Mumbai: The Bombay High Court has quashed stamp duty demands running into crores of rupees against firms involved in Goregaon property transactions. Authorities must consider the entire chain of documents to determine whether multiple deals formed part of a single principal transaction, rather than treating the final conveyance as a new sale, Justice Amit Borkar, sitting singly, held on Oct 5.There were four petitions that had a similar issue and the HC disposed of them by a single judgment.The petitions had challenged the legality, validity and propriety of an order dated March 3, 2016, passed by the deputy controller of stamps in Mumbai. In one of the petitions, a partnership firm, the owner of land at Laxmi Industrial Estate, Village Pahadi, Goregaon in Mumbai, said the plot was in 1977 declared to be a slum under the Maharashtra Slum Areas (Improvement, Clearance, and Redevelopment) Act, 1971, as it was found to be encroached upon and had shanties. Landowners had entered into development-cum-sale agreements dated Dec 9, 1985, with different members of a Family for over Rs 5 lakh for five plots spread over 8,400 sq metres and the stamp duty payable was only Rs 40,000 at the time. Part of the plot was under CRZ I and part under CRZ II, also a forest area, and there were over 280 shanties. After initially getting SRA approval, in 2012, the SRA required the Petitioners to establish and complete their title in respect of the lands they had acquired development-cum-sale rights to under the Agreements of 1985 and of which they were in possession. Petitioners thus prepared four conveyances. But in 2013, the stamp authorities said the land was valued at over Rs 56 crore in 2012 and hence stamp duty payable was over Rs 2 crore. The petitioners, represented by senior counsel Aspi Chinoy, challenged such a demand. They argued the market value of 2012 could not have been applied.Vineet Naik, senior advocate appearing for the deputy controller, said the challenge was also to orders of March 2016 rejecting the appeals of the landowner, hence the stamp duty was payable.The HC said, “First question is what is the real nature of the transaction?” “According to the petitioners, the conveyances made in 2012 were only the final documents by which the transactions made in 1985, and in one case in 1996, were completed and the title was formally transferred. According to the state, the conveyances of 2012 were independent instruments. Therefore, according to the state, the market value of the properties in 2012 had to be taken.”The HC observed, “The documents have to be seen together,” and added that a stamp duty matter cannot be decided only by looking at the last document and forgetting why and in what circumstances that document came to be made, but at the same time there should be material to show how the documents are connected.There must be some material on record showing how the different documents are connected, which Justice Borkar held was available in the case.“The long gap between the earlier agreements and the final Conveyances does not end the earlier transaction,” said the HC and held that “If the earlier agreements are read along with the possession documents, powers of attorney and receipts, and the final conveyances are seen in that background, it would not be proper to divide the transaction into one earlier transaction which had ended and another new transaction starting in 2012. The final conveyances were made to complete the transfer which had been contemplated under the earlier arrangements.”The state argued that the transactions under the earlier documents were separate and the Conveyances of 2012 must be valued independently. “I am unable to accept this submission. The material shows continuity in the parties, continuity in the properties and continuity in the rights…” Justice Borkar said.The petition has also said the 2012 ready reckoner could not have been applied as the properties were affected by various restrictions, including slum conditions, CRZ or environmental restrictions, mangroves, reservations, road reservations and other development restrictions. The HC said that while the RR forms the starting point, in every case it cannot prove the true market value and the state had to factor in the circumstances of the particular properties. The HC said, however, since the 2012 conveyance was held not to be a fresh one but to be the final document completing the 1985 sale, it didn’t need to decide on the RR aspect.The HC held, “Authorities treated the Conveyances of 2012 as if an entirely new sale had taken place in 2012 and thereafter applied the market value of 2012 to that fresh transaction. The material on record does not support this basic factual assumption,” and set aside the stamp duty demand in crores based on the 2012 market price.
