Earlier agreements and later conveyances formed one transaction for stamp duty, Bombay High Court rules, rejecting 2012-value demands

The Petitioners executed Development-cum-Sale Agreements in 1985, and in one case an Agreement for Sale in 1996, concerning several plots.

They relied on those agreements, payment receipts, possession documents and Powers of Attorney to contend that the transactions were completed by registered Conveyances dated 10 July 2012.

The Stamp Authorities treated the Conveyances as fresh 2012 transactions, assessed duty using the properties’ 2012 market values and demanded deficit duty.

The Appellate Authority upheld the assessments on 3 March 2016; the Petitioners challenged those orders, arguing principally that Section 4 of the Maharashtra Stamp Act applied and that the authorities had also undervalued the effect of property restrictions.

Whether the earlier agreements and the 2012 Conveyances were instruments employed to complete the same transactions, attracting Section 4 of the Maharashtra Stamp Act, or whether the Conveyances were independent 2012 transactions subject to duty on 2012 market value.

Whether the Stamp Authorities could disregard the earlier instruments because the Conveyances did not expressly recite their relationship to those instruments, having regard to Section 28 of the Act.

Whether the Court needed to determine the correct 2012 market value, including the effect of CRZ, mangroves, reservations and other restrictions, to decide the petitions.

Section 4 of the Maharashtra Stamp Act, 1958 provides that where several instruments are employed to complete a single transaction of sale, development agreement, lease, mortgage or settlement, duty is chargeable on the principal instrument, with the other instruments charged as prescribed; the inquiry is whether the instruments were in fact used to complete one transaction, not whether they bear the same title or date (*Kumar Housing Corporation*).

Section 2(na) defines market value by reference to the date of execution of the instrument, but must be read with Section 4 where the instrument forms part of a transaction completed through several instruments.

Section 28 requires facts affecting chargeability to be fully and truly set forth in the instrument; under *Praman Infrastructure Pvt. Ltd.*, material recitals in annexures may be considered where unambiguously incorporated into the deed.

Ready Reckoner rates are guidelines and prima facie indicators, not conclusive proof of market value (*Prasadnagar Co-operative Housing Society Ltd.*).

The Court found a documentary chain linking the earlier agreements, possession, consideration, Powers of Attorney and the 2012 Conveyances concerning the same parties and properties.

That material supported the conclusion that the Conveyances completed the earlier arrangements rather than recording fresh sales in 2012; the passage of time and the different descriptions of the instruments did not, by themselves, divide one transaction into separate transactions.

The Court distinguished *Praman Infrastructure*: the Petitioners relied on earlier instruments to establish the continuity of the transaction, rather than relying on external property restrictions solely to reduce market value.

Section 28 therefore could not be applied to nullify the inquiry required by Section 4.

Because the demand rested on treating the Conveyances as independent 2012 transactions, the Court did not determine the precise effect of the property restrictions or the correct 2012 market value.

It allowed all four petitions, quashed the appellate orders dated 3 March 2016 and the Collector’s orders dated 9 October 2014, and set aside consequential penalty, interest and recovery proceedings.

Rule was made absolute, with no order as to costs.