Judgment:
ORDER
G. Yethirajulu, J.
1. This writ of certiorari has been filed to call for the records pertaining to the proceedings of the District Registrar and Collector, R.R. District, dated 20-9-2004 and to quash the same as illegal and without jurisdiction and consequently to direct the respondents to release the conveyance deed, dated 26-12-1997 before the third respondent to the petitioner.
2. The petitioner is a registered company incorporated under the provisions of the Companies Act and is dealing in bottling and distribution of non-alcoholic beverages. For the purpose of expansion of its business, the petitioner had negotiated with M/s. Spectra Bottling Company Limited to take over its business including the land and buildings at Moul-a-ali, R.R. District. The petitioner purchased the land admeasuring Acs. 9-31 guntas along with buildings for a total consideration of Rs. 15 crores. The vendor M/s. Spectra Bottling Company Limited had executed a sale deed, dated 26-12-1997 conveying the said property. The vendor has obtained the valuation certificate from the third respondent according to which the market value of the property covered by the conveyance deed was less than Rs. 6 crores. Since the sale consideration paid under the conveyance deed was Rs. 15 crores, which is more than the market value, the petitioner paid the stamp duty on Rs. 15 crores. When the document was presented for registration, it was kept pending by the third respondent and without any basis and without following the procedure under the Rules, referred the document to the second respondent for determination of the market value of the property covered by the instrument. The second respondent issued a notice calling upon the petitioner to submit his explanation against the market value determined at Rs. 56,23,00,000/-. The petitioner submitted an explanation, dated 3-3-2003 stating that the vendor before the execution of the sale deed verified about the required stamp duty payable in respect of the instrument from the third respondent who had in turn informed through his letter, dated 4-12-2007 that the required stamp duty is Rs. 1.65 crores. Since the sale consideration mentioned in the instrument was Rs. 15 crores, an amount of Rs. 1.65 crores was paid towards the stamp duty. The petitioner company through the instrument had purchased the land and the building and nothing more. The sale consideration is much more than the market value based on the basic registered value, therefore, there was no necessity for the third respondent to refer the document for fixation of the market value on the ground that the document is under-valued. Under the conveyance deed only, the land and buildings were conveyed and stamp duty was paid accordingly. The other items like bottles, crates, furniture and goodwill, etc. mentioned in the above sale agreement are not required to be transferred by the registered sale deed and they are not the subject-matter of the deed of conveyance in question. The authority under Section 47-A of the Indian Stamp Act, 1899 (for short 'the Act') can only consider the value of the property, which is the subject-matter of conveyance. He cannot go beyond the schedule of the property and fix the market value by including certain other properties which is not the subject-matter of conveyance. There are no grounds to keep the documents presented for registration pending and to refer the matter under Section 47-A of the Act to the Collector for determination of the market value of the property. There should be some basis for the Registering Officer to entertain a doubt regarding the under-valuation of the property covered by the instrument. The Registering Authority, on the basis of the business sale agreement, infers that the market value mentioned in the instrument is not true. Under the business sale agreement, the petitioner has agreed to purchase not only the immovable properties, but also movable properties like bottles, crates etc. But the other items included in the business sale agreement are not part of the deed of conveyance presented for registration. The Registering Authority cannot look into the value of some other transaction, which is not part of the property being conveyed under the instrument presented for registration, therefore, the order is liable to be quashed.
The respondents filed a counter-affidavit contending that the petitioner tried to evade the stamp duty by quoting lesser stamp duty in the documents. The impugned order was passed by taking into consideration the amount mentioned in the business sale agreement and the document presented for registration. The Collector rightly passed the order imposing stamp duty. There are no merits in the writ petition, therefore, it is liable to be dismissed.
3. It is an undisputed fact that the property covered by the conveyance deed was the land and the building of the factory. In the conveyance deed, dated 26-12-1997, it is mentioned that pursuant to the business sale, the vendor has agreed to convey the land and buildings situated at Moul-a-ali for Rs. 15 crores. The respondents did not dispute the market value of the land and buildings. It is not the contention of the respondents that the land and the buildings are under-valued. It is the contention of the respondents that there was a reference to the business sale agreement between the parties in the conveyance deed transferring bottles, crates, furniture and goodwill, etc. to the petitioner and the value mentioned in the business sale agreement was Rs. 56,23,00,000/-, therefore, they insist that the petitioner should pay stamp duty on the said amount. In the schedule of properties attached to the conveyance deed, the particulars of the land and buildings were mentioned. The movable properties covered by the agreement are not included in the conveyance deed. It is the specific version of the petitioner that though there was an agreement between the parties with respect of the properties, the conveyance deed was executed only in respect of the land and structures.
