered on the reference under Section
57, Section 59(2) requires the Court to
remit a copy of its judgment to the
revenue authority by which the case was
stated. The revenue authority on receiving
a copy of the decision has to dispose of
the case conformably to such judgement.
The words "dispose of the case" are not
amenable to the construction nor can they
be construed to mean a case which is
pending before the revenue authority.
What Section 59(2) essentially requires is
that effect has to be given to the decision
of the High Court on a reference under
Section 57. Once a decision is rendered
on a reference, the authority making the
reference has to act in conformity with the
decision by disposing of the case. We,
therefore, are unable to accept the
preliminary
objection
to
the
maintainability of the reference.
10. We will now proceed to analyze
the questions referred to in the order of
reference. At the outset, it would be
necessary for the Court to clarify that the
position will have to be considered on the
basis of the provisions of the Indian
Stamp Act 1899 as it stood at the material
time and the United Provinces Stamp
Rules 1942.
11. Section 47-A as amended by
U.P. Act Nos. 11 of 1969, 20 of 1974, 49
1 All] Smt. Pushpa Sarin Vs. State of U.P.
133
of 1975 and 6 of 1980 provided as
follows:
"47-A Instruments of conveyance
etc., if undervalued, how to be dealt with.
-(1) If the market value of any property
which is the subject of any instrument of
conveyance, exchange, gift, settlement,
award or trust as set forth in such
instrument, is less than even the minimum
value determined in accordance with any
rules made under this Act the registering
officer
appointed
under
the
Indian
Registration Act, 1908, shall refer the
same to the Collector for determination of
the market value of such property and the
proper duty payable thereon.
(2)
Without
prejudice
to
the
provisions of sub-section (1), if such
registering officer while registering any
instrument on which duty is chargeable on
the market value of the property has
reason to believe that the market value 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 market
value of such property and the proper
duty payable thereon.
(3) On receipt of a reference under
sub-section (1) of sub-section (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, if any, in the amount of duty
shall be payable by the person liable to
pay the duty.
(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
authorised 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 the
property not already referred to him under
sub-section (1) or sub-section (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 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 sub-section (3). The
difference, if any, in the amount of duty,
shall be payable by the person liable to pay
the duty."
12. Sub-section (1) of Section 47-A
enables the registering officer who is
appointed under the Indian Registration
Act, 1908 to refer an instrument to the
Collector for determining the market
value of the property and the duty payable
thereon. The registering officer was
empowered to do so, if the market value
of any property which was the subject of
the instrument, as set forth in the
instrument, was less than even the
minimum value determined in accordance
with the rules made under the Indian
Stamp Act, 1899. Sub-section (2) of
Section 47-A was without prejudice to the
provisions of sub-section (1), and enabled
the registering officer while registering
any instrument to refer the instrument to
the Collector for determination of the
market value of the property and the duty
payable thereon. Sub-section (2) indicated
134
 INDIAN LAW REPORTS ALLAHABAD SERIES
that the registering officer had to do so
after registering such instrument. His
power to refer the instrument to the
Collector for adjudication of the market
value and the duty payable thereon came
into existence on his having reason to
believe that the market value of the
property had not been truly set forth in the
instrument. On receipt of a reference
under sub-section (1) or sub-section (2),
the Collector under sub-section (3) was
empowered to determine the market value
of the property after holding an enquiry in
which the parties would have a reasonable
opportunity of being heard. Thereupon,
the difference in duty was payable by the
person liable to pay the duty. Sub-section
(4) conferred a suo motu power upon the
Collector as well as a power on a
reference from any court where the
instrument had not been referred under
sub-section (1) or sub-section (2). Under
sub-section
(4),
the
Collector
was
empowered to call for and examine the
instrument for the purpose of satisfying
himself of the correctness of the market
value of the property and the duty payable
thereon and if he had reason to believe
that the market value of such property
was not truly set forth, he would
determine the market value as well as the
duty payable in accordance with the
provisions of sub-section (3). Subsections (1), (2), and (4) of Section 47-A
