SHANTI BHUSHAN (D) THR. LR. & ORS versus STATE OF U.P. AND ORS

Citation: [2023] 6 S.C.R. 513 · Decided: 25-04-2023 · Supreme Court of India · Bench: ABHAY S. OKA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SHANTI BHUSHAN (D) THR. LR. & ORS.
v.
STATE OF U.P. AND ORS.
(Civil Appeal No. 8388 of 2017)
APRIL 25, 2023
[ABHAY S. OKA AND RAJESH BINDAL, JJ.]
Stamp Act,1899 – ss.31,32, 47-A and Art. 23 of the Schedule
IB – Market Value of property – Determination of – A property was
purchased by the appellants under a registered sale deed from the
vendor – Appellants were already in possession land as tenants –
The appellants calculated Rs.6,67,200/-as the market value of the
property and paid the stamp duty quantified at Rs. 46,700/- – The
Assistant Stamp Collector, held that the market value of the land
will have to be calculated at the rate of Rs. 24,000/per sq. meter –
Thus, on the date of the sale deed, the market value of the sale
deed property was Rs.19,23,08,305/- on which stamp duty of
Rs.1,34,61,630/- was payable – Appellants were directed to pay a
deficit stamp duty along with penalty and the interest – The appellants
preferred an appeal against the order of Assistant collector, which
was dismissed by the Appellate Authority – The above orders were
challenged before the High Court – The High Court affirmed the
market value fixed by the authorities but set aside the demand for
penalty – On appeal, held: Stamp duty on a conveyance will be
payable as per the market value prevailing on the date of conveyance
unless consideration shown therein is more than the prevailing
market value – The market value fixed by appellants was fixed by
adopting method used for levy of property tax under the Municipal
laws, such a value cannot be taken as basis for determining the
market value for the purpose of Art. 23 – Further, a property in
possession of a tenant will fetch lesser value in the open market
than the market value of a similar property exclusively in possession
of the vendor as the buyer will not get actual possession of the
portion of the property in possession of the tenant – The market
value can be determined by the comparison method even in case of
a property in possession of tenants – If no comparable instances
are found, the market value can be fixed of the property in possession
of tenants by making an appropriate deduction from the market
[2023] 6 S.C.R. 513
513
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SUPREME COURT REPORTS
[2023] 6 S.C.R.
value of a comparable property in which there are no tenants –
Even if the guidance value of Rs. 24,000/- per sq. meter is to be
taken as the market value of the sale deed land, necessary deductions
will have to be made from the market value as the appellants were
already in possession of the sale deed land as tenants – The extent
to which deduction can be made will depend upon the nature of the
tenancy and other material factors – Case sent back to the Assistant
Stamp Collector for determination of the market value of the sale
deed land.
Stamp Act, 1899 – Interpretation of – In interpreting a taxing
statute, equitable considerations cannot be applied – The rule of
literal construction must be applied while interpreting a taxing
statute – It must be interpreted in terms of the natural construction
of the words used – There is no scope to imply anything which is not
expressly provided.
Allowing the appeal, the Court
HELD:1. The Stamp Act is a taxing statute. In interpreting
such a statute, equitable considerations cannot be applied. A
taxing statute has to be interpreted in accordance with what is
clearly expressed therein. While interpreting such a statute and
determining the liability to pay tax, the provisions are required
to be construed strictly. In other words, the rule of literal
construction must be applied while interpreting a taxing statute.
It must be interpreted in terms of the natural construction of the
words used. There is no scope to imply anything which is not
expressly provided. [Para 18][524-D-E]
2. In view of Article 23 of Schedule I of the Stamp Act, the
stamp duty payable on a conveyance will be in accordance with
the market value of the subject property on the date of the
conveyance unless the consideration shown therein is more than
the prevailing market value. When a sale deed is presented for
registration, the registering authority must ascertain the correct
market value of the property subject matter of the document on
the date of execution of the document. The stamp duty is payable
on the basis of such market value and not on the consideration
mentioned in the document. If the consideration mentioned is
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more than the market value, the s

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