Stamp Duty Relief For Co-operative Societies Cannot Be Conditioned On Extra Verification Not Mandated By Law : Supreme Court

The Supreme Court on Friday (December 5) struck down a Jharkhand Government Memo that required cooperative societies to obtain an Assistant Registrar's recommendation before claiming stamp duty exemption under Section 9A of the Indian Stamp (Bihar Amendment) Act for registering property transfers to their members.

“The requirement of recommendation by the Assistant Registrar, Cooperative Society as a pre-condition for registering an instrument transferring premises of a cooperative society in favour of its members without stamp duty to prevent fake cooperative societies from claiming benefit of Section 9A is, in our opinion, an irrelevant consideration leading to illegality in action. Such a pre-condition is clearly superfluous and in fact, unnecessary.”, observed a bench of Justices PS Narasimha and Atul S Chandurkar, adding that the Principal Secretary had acted without statutory authority in imposing the extra condition, terming it ultra vires, superfluous, and based on irrelevant considerations when Section 9A of the Indian Stamp (Bihar Amendment) Act, 1988 doesn't prescribes such a requirement.

“Once a cooperative society is registered and a certificate is issued, Section 5(7) of the Act declares it to be a conclusive proof of its existence and continuation as a body corporate. We have held that when the certificate serves the purpose, the additional requirement is unnecessary. We have also noted that the Memo requiring recommendation from Assistant Registrar, Cooperative Society is based on irrelevant considerations and it does not offer any value addition to the integrity of the transaction as alleged.”, the court noted.

The Court said that once the certificate of registration is issued to the cooperative society it becomes a “conclusive evidence of the existence of the cooperative society. The State and its instrumentalities are bound by this certification and no further question should arise about the existence or authenticity of the cooperative society. The certificate is a recognition and a declaration of the State that the cooperative society is continuing on statutorily maintained roll.”

In essence, the court clarified that executive directions cannot override statutory conclusive proof, and courts must intervene where the executive adds unauthorized hurdles.

“While higher courts set aside executive decisions on the grounds of illegality if they are not founded on relevant considerations, or even when the decisions are based on irrelevant considerations, it is important to recognize the principle that executive actions that mandate certain unnecessary, excessive requirements, must equally be set aside as illegal.”, the court observed.

Accordingly, the appeal was allowed, while setting aside the Jharkhand High Court's judgment, holding that cooperative societies cannot be subjected to additional approvals not contemplated by law.

Cause Title: ADARSH SAHKARI GRIH NIRMAN SWAWLAMBI SOCIETY LTD. VERSUS THE STATE OF JHARKHAND & ORS.

Citation : 2025 LiveLaw (SC) 1175

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Appearance:

For Petitioner(s) : Mr. Rahul Arya, Adv. Mr. Ankit Ambastha, Adv. Ms. Aahana Jaiswal, Adv. Mr. Shailendra Slaria, Adv. Mr. Bhaskar Aditya, AOR

For Respondent(s) : Mr. Kumar Anurag Singh, Adv. Mr. Jayant Mohan, AOR Ms. Meenakshi Chaterjee, Adv. Mr. Nilesh Kumar, Adv. Ms. Adya Shree Dutta, Adv. Ms. Dorjee Ongmu Lachungpa, Adv.