Document Presenter Can't Avoid Stamp Duty By Withdrawing Instrument Before Registration: Madras High Court

The bench of Justice SM Subramaniam and Justice Mohammed Shaffiq noted that, as per the provisions of the Indian Stamp Act and the registration Rules, when a document or instrument is presented for registration, it would be scrutinised for the correctness of the stamp duty paid. If it is found that the stamp duty paid is insufficient, the Registering Authority is duty-bound to impound the document and send it to the Collector for the determination of stamp duty.

The court noted that after the stamp duty is determined by the Collector, it is sent back to the registering authority, who then issues a notice to the presenter, who then decides whether to continue with the registration process or seek the return of the document. The court thus pointed out that execution of the document would be sufficient for recovering the deficient stamp duty.

“Thus, statute contemplates an instrument executed and presented for registration must be scrutinized and correctness of stamp duty paid in the document to be verified. Therefore, non registration of an instrument presented would not be a ground to seek return of document. Execution of document would be sufficient for the purpose of recovering deficit stamp duty by invoking the provisions of Indian Stamp Act,” the court said.

The court was hearing an appeal filed by Gita Power and Infrastructure Private Limited. The company had presented an assignment agreement before the Sub registrar/registering Authority for registration on July 29, 2021. The Registering Authority referred the matter to the District Registrar, Administration on the ground that the document presented was not sufficiently stamped.

The company, noting that the stamp duty was high, decided to take back the document presented for registration and moved an application for return of documents. The applications were however dismissed by the Registering Authority. The review against the same was rejected by reducing the stamp duty and the documents were impounded to recover the stamp duty. Against this, the company had filed a writ petition, which was ultimately dismissed. The present appeal was against the order of single judge dismissing the company's petition.

The company argued that the instrument was not registered, and they had filed an application to return the document. It was submitted that the company had no intention to act on the assignment agreement and thus, the authorities had no power to demand stamp duty.

The Special Government Pleader, on the other hand, opposed the plea and submitted that once the document is presented for registration, the registering Authority is bound to verify the correctness of the stamp duty paid, and if there is any deficit, he has to initiate action by impounding the document. It was submitted that in the present case, such procedure was followed and there was no infirmity.

The court relied on Section 33(1)(a), Section 38(2), Section 40, Section 42, and Section 48 of the Indian Stamp Act, along with Rule 107 of the Registration Rules. The court noted that the choice of the presenter of Document would come into play only after determination of the stamp duty by the Collector and recovery of the stamp duty by the Collector, as per the procedure contemplated under the Act.

The court thus emphasised that the return of documents would be only after determination of the deficit stamp duty.

Thus, finding no reason to interfere with the order of the single judge, the court confirmed the same and dismissed the appeal.

Counsel for Appellant: Mr Derrick Sam G

Counsel for Respondents: Mr U. Baranidharan, Special Government Pleader

Case Title: Gita Power and Infrastructure Private Limited v. The Inspector General of Registration and Others

Citation: 2025 LiveLaw (Mad) 382

Case No: W.A.No.1609 of 2024