4. It is the contention of the learned Government Pleader representing the respondents that since there is a reference about the business sale agreement, the stamp duty has to be paid on the entire value of the properties covered by the agreement of sale and it is not sufficient if it is simply mentioned the value of the land and the structures belonging to the petitioner.
5. Section 40 of the Act reads as follows:
40. Collector's power to stamp instruments impounded:
(1) When the Collector impounds any instrument under Section 33, or receives any instrument sent to him under Section 38, Sub-section (2), not being an instrument chargeable with a duty not exceeding ten naye paise only or a bill of exchange or promissory note, he shall adopt the following procedure:
(a) if he is of opinion that such instrument is duly stamped, or is not chargeable with duty, he shall certify by endorsement thereon that it is duly stamped, or that it is not so chargeable, as the case may be;
(b) if he is of opinion that such instrument is chargeable with duty and is not duly stamped, he shall require the payment of the proper duty or the amount required to make up the same, together with a penalty of the five rupees; or, if he thinks fit, an amount not exceeding ten times the amount of the proper duty or of the deficient portion thereof, whether such amount exceeds or falls short of five rupees : Provided that, when such instrument has been impounded only because it has been written In contravention of Section 13 or Section 14 the Collector may, if he thinks fit, remit the whole penalty prescribed by this section.
(2) Every certificate under Clause (a) of Sub-section (1) shall, for the purposes of this Act, be conclusive evidence of the matters stated therein.
(3) Where an instrument has been sent to the Collector under Section 38, Sub-section (2), the Collector shall, when he has dealt with it as provided by this section, return it to the impounding officer.
Section 41-A of the Act reads as follows:
41-A. Recovery of Stamp Duty not levied or short levied : (1) Whereafter the commencement of the Indian Stamp (Andhra Pradesh Amendment) Act, 1986, any instrument chargeable with duty has not been duly stamped and registered by any Registering Officer by mistake and remarked as such by the Collector or any audit party, the Collector may, within five years from the date of registration serve a notice on the person by whom the duty was payable requiring him to show cause why the proper duty or the amount required to make up the same should not be collected from him:
Provided that where the non-payment was by reason of fraud, collection or any willful misstatement or suppression of facts or contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of duty, the Collector may, within ten years from the date of registration, serve a notice on such person to show cause why the amount required to make up the deficit stamp duty should not be collected from him along with a penalty of three times of deficit stamp duty.
(2) The Collector or any officer specially authorized by him in this behalf shall, after considering the representation if any, made by the person on whom notice is served under Sub-section (1), determine by an order, the amount of duty and the penalty due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount as determined. On payment of the amount the Collector shall add a certificate under Section 42.
(3) Any person aggrieved by an order under Sub-section (2) may prefer an appeal before the Chief Controlling Revenue Authority, Andhra Pradesh, Hyderabad within three months from the date of such order;
(4) Any amount payable under this section shall be recovered as an arrear of land revenue.
Section 47-A of the Act reads as follows:
47-A Instruments of conveyance, etc. under-valued how to be dealt with : (1) where the registering officer appointed under the Registration Act, 1908, (Central Act 16 of 1908), while registering any instrument of conveyance, exchange, gift, partition, settlement, release, agreement relating to construction, development or sale of any immovable property or power of attorney given for sale, development of immovable property, has reason to believe that the market value of the property which is the subject-matter of such instrument has not been truly setforth in the instrument, or that the value arrived at by him as per the guidelines prepared or caused to be prepared by the Government from time to time has not been adopted by the parties, he may keep pending such instrument and refer the matter to the Collector for determination of market value of the property and the proper duty payable thereon:
Provided that no reference shall be made by the registering officer unless an amount equal to fifty per cent of the deficit duty arrived at by him is deposited by the party concerned.
(2) On receipt of a reference under Sub-section (1), the Collector shall, after giving the parties an opportunity of making their representation 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-matter of such instrument and the duty as aforesaid:
Provided that no appeal shall be preferred unless and until the difference, if any, in the amount of duty is paid by the person liable to pay the same, after deducting the amount already deposited by him:
Provided further that where after the determination of market value by the Collector, if the stamp duty borne by the instrument is found sufficient, the amount deposited shall be returned to the person concerned without interest.
(3) The Collector may suo motu within two years from the date of registration of such instrument, not already referred to him under Sub-section (1), call for and examine the instrument to the purpose of satisfying himself as to the correctness of the market value of the property which is the subject-matter of such instrument and the duty payable thereon and it, after such examination, he has reason to believe that 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 as aforesaid in accordance with the procedure provided for in Sub-section (2), The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty:
Provided that nothing in this sub-section, shall apply to any instrument registered before the date of commencement of the Indian Stamp (Andhra Pradesh Amendment) Act, 1971.
