Supreme Court to Examine Stamp Authority Powers in Property Valuation
The Supreme Court of India is set to deliberate on whether stamp authorities can initiate proceedings for alleged property undervaluation without evidence of fraudulent intent to evade stamp duty. This decision arises from the case BPCL Vs DRO.
Current Legal Precedent Under Scrutiny
A bench comprising Justices Dipankar Datta and Sheel Nagu has raised questions about the accuracy of a previous three-judge bench ruling in VN Devadoss v. Chief Revenue Control Officer-cum-Inspector of Stamps. The earlier decision established that Section 47-A of the Indian Stamp Act, 1899, requires proof of intentional undervaluation with fraudulent intent to evade stamp duty.
Judicial Discipline and Larger Bench Referral
Given that the VN Devadoss case was resolved by a three-judge bench, the current two-judge bench has adhered to judicial protocol by following the precedent. Nonetheless, they have suggested that a larger bench re-evaluate the issue. Consequently, they have requested the Chief Justice to assemble a bench of appropriate size for further examination.
Case Background: BPCL Appeal
The matter originated from an appeal by Bharat Petroleum Corporation Limited (BPCL) against a judgment by the Madras High Court. The case concerns stamp duty on land acquired from the Union government. BPCL had settled the complete sale amount and subsequently paid stamp duty and registration fees based on the value in the transfer deed. However, the registering authority, noticing a discrepancy between the declared value and the guideline value, invoked Section 47-A, demanding additional stamp duty.
Court’s Analysis on Section 47-A
The Supreme Court highlighted that Section 47-A mandates the registering authority to have a “reason to believe” that the market value or consideration has not been accurately portrayed, without explicitly necessitating fraudulent intent. The court noted that interpreting the provision to demand proof of intent could equate to judicial legislation.
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Implications of the VN Devadoss Test
The court expressed concerns that the VN Devadoss test could transform a valuation process into a “quasi-criminal enquiry,” potentially forcing honest purchasers to defend their integrity merely because a property was sold for less than the guideline value. Conversely, requiring evidence of fraud at the outset might hinder authorities from investigating transactions where part of the payment is made in cash.
Issues for the Larger Bench
The bench has referred the following questions to a larger bench:
- Does the ruling in VN Devadoss, later followed in Registrar of Assurances v. ASL Vyapar (P) Ltd., correctly interpret Section 47-A as applicable only in cases of intentional undervaluation with fraudulent intent, or can the provision be invoked without evidence of such intent, based on the actual nature and value of the transaction?
- Do the decisions in Ramesh Chand Bansal v. District Magistrate/Collector and Shanti Bhushan v. State of Uttar Pradesh establish the correct legal interpretation?
Legal Representation
The petitioner, BPCL, was represented by Additional Solicitor General N Venkataraman and advocates T Sundar Ramanathan, Vivek Pandey, Krishan Singhal, Aastha Sardana, Anshika Singh, Shivkumar, and Abshieke R. The respondents were represented by Senior Additional Advocate General of Tamil Nadu Haripriya Padmanabhan, along with advocates Kanika Kalaiyarasan and Shourya Das Gupta.
