15 十月 2020

Stamp duty on property lease – No difference between property owned by Government and private person

The Bombay High Court has rejected the contention of the stamp duty authorities that as the leased property was owned by Mumbai Metropolitan Region Development Authority, the market value of the said property cannot be decided and hence stamp duty needs to be paid on 100% of the amount paid for the lease instead of 90% of the market value as contemplated under Article 36(iv) of Schedule I to the Maharashtra Stamp Act, 1958.

Quashing the impugned order which sought to make a distinction between a property owned by the Government or its instrumentality on the one hand and a private property on the other and thus demanding differential stamp duty, the Court in the case Goisu Realty Private Limited v. State of Maharashtra [Judgement dated 05-10-2020] observed that no such distinction was carved out in law.

Upholding the submissions of Mr. V. Sridharan, Senior Advocate, Bombay High Court, the Counsel for the petitioner, the Court held,

Mr. Sridharan is correct in his submission when he submits that the stamp authorities have proceeded on a completely wrong premise to charge stamp duty on 100% of the market value which is clearly contrary to the statute.

The department’s contention that if any consideration in the form of premium or security deposit paid is higher than the market value, then the entire amount of consideration agreed between the parties, needs to be taken into consideration and must be charged on that basis, namely, at 100%, was thus rejected.

The High Court was of the view that the reliance placed by the statutory authorities on Explanation I to Article 36(iv) was wholly misconceived, as the Explanation does not derogate from the fact that in a lease exceeding 29 years, the stamp duty leviable thereon would be as if it is a conveyance under Clauses (a), (b) or (c) of Article 25, on 90% of the market value of the said property.

The Explanation stipulated that any consideration in the form of premium or money advanced or to be advanced, or security deposit, by whatever name called shall, for the purpose of market value, be treated as consideration passed on.

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