operated in distinct eventualities. Subsection (1) operated in a situation where
the registering officer found that the
market value of the property which was
the subject matter of the instrument was
less than even the minimum prescribed in
the rules made under the Act. Sub-section
(2) applied to a situation where the
registering officer formed a reason to
believe that the market value of the
property has not been truly indicated in
the instrument, when it was presented to
him for registration and the registering
officer was empowered after registering
the instrument to refer it to adjudication to
the Collector. Sub-section (4) inter alia
enabled the Collector suo motu to
examine an instrument and to adjudicate
upon the market value of the property if
he had reason to believe that the market
value was not truly set forth in the
instrument. Under sub-section (4), the
power was exercisable by the Collector
within a stipulated period from the date of
the registration of the instrument. The
expression "reason to believe" conditions
the exercise of power under sub-sections
(2) and (4). On the other hand, under subsection (1), the registering officer could
refer the instrument to the Collector, if the
market value of the property as reflected
therein, was less than the minimum which
was prescribed in the rules. Hence, a
situation where the market value of the
property was less than even the minimum
prescribed in the rules, was a condition
which applied to exercise of the power
under sub-section (1). However, subsections (2) and (4) did not condition the
exercise of power on a finding that the
market value as reflected in the instrument
is below the market value prescribed in the
rules. Under both sub-sections (2) and (4),
the registering officer or, as the case may
be, the Collector had to form a reason to
believe; the reason to believe being that the
market value, as reflected in the instrument,
was not a correct reflection of the true
market value of the property.
13. Once this legal position is clear
from a plain and literal construction of the
provisions of Section 47-A, the answer to
the first question in the reference does not
pose any difficulty. The registering officer
under sub-section (1) was required to find
1 All] Smt. Pushpa Sarin Vs. State of U.P.
135
that the market value of the property as set
forth in instrument is less than even the
market value prescribed by the rules.
However, this requirement of sub-section (1)
of Section 47-A had not been incorporated
by the legislature either in sub-section (2) or
in sub-section (4). The registering officer
under sub-section (1) of Section 47-A,
exercised the power to refer the matter to the
Collector even before the registration of the
document. On the other hand, without
prejudice to the provisions of sub-section (1),
the registering officer was empowered by
sub-section (2) to refer the instrument to the
Collector for adjudication of the market
value and the duty, if he had reason to
believe that the market value of the property
had not been truly set forth in the instrument.
The power under sub-section (2) came into
existence, if while registering the instrument,
the registering officer formed a reason to
believe and the provision stipulated that after
registering the document, he was required to
forward it to the Collector who, in turn, upon
receipt of the instrument, had to pursue the
procedure under sub-section (3). Hence, it
would not be a correct interpretation of the
provisions of Section 47-A to read the
requirement of sub-section (1) into the
provisions of sub-sections (2) and (4). Each
of them operates in a distinct field and is
governed by a different set of conditions.
We, therefore, answer question 1 by holding
that a finding that the market value of the
property as set forth in the instrument is less
than even the minimum market value
determined in accordance with the rules
made under the Act applies to a situation
governed by sub-section (1) and not to a
situation governed by sub-sections (2) and
(4).
14. In connection with the first
question, we will now take up the fourth
question for analysis.
Section 27 of the Stamp Act
stipulated as follows:
"27. Facts affecting duty to be set
forth
in
instrument.
-
(1)
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.
(2) In the case of instruments relating
to immovable property chargeable with an
ad valorem duty on the value of the
property, and not on the value set forth,
the instrument shall fully and truly set
forth the annual land revenue in the case
of revenue paying land, the annual rental
or gross assets, if any, in the case of other
immovable property, the local rates,
Municipal or other taxes, if any, to which
such property may be subject, and any
other particulars which may be prescribed
by rules made under this Act."
15. In exercise of the powers
conferred by the provisions of the Stamp
Act, the Stamp Rules were made. Chapter
XV
contains
provisions
for
the
determination of the market value on
certain instruments.
