Bombay HC Quashes ₹9.27 Lakh Stamp-Duty Demand On 2012 Land Deed After Buyer Paid Assessed Duty On Earlier Possession Agreement For Same Sale

The Petitioner and Hermes Mirage Co-operative Housing Society Ltd. entered into a registered Agreement for Sale dated 9 July 1998 concerning specified lands. The agreement recorded that possession had been delivered to the Petitioner.

After the agreement was impounded, the Petitioner paid deficit stamp duty and penalty as determined by the competent authority on 24 October 2011.

The parties executed a Deed of Conveyance on 16 January 2012, referring to the earlier agreement and recording the payment; the deed was registered on payment of Rs. 100 in stamp duty.

Following an audit objection—including that the original stamp paper had not been purchased in a party’s name—the authorities demanded additional stamp duty by treating the 2012 deed as chargeable on the property’s later market value. The Petitioner’s appeal was dismissed, and a further demand notice was issued on 12 October 2017. The Petitioner challenged the appellate order and demand notice.

Explanation I to Article 25 of Schedule I to the Maharashtra Stamp Act, 1958 treats an agreement to sell immovable property as a conveyance for stamp-duty purposes where possession is transferred or agreed to be transferred; its Second Proviso requires duty paid on that deemed conveyance to be adjusted against the duty on a subsequent conveyance.

Section 4, as applicable in January 2012, provides that where several instruments complete one transaction of sale, conveyance duty is charged on the principal instrument, while the other instruments attract duty of Rs. 100; the parties may select the principal instrument, failing which the authority may do so.

Sections 34 and 41 provide for dealing with improperly stamped instruments and for an instrument bearing the prescribed payment endorsement to be registered and acted upon as if duly stamped, subject to Section 53A. Under Section 53A, an earlier stamp-duty decision may be revised through the statutory process; a pending revision does not itself set aside that decision.

The Court also relied on Veena Hasmukh Jain v. State of Maharashtra, (1999) 5 SCC 725, and Ramesh Mishrimal Jain v. Avinash Vishwanath Patne, 2025 INSC 213, concerning conveyance duty on agreements providing for delivery of possession.

The agreement expressly recorded that possession had been handed over as part performance, and the later deed confirmed that delivery. The Court therefore held that the agreement fell within Explanation I to Article 25.

The competent authority had impounded the agreement, determined the duty and penalty, received payment before execution of the final deed, and endorsed the instrument; the audit objection did not itself cancel that endorsement, and no order setting it aside had been made in the pending Section 53A revision.

The 2012 deed concerned the same lands and consideration and completed the transaction contemplated by the earlier agreement; no change in the transaction’s main terms was shown.

Applying Section 4 as it stood in 2012, the Court concluded that the later deed could not be charged as a fresh principal instrument merely because the property’s market value had increased.

It set aside the orders dated 8 June 2017 and 20 September 2017 insofar as they upheld additional duty on the basis that the later deed was a fresh principal instrument, and quashed the demand notice dated 12 October 2017. The Rule was made absolute and the petition disposed of.