Madras High Court Upholds Stamp Duty Procedures in Gita Power Case

Court Confirms Mandatory Stamp Duty Verification Before Document Registration

In a significant ruling, the Madras High Court has reinforced the procedural requirements for stamp duty verification as outlined in the Indian Stamp Act, 1899, and the Registration Act. The Division Bench, comprising Justices S.M. Subramaniam and Mohammed Shaffiq, dismissed the appeal filed by Gita Power and Infrastructure Private Limited, thus confirming the order passed by the Single Judge in W.P.No.33963 of 2022.

The appellant, Gita Power and Infrastructure Private Limited, had sought the return of an assignment agreement presented for registration, arguing that since the document was not registered, they should be allowed to take back the document without paying the demanded stamp duty. The Registering Authority had initially impounded the document due to insufficient stamp duty and referred it to the Collector for determination and recovery.

The appellant’s counsel contended that the Registration Rules entitle the document presentant to submit an application for its return if it remains unregistered, relying on precedents set by Cybercity Builders and Developers Private Limited v. Inspector General of Registration and Government of Andhra Pradesh v. P. Laxmi Devi. However, the court clarified that the provisions of the Indian Stamp Act are explicit in mandating the impounding of documents with insufficient stamp duty, and the choice to proceed with registration or seek document return only arises post determination and recovery of the stamp duty by the Collector.

The court referred to Sections 33, 38, 40, 42, and 48 of the Indian Stamp Act, which stipulate the processes for impounding and determining stamp duty. It underscored the importance of Rule 107 of the Registration Rules, which outlines the procedure following the Collector’s adjudication.

Justice Subramaniam emphasized that the Registering Authority has a statutory obligation to ensure the correctness of the stamp duty paid, and that the appellant's request to bypass these procedures was untenable. The judgment also cited precedents from the Supreme Court, affirming that the legislative intent and statutory mandates cannot be overridden by subjective interpretations or perceived hardships.

The court's decision reinforces the stringent adherence to statutory processes in matters of stamp duty and registration, thereby ensuring compliance with the legislative framework designed to safeguard revenue and uphold the integrity of document registration.

Bottom Line:

Under the Indian Stamp Act, 1899 and Registration Act, the Registering Authority must scrutinize the correctness of the stamp duty paid on any document presented for registration - If insufficient stamp duty is found, the Registering Authority is obligated to impound the document and send it to the Collector for determination and recovery of deficit stamp duty - Only upon compliance with these procedures can the presentant of the document decide either to proceed with the registration or seek the return of the document.

Statutory provision(s): Sections 33, 38, 40, 42, 48 of the Indian Stamp Act, 1899; Rule 107 of Registration Rules

Gita Power and Infrastructure Private Limited v. Inspector General of Registration, (Madras)(DB) : Law Finder Doc Id # 2800491