16. Sub-section (3) of Section 47-A
provided that on receipt of a reference
under sub-section (1) or sub-section (2),
the Collector after furnishing a reasonable
opportunity of being heard and upon
holding an enquiry as prescribed by the
rules was required to determine the
market value of the property which is the
subject matter of the instrument as well as
the duty. The question as framed for
reference is whether the Collector should
demand stamp duty under Section 47-A
without a finding of fact that the market
value as stated in the document is less
136
 INDIAN LAW REPORTS ALLAHABAD SERIES
than that which was agreed upon between
the parties. The Collector, as we have
already noted, could be moved on a
reference by the registering officer under
sub-section (1) or sub-section (2) or could
even exercise his powers suo motu under
sub-section (4). When he received a
reference under sub-sections (1) and (2),
the Collector was required to follow the
provisions of sub-section (3). Similarly,
even when the Collector acted suo motu
under sub-section (4), he was required to
follow the procedure provided in subsection (3). In other words, once the
Collector was seized with the proceedings
either on a reference under sub-section (1)
or sub-section (2) or suo motu under subsection (4), what he was required to
determine is the market value of the
property
in
accordance
with
the
provisions of sub-section (3). Whether the
market value, as stated in the document, is
less than that which was actually agreed
upon between the parties, to our mind,
begs the basic question. The jurisdiction
of the Collector was to determine the
correct market value. These provisions of
Section 47-A were introduced in order to
curb the evasion of stamp duty and to
enable the Collector to determine what is
the correct market value of the property in
a situation where the instrument was not
reflective of the correct market value.
17. The law on the subject was duly
formulated in several decisions of this
Court.
18. In Kaka Singh vs. The
Additional
Collector
and
District
Magistrate (Finance and Revenue) and
another5, a Division Bench of this Court
noted that Section 47-A filled in a lacuna
because prior to the insertion of the
provision,
there
was
no
enabling
provision under the Act empowering the
revenue authority to make an enquiry into
the value of the property conveyed for
determining the duty payable thereon.
Section 27 of the Act laid down that 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 truly and fully set
forth therein. However, prior to the
insertion of Section 27, if the instrument
did not set forth the true market value of
the property, the revenue was not
empowered to adjudicate upon the correct
market value. This lacuna which was
noticed in a judgment of the Supreme
Court in Himalaya House Co. Ltd.,
Bombay vs. The Chief Controlling
Revenue Authority6 was remedied by the
insertion of Section 47-A. After the
insertion of Section 47-A, this Court had
taken the consistent position that the
power of the Collector was not only
confined to the minimum value which
was prescribed in the rules framed under
the Act. Rule 341 of Chapter XV of the
Stamp Rules provided that for the
purposes of the payment of stamp duty,
the minimum market value of immovable
property forming the subject inter alia of a
conveyance referred to in Section 47-A
(1) would not be less than what was
arrived at on the basis of the provisions of
the rules. But it was well settled that the
power of the Collector was not confined
to the minimum as prescribed in Rule
341. In other words, the value computed
under Rule 341 was not conclusive of
what should be the correct market value
when the Collector had to make a
determination in pursuance of an inquiry
under sub-section (3) of Section 47-A.
Under sub-section (1) of Section 47-A,
the registering officer could make a
1 All] Smt. Pushpa Sarin Vs. State of U.P.
137
reference to the Collector, if he found that
the market value as reflected in the
instrument was less than even the
minimum
prescribed
in
the
Rules.
However, the minimum which was
prescribed in the rules was at best a
guiding factor for the Collector and was
not conclusive of his power to determine
the market value. For that matter, the
value under Rule 341 was not binding
either on the person who produced the
instrument for registration or on the State
Government.
19. Subsequently, the provisions of
the Stamp Rules in regard to valuation
were replaced by the Uttar Pradesh Stamp
(Valuation of Property) Rules,
1997
which have been made in exercise of the
powers conferred by Sections 27, 47A
and 75 of the Stamp Act. However, it is
not necessary for the Court to express any
view on the scheme or provisions of those
rules since the period of dispute in the
present
reference
is
prior
to
the
enforcement of those rules.
20. We may also note at this stage
that the decision of the Division Bench in
Kaka Singh (supra) was followed by
another Division Bench of this Court in
Agra City Real Estate Development
Organisation vs. State of U.P. and
others7, where it was held as follows:
"Section 47A (1) does not say that
the valuation of the property for the
purpose of stamp duty has to be the
minimum value determined under the
Rules. All it says is that if the valuation
set forth in the instrument is less than the
minimum value determined in accordance
with the rules, then a reference has to be
made to the Collector. Thus, the minimum
value fixed under the rules is only for the
purpose of getting a reference made to the
Collector. When the reference comes before
the Collector, he has to make an enquiry
and determine the correct market value of
the property. After such enquiry, the
Collector can even hold that the correct
market value of the property is less than the
minimum fixed under the Rules."
