Stamp duty is refundable on registered property agreements cancelled before possession within five years, if claimed within six months.

The Petitioners entered into a registered agreement dated 8 March 2016 with M/s. Marvel Asta Construction LLP, under which they were to obtain leasehold rights over a plot and a bungalow constructed on it, for a total consideration of ₹20.4 crore.

They paid stamp duty of ₹1,22,40,000 on the agreement.

The developer did not complete the development, and the larger land, including the plot concerned, was conveyed to another company.

The Petitioners, the developer and the subsequent purchaser then executed a registered deed of cancellation on 26 June 2019, and ₹7.5 crore was returned to the Petitioners.

The Petitioners applied for a refund of stamp duty in August 2019.

Respondent No. 2 rejected the application by order dated 14 September 2020, prompting this writ petition.

1. Whether the Petitioners’ refund claim was governed by the special period in the proviso to Section 48(1) of the Maharashtra Stamp Act, rather than the ordinary six-month period from execution of the original agreement.

2. Whether the original agreement and its registered cancellation satisfied the statutory conditions for refund, including failure of the intended transaction and cancellation before possession.

Section 47 of the Maharashtra Stamp Act provides the substantive right to seek refund or allowance of stamp duty in specified circumstances, including where an instrument fails of its intended purpose for a reason covered by the Act; Section 48 prescribes the time for exercising that right.

The proviso to Section 48(1), as applicable here, allows an application within six months of registration of a deed cancelling a registered agreement for sale of immovable property, provided cancellation occurs within five years of the original agreement and before possession is taken.

The nature of an instrument is determined by its substance, not merely its title, and the relevant statutory conditions must be considered together; M/s. Satyam Construction and Sai Innovation were relied on for these principles.

The Court found that the authority itself had treated the original instrument as, in substance, an agreement for sale and had noted that the refund application was made within six months of registration of the cancellation deed.

The development was not completed, the Petitioners did not obtain possession, and the property was conveyed to another company; the registered cancellation therefore reflected the failure and termination of the intended arrangement.

The cancellation deed’s execution by three parties did not, without evidence of an independent transfer of property under that deed, establish a fresh transaction that defeated the refund claim.

Cancellation occurred within five years, and the refund application was made within six months of registration of the cancellation deed, bringing the claim within the proviso to Section 48(1).

The Court accordingly held that the objections based on the agreement’s title, stamp-duty classification and the subsequent purchaser’s participation did not justify rejecting the refund.

It allowed the writ petition, quashed the order dated 14 September 2020 and directed the Respondents to refund ₹1,22,40,000 with simple interest at 6% per annum from 16 August 2019 until payment, within eight weeks from uploading of the judgment.

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