Value Of Plant & Machinery Permanently Embedded To Land Must Be Ascertained To Compute Stamp Duty For Sale Deed : Supreme Court

The Supreme Court has held that the registration authorities are empowered under the proviso to Section 27 of the Indian Stamps Act, 1899, as inserted by the Andhra Pradesh Amending Act, 1988, to inspect the property, which is the subject matter of the instrument, make necessary enquiries and satisfy itself that the provisions of Section 27, which requires that all facts affecting the levy of Stamp Duty are fully and truly set forth in instrument, are complied with. The bench of Justices K.M. Joseph and Hrishikesh Roy was dealing with an appeal against the decision of the Division Bench of the Andhra Pradesh High Court which had held that the registration authorities cannot force the vendee to pay stamp duty on the value of plant and machinery when it does not seek its registration, and only seeks the registration of the land and buildings purchased by it.The court remarked that the Division Bench erred in not noticing the true purport of the Sale Deed executed in favour of the vendee, in conjunction with Section 8 of the Transfer of Property Act, 1882, and the definition of the word ‘immovable property’, as contained in the General Clauses Act, 1897, the Transfer of Property Act, and the Registration Act, 1908. The court further remarked that the Division Bench also failed to bear in mind the power available with the registration authorities with respect to undervaluation of instruments, including Section 47A of the Stamp Act, which empowers the Registering Officer to deal with undervalued instruments.The top court reckoned that in view of Section 8 of the Transfer of Property Act, in the absence of an express or implied indication, a transfer of land would pass to the transferee all things attached to the earth.The court remarked that merely because no express reference to plant and machinery was contained in the Recital Clause of the Sale Deed, it cannot mean that the interest in the plant and machinery which stood attached to the land which was scheduled in the Deed, was not conveyed to the vendee. Therefore, the value of plant and machinery must also be ascertained for computation of stamp duty, it ruled.The court, however, added that only such plant and machinery, which was permanently embedded to the earth and answered the description of the immovable property, as defined in law, can be said to have been conveyed under the deed.The respondent no. 2, M/s SMC Marketing PvtLtd, purchased a property, consisting of land, building, civil works, plant & machinery, inter alia, in a court auction of a wound-up company. A conveyance deed was executed by the Official Liquidator in favour of the 2nd respondent’s nomineee, M/s Dankuni Steels Ltd, (1st respondent), on the direction of the Andhra Pradesh High Court.The Sub Registrar informed the vendee/ 1st respondent, Dankuni Steels, that the registration of the Sale Deed executed in its favour was kept pending since the vendee had undervalued the instrument for payment of stamp duty. Thereafter, the District Registrar imposed penalty on the vendee and the Official Liquidator, directing them to deposit the stamp duty on the full value.Challenging the said communication, Dankuni Steels filed a Writ Petition before the Andhra Pradesh High Court, which was dismissed by the Single Judge. The Single Judge rejected the contention of the vendee that the Sale Deed in question was only for Land, Buildings and Civil works, and not for plant and machinery. The court held that since the property covered by the Sale Deed covered not only the land, buildings and civil works, but plant and machinery also, the value of the plant and machinery also had to be considered for payment of stamp duty, after reducing the value of current assets.The appeal filed by the respondent/vendee, Dankuni Steels, against the judgment of the Single Judge, was allowed by the Division Bench.The Division Bench held that the vendee could not be forced to register even the plant and machinery when it only sought registration of the land and buildings, and that the Sub-Registrar cannot force it to pay stamp duty on the value of plant and machinery when it did not seek its registration. The bench thus directed the Sub-Registrar to consider the respondent’s request for registration of the land and building, determine its value, and collect stamp duty/ registration fee on the said value.In an appeal filed by the Sub-Registrar against the decision of the Division Bench, the amicus curies, S. Niranjan Reddy, submitted before the Supreme Court that the registration authorities are empowered to verify the preambular recitals contained in the conveyance deed, to ascertain whether the instrument purports to provide for a larger transaction than projected in the Schedule. He argued that in view of Sections 27 and 47A of the Stamp Act, the authorities can ascertain as to whether the immovable property is wholly and properly described in the instrument, and verify whether there is any plant and machinery embedded...

Value Of Plant & Machinery Permanently Embedded To Land Must Be Ascertained To Compute Stamp Duty For Sale Deed : Supreme Court

Parina Katyal

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