21. In this view of the matter, we
answer question 4 by holding that the
power of Collector to determine the
market value either on a reference under
sub-section (1) or (2) of Section 47-A or
acting suo motu under sub-section (4) was
to determine the correct market value of
the property.
22. Now insofar as the second
question is concerned, the issue posed for
consideration before the Court is whether
the Collector has the power to fix the
valuation of a plot on the assumption that
it is likely to be used for commercial
purposes and whether the presumed future
prospective use of the land can be a
criterion for valuation by the Collector.
The Collector, while exercising his
jurisdiction
under
Section
47-A,
is
required to determine the market value of
the property on the date of the instrument.
It is a well settled principle of law that
stamp duty is a levy which is imposed not
on the transaction but on the instrument.
23. The attention of the Court has
been drawn to certain judgments of the
learned Single Judges of this Court which
had taken the view that the market value
of the land could not be determined with
reference to the use of the land to which
the buyer intends to put it in future.
24. Section 17 of the Stamp Act
provides that all instruments chargeable to
138
 INDIAN LAW REPORTS ALLAHABAD SERIES
duty and executed by any person in India
shall be stamped before or at the time of
execution.
25. In certain judgments of the
learned Single Judges of this Court, a
view had been taken that the authorities
are required to determine the value of the
land on the date on which the sale was
made and cannot consider the potential
value of the land to which it could be put
to use in future. (Smt. Kusum Lata
Jaiswal vs. State of U.P. and others8).
Similarly
in
Dinesh
Tiwari
vs.
Commissioner, Gorakhpur and others9, it
was held that the Collector had no power
to assess the market value of the property
on the basis of a future value which the
property may acquire.
26. The power and jurisdiction of
the Collector, as contained in Section 47A, is to determine the actual market value
of the property. The Collector in making
that determination is not bound either by
the value as described in the instrument or
for that matter, the value as discernible on
the basis of the rules.
27. In Ramesh Chand Bansal and
others vs. District Magistrate/Collector,
Ghaziabad and others10, the Supreme
Court held as follows:
"The object of the Indian Stamp Act
is to collect proper stamp duty on an
instrument or conveyance on which such
duty is payable. This is to protect the
State revenue. It is matter for common
knowledge in order to escape such duty
by unfair practice, many a time under
valuation
of
a
property
or
lower
consideration is mentioned in a sale deed.
The imposition of stamp duty on sale
deeds are on the actual market value of
such property and not the value described
in the instrument. Thus, an obligation is
cast on authority to properly ascertain its
true value for which he is not bound by
the apparent tenor of the instrument. He
has to truly decide the real nature of the
transaction and value of such property.
For this, Act empowers an authority to
charge stamp duty on the instrument
presented before it for registration. The
market value of a property may vary from
village to village; from location to
location and even may differ from the
sizes of area and other relevant factors.
This apart there has to be some material
before such authority as to what is likely
value of such property in that area. In its
absence it would be very difficult for such
Registering Authority to assess the
valuation of such instrument. It is to give
such support to the Registering Authority
the Rule 340-A is introduced. Under this
Collector has to satisfy himself based on
various factors mentioned therein before
recording the circle rate, which would at
best be the prima facie rate of that area
concerned. This is merely a guideline
which helps the Registering Authority to
assess the true valuation of a transaction
in an instrument. This gives him material
to test prima facie whether description of
valuation in an instrument is proper or
not.... Reading Section 47-A with the
aforesaid Rule 340-A it is clear that the
circle rate fixed by the Collector is not
final
but
is
only
a
prima
facie
determination of rate of an area concerned
only to give guidance to the Registering
Authority to test prima facie whether the
instrument has properly described the
value of the property. The circle rate
under this Rule is neither final for the
authority nor to one subjected to pay the
stamp duty. So far sub-sections (1) and
(2) it is very limited in its application as it
1 All] Smt. Pushpa Sarin Vs. State of U.P.
139
only directs the Registering Authority to
refer to the Collector for determination in
case property is under valued in such
instrument. The circle rate does not take
away the right of such person to show that
the property in question is correctly
valued as he gets an opportunity in case of
under valuation to prove it before the
Collector after reference is made. This
also marks the dividing line for the
exercise
of
power
between
the
Registering Authority and the Collector.