(3A)(i) The Inspector General may suo motu, call for and examine the record of any order passed or proceedings recorded by the Collector under Sub-section (2) or Sub-section (3) and if such order or proceeding recorded is found leading to loss of legitimate revenue due to disregard of market value by the Collector based on mistake, omission, or failure to take into account, any direct or collateral factual evidence affecting the market value of the property Involved in the case referred under Sub-section (2) or Sub-section (3) as the case may be may make such enquiry or cause such enquiry and inspection of the property to be made and subject to the provisions of this Act may initiate proceedings to revise, modify or set aside such order or proceeding and may pass such order in reference thereto as he thinks fit determining the market value and corresponding deficit stamp duty:
Provided that such action for revision shall be initiated within a period of one year from the date of the order of proceeding issued by the Collector acting under Sub-section (2) or Sub-section (3);
(ii) the power under Clause (1) shall not be exercised by the authority specified therein in respect of any issue or question which is the subject-matter of an appeal before, or which was decided an appeal by, the appellate authority under Sub-section (5);
(iii) no order shall be passed under Clause (i) enhancing any duty unless an opportunity has been given to the party to show cause against the proposed revision of market value and deficit Stamp Duty;
(iv) where any action under this sub-section has been deferred in respect of any reference under Sub-section (2) or Sub-section (3) on account of any stay order granted by the Court in any case or by reason of the fact that another proceeding is pending before the Court involving a question of law having a direct bearing on the order or proceeding in question, the period during which the stay order was in force or such proceeding was pending shall be excluded in computing the period of one year specified in the proviso to Clause (i) of this section for the purpose of exercising the power under this sub-section.
(4) Any person aggrieved by an order of the Collector under Sub-section (2) or Sub-section (3) may appeal to the appellate authority specified in Sub-section (5). All such appeals shall be preferred within such time and shall be heard and disposed of in such manner, as may be prescribed by rules made under this Act.
(4A) Any person aggrieved by the order of the Inspector-General under Sub-section (3A) may appeal to the High Court within a period of two months from the date of receipt of such order;
(5) The appellate authority shall be:
(i) in the cities of Hyderabad and Secunderabad, the City Civil Court,
(ii) elsewhere:
(a) the Subordinate Judge or if there are more than one Subordinate Judge, the Principal Subordinate Judge, having jurisdiction over the area in which the property concerned is situated; or
(b) if there is no such Subordinate Judge, the District Judge having jurisdiction over the area aforesaid.
(6) For the purpose of this Act, market value of any property shall be estimated to be the price which in the opinion of the Collector or the appellate authority, as the case may be, such property would have fetched or would fetch if sold in the open market on the date of execution of any instrument referred to in Sub-section (1):
Provided that in respect of instruments executed by or on behalf of the Central Government or the State Government or any authority or body incorporate by or under any law for the time being in force and wholly owned by Central/State Government, the market value of any property shall be the value shown in such instrument.
There is no dispute that the Collector has power to impound the instruments under Section 40 of the Act if no stamp duty or deficit stamp duty is paid. There is no dispute about the powers of the Collector under this Section. Under Section 41-A of the Act, also, there is no dispute that the authorities are entitled to recover the stamp duty not levied or short levied. Under Section 47-A of the Act, if the authorities believed that the market value of the properly which is the subject-matter of the instrument has not been truly set forth in the instrument, he may keep the document pending and refer the matter to the Collector for determination of the market value of the property and the property payable therein. But, it has to be considered whether there is any machinery embedded to the earth. If so, whether it was not included in the sale deed for the purpose of value of the property covered by the sale deed.
7. In this connection, it is appropriate to refer to the judgment of the Supreme Court.
In Duncans Industries Ltd. v. State of U.P. : 2000ECR19(SC) , The Supreme Court considered the aspect and held:
Whether a machinery which is embedded in the earth is movable property or an immovable property, depends upon the facts and circumstances of each case, Primarily, the Court will have to take into consideration the intention of the parties when it decided to embed the machinery whether such embedment was intended to be temporary or permanent. A careful perusal of the agreement of sale and the conveyance deed along with the attendant circumstances and taking into consideration the nature of machineries involved clearly shows that the machines which have been embedded in the earth to constitute a fertilizer plant in the instant case, are definitely embedded permanently with a view to utilise the same as a fertilizer plant. The description of the machines as seen in the Schedule attached to the deed of conveyance also shows without any doubt that they were set up permanently in the land in question with a view to operate a fertilizer plant and the same was not embedded to dismantle and remove the same for the purpose of sale as machinery at any point of time. Hence, the appellants contention that these machines should be treated as movables cannot be accepted, nor can it be said that the plant and machinery could have been transferred by delivery of possession on any date prior to the date of conveyance of the title to the land.
