Guidelines For Determination Of Market Value For Computing The Stamp Duty On A Sale Certificate – Bombay High Court

Author:Mr Maneck Mulla, Anuja Jhunjhunwala and Siddha Pamecha
Profession:M Mulla Associates

Recently, the Bombay High Court in Pinak Bharat & Co. V. Anil Ramrao & Co, has laid down the general guidelines to arrive at the market value of a property to compute the stamp duty payable under the Maharashtra Stamp Act, on a sale certificate issued by the Court. It has been held that for computation of stamp duty on a sale certificate the market value of the property cannot be different from the market value recognised and accepted by the Court after obtaining a valuation of the property. Thus, the market value of the property will be the highest valuation of the property recognised and accepted by the Court for the purpose of sale or the sale price mentioned in the sale certificate, whichever is higher. In effect, it has been held that the Stamp Duty Authorities cannot sit in appeal over the orders of the Court.

Facts: In execution of a decree an immovable property was sold by the Bombay High Court (Court). The sale was affected by an auction sale. The decree holders Pinak Bharat & Co & Bina V Advani, offered a price of Rs.15.30 Crore. Their bid was accepted, and a sale certificate was issued in their favour.

A sale certificate being a document conveying title, requires to be stamped and registered. Accordingly, when the auction purchaser approached the Collector of Stamps, the property was assessed at Rs.155 Crore. However, after considering some additional material the market value of the property was re-assessed at Rs. 35 approximately.

Issues: The question that arose in the execution application was that: when the sale certificate is issued by inviting bids and obtaning the valuation of the property, how should the Collector of Stamps assess the market value of the property?

In other words, is the Collector of Stamps required to accept the valuation stated in the sale certificate issued by the Court or conduct an independent inquiry to assess the valuation of the immovable property?

Judgment: Before answering the question, the Court considered Article 16 of the Maharashtra Stamp Act (Act) which reads as follows:

Description of Instrument Proper Stamp Duty 16. CERTIFICATE OF SALE (in respect of each property put up as a separate lot and sold) granted to the purchaser of any property sold by public auction by a Civil or Revenue Court, or Collector or other Revenue Officer or any other officer empowered by law to sell the property by public auction. The same duty as is leviable on a Conveyance under clause (a), (b) or (c) as the...

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