In case the valuation in the instrument is
same as recorded in the circle rate or is
truly described it could be registered by
Registering Authority but in case it is
under valued in terms of sub-section (1)
or sub-section (2), it has to be referred
and decided by the Collector. Thus, the
circle rate, as aforesaid, is merely a
guideline and is also indicative of division
of exercise of power between the
Registering Authority and the Collector."
28. The true test for determination
by the Collector is the market value of the
property on the date of the instrument
because, under the provisions of the Act,
every instrument is required to be
stamped before or at the time of
execution. In making that determination,
the Collector has to be mindful of the fact
that the market value of the property may
vary from location to location and is
dependent upon a large number of
circumstances having a bearing on the
comparative advantages or disadvantages
of the land as well as the use to which the
land can be put on the date of the
execution of the instrument.
29. Undoubtedly, the Collector is
not permitted to launch upon a speculative
inquiry about the prospective use to which
a land may be put to use at an uncertain
future date. The market value of the
property has to be determined with
reference to the use to which the land is
capable reasonably of being put to
immediately or in the proximate future.
The possibility of the land becoming
available in the immediate or near future
for better use and enjoyment reflects upon
the potentiality of the land. This potential
has to be assessed with reference to the
date of the execution of the instrument. In
other words, the power of the Collector
cannot be unduly circumscribed by ruling
out the potential to which the land can be
advantageously deployed at the time of
the execution of the instrument or a
period reasonably proximate thereto.
Again the use to which land in the area
had been put is a material consideration.
If the land surrounding the property in
question has been put to commercial use,
it would be improper to hold that this is a
circumstance which should not weigh
with the Collector as a factor which
influences the market value of the land.
30. The fact that the land was put to
a particular use, say for instance a
commercial purpose at a later point in
time, may not be a relevant criterion for
deciding the value for the purpose of
stamp duty, as held by the Supreme Court
in State of U.P. and others vs. Ambrish
Tandon and another11. This is because
the nature of the user is relateable to the
date of purchase which is relevant for the
purpose of computing the stamp duty.
Where, however, the potential of the land
can be assessed on the date of the
execution of the instrument itself, that is
clearly a circumstance which is relevant
and germane to the determination of the
true market value. At the same time, the
exercise before the Collector has to be
based on adequate material and cannot be
140
 INDIAN LAW REPORTS ALLAHABAD SERIES
a matter of hypothesis or surmise. The
Collector must have material on the
record to the effect that there has been a
change of use or other contemporaneous
sale deeds in respect of the adjacent areas
that would have a bearing on the market
value of the property which is under
consideration. The Collector, therefore,
would be within jurisdiction in referring
to exemplars or comparable sale instances
which have a bearing on the true market
value of the property which is required to
be assessed. If the sale instances are
comparable, they would also reflect the
potentiality of the land which would be
taken into consideration in a price agreed
upon between a vendor and a purchaser.
31. In the circumstances, we answer
the second question as referred in the
aforesaid terms.
32. The third question which has
been referred would not arise in this
reference. The question is what should be
the norms for fixing the valuation of free
hold land vis-a-vis lease hold land. In the
present case, it is not in dispute that the
land was not lease hold property. Hence,
properly construed the question would not
arise for determination in this reference.
33. Finally, in respect of the fifth
and the last question, the law on the
subject is clear. The power of substantive
review is a statutory power which has to
be conferred upon an authority by an
enabling provision of law. The power of a
substantive review cannot be implied.
34. In a decision of the Supreme
Court in Patel Narshi Thakershi and
others
vs.
Pradyumansinghji
Arjunsinghji12, the principle of law was
enunciated in the following terms:
"...It is well settled that the power to
review is not an inherent power. It must
be conferred by law either specifically or
by necessary implication. No provision in
the Act was brought to our notice from
which it could be gathered that the
Government had power to review its own
order. If the Government had no power to
review its own order, it is obvious that its
delegate could not have reviewed its
order..."
35. In Grindlays Bank Ltd.