The Supreme Court further observed that:
In order to decide the further question as to whether the vendor did transfer the title of the plant and machinery in the instant case by the conveyance deed, it is again imperative to ascertain the intention of the parties from the material available on record. While ascertaining the intention of the parties, we cannot preclude the contents of the agreement pursuant to which the conveyance deed in question has come into existence. We have noticed that as per the agreement it is clear what was agreed to be said is the entire business of fertilizer on an 'as is where is' basis including the land, building thereon, plant and machinery relating to fertilizer business.
From the above decision, it is clear that the machinery embedded to earth can be treated as immovable property and when there is machinery in a particular building or premises embedded to earth, it cannot be excluded for the purpose of conveyance to the purchaser by showing only the buildings existing in the premises. If there is an agreement to the effect that the vendor agrees to sell the land, the buildings thereon, plant and machinery relating to the business, all those things have to be treated as immovable property and the value of those properties have to be mentioned in the conveyance deed for the purpose of working out the stamp duty and registration fees. The learned Government Pleader, therefore, submits that the properties mentioned in the agreement have to be taken into consideration for the purpose of value of the property to be conveyed and the stamp duty and registration fees has to be collected on that basis.
8. By virtue of the submissions made by the learned Government Pleader, I have gone through the terms and conditions of the conveyance deed. In para 2 of the conveyance deed, it was mentioned as follows:
The Vendor hereby grants, conveys, transfers, assures and assigns the said Immovable Property together with all hereditaments and premises standing thereof together with all and singular houses, outhouses, edifices, buildings, courtyards, areas, ways, walls, compounds, paths, passages, water, watercourses, seers, ditches, drains, trees, plants, lights, liberties easements, profits, privileges, advantages, rights, members and appurtenances of whatsoever nature of the said Immovable Property belonging to or appurtenances thereto.
In para 1 of the conveyance deed, it was mentioned as follows:
The vendor doth hereby grant, convey, transfer, assign and assure, all that Immovable Property bearing No. 44-69, Moula Ali, Hyderabad-500 040, as more particularly described in Schedule I hereunder.
9. In the business agreement between the parties, in para D it was mentioned as follows:
Acquired Business Immovable Properties means all immovable property, whether owned or lawfully leased, in possession of the seller including all land, buildings, improvements, production lines, equipment attached to the earth, easements, rights of way and appurtenances thereon or thereto and other rights relating thereto including without limitation those which are described in Schedule 1.1 (D).
According to this para, the immovable property along with equipment attached to the earth has been described in schedule 1.1(D). Scheduled 1.1 (D) is in respect of the acquired business immovable property. In all the pages, only buildings were described and there is no mention about the existence of any machinery embedded to the earth in any part of the building or the site mentioned in the agreement. By entertaining a doubt whether the parties intentionally omitted to mention about the machinery embedded to the earth, the Sub-Registrar's report was called for, who submitted the said report after inspecting the premises for the purpose of fixing the valuation. But unfortunately, the Sub-Registrar's report also does not disclose the existence of any machinery embedded to the earth for the purpose of treating it as an immovable property and for inclusion of its value to the value of the conveyance deed.
10. In the light of the above facts, no material has been placed by the respondents that either the value of any of the buildings or the land are under-valued or that the value of any of the machinery embedded to the earth is not shown in the conveyance deed. In the absence of such material, the value of the immovable property mentioned in the agreement cannot be automatically included in the conveyance deed when the parties are not inclined to do so. Since the report of the Sub-Registrar is not that the buildings or the land have been under-valued, there is no ground to hold that the property has been under-valued and the petitioners are not entitled to the relief as prayed for.
11. Since the respondents are not disputting the value of those properties, they are not entitled to say that the petitioner has to pay stamp duty on the properties which are not covered by the conveyance deed, therefore, I find sufficient force in the contention of the petitioner that the order passed by the Registrar, Rangareddy District, dated 20-9-2004 is illegal and without jurisdiction. As the stamp duty is correctly paid by the petitioner in respect of the properties covered by the conveyance deed, the respondents are bound to register the conveyance deed and release the same in favour of the petitioner.
12. The writ petition is, accordingly, allowed directing the respondents not to insist for payment of further stamp duty and register the conveyance deed without raising any further objection regarding payment of stamp duty and release the same in favour of the petitioner. No order as to costs.