Stamp Duty Determined Based On Market Rate At Time Of Execution Of Sale Deed, Not When Agreement To Sell Was Executed: P&H High Court

The Punjab & Haryana High Court has clarified that for the purpose of determining the stamp duty payable on a sale deed, it is the market value of the property at the time of execution of the sale deed—and not the agreement to sell—which is relevant. Justice Anil Kshetarpal and Justice Rohit Kapoor said, "For the purpose of determining the amount of stamp duty on conveyance deed/ sale deed, the market rate prevailing at the time of execution of sale deed would be relevant and not when the parties entered into agreement to sell."The Court noted that the payment of stamp duty on sale deeds/conveyance deeds is governed by the Stamp Act, 1899 (hereinafter referred to as '1899 Act', which has been amended not only by the Union of India but also by the States.Perusing Section 3 of 'the 1899 Act' it noted that the provision provides for levy of the duty on the instrument (conveyance deed) but not on the transaction. "However, the court has to look into the nature of the transaction covered by the instrument in order to determine the nature of the instrument," it added further.Reliance was placed on State of Rajasthan vs. Khandaka Jain Jewellers', [(2007) 14 SCC 339] wherein the Supreme Court came to the conclusion that stamp duty on a sale has to be assessed on the market value of the property at the time when the instrument of sale was executed. The valuation as at the time of agreement to sell or at the time of filing of the suit is not relevant.The bench also noted that in 'Shanti Bhushan (dead) through Lrs vs. State of UP and others' 2023 INSC 425, the Supreme Court again while relying upon the judgment passed in Khandaka Jain Jewellers's case (supra) has held that market value specified in the agreement to sell or the market value prevailing on the date of agreement would have no relevance for deciding stamp duty because the relevant market value for the purpose of assessing the stamp duty is the one which prevails on the date of execution of the conveyance in view of Section 3 read with Section 17 of the 1899 Act.This matter has been placed before the Division Bench in view of divergence of views by the co-ordinate Benches of the High Court. The short question which requires adjudication is “whether the valuation of the stamp duty should be assessed on the market rate prevailing at the time of the registration of the sale deed or when the parties entered into agreement to sell?”The above question was accordingly answered.Mr. L.S.Sidhu, Advocate and Mr. Ishan Thakur, Advocate for the petitionerDr. D.S.Lamba, Addl. Advocate General, PunjabTitle: Uggar Singh v. State of Punjab and othersClick here to read/download the order

Stamp Duty Determined Based On Market Rate At Time Of Execution Of Sale Deed, Not When Agreement To Sell Was Executed: P&H High Court

Aiman J. Chishti

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