Stamp-duty valuation proceedings initiated over two years after registration are time-barred, Patna High Court rules

The petitioners purchased 1.80 acres of land by registered sale deed dated 9 October 2017 for Rs. 14,00,000.

Following an audit, the District Sub-Registrar obtained a site-inspection report and referred the matter to the Collector under Section 47-A(3) of the Indian Stamp Act, 1899.

The reference was made in November 2022, and notice was issued to the petitioners in January 2023.

By order dated 5 September 2023, the Collector assessed deficit stamp duty and penalty, and directed payment of Rs. 17,36,100; a demand letter followed on 26 September 2023.

The petitioners challenged the proceedings and consequential orders, principally as barred by limitation.

1. Whether proceedings under Section 47-A(3) of the Indian Stamp Act, 1899, initiated more than two years after registration of the sale deed, were barred by limitation.

2. Whether the Collector’s order and the consequential demand letter could stand once the proceedings were found time-barred.

Section 47-A(3) of the Indian Stamp Act, 1899, as reproduced by the Court, authorises the Collector to examine an instrument and determine the market value and duty where the stated value is incorrect.

The Court held that proceedings under this provision may be initiated only within two years from registration of the instrument; action beyond that period is barred and cannot support a determination of deficit duty.

Although the State relied on Chandrakant C. Adesara v. State of Bihar and State of Punjab v. M/s Mahajan Sabha, Gurudaspur, the Court did not apply or discuss those authorities in its reasoning.

The sale deed was registered on 9 October 2017, while the reference and ensuing proceedings were initiated more than five years later.

Applying its interpretation of Section 47-A(3), the Court concluded that the proceedings exceeded the statutory two-year period.

It therefore treated the Collector’s action as contrary to the provision’s limitation mandate, without needing to determine the petitioners’ other objections concerning valuation, evidence, or natural justice.

It quashed the Collector’s order dated 5 September 2023 and set aside the consequential demand letter dated 26 September 2023.

The respondents were debarred from proceeding further in the matter, and the writ petition was allowed.