High court stamps out unfair duty on resale of old properties

Theres good news for Mumbaikars whove been eyeing old properties but stayed away because of prohibitive stamp duty rates In a landmark judgment the Bombay High Court has put an end to the ageold practice of collecting stamp duty retrospectively on resale of old properties and imposing hefty penalty for past sale agreements that are now regarded as insufficiently stamped or not registeredThe high court was hearing a case regarding the resale of a posh 3300sqfeet carpet area apartment in Tahnee Heights Cooperative Housing Society at Napean Sea Road The last time this apartment was sold was in 1979 when the owners had paid a stamp duty of Rs 10 This was in the good old days when an agreement could be formalised with stamp duty of Rs 5 or Rs 10Then in December 1985 an amendment to the Maharashtra Stamp Act spelled out that stamp duty had to be paid at the ready reckoner rate declared every year by the government Following this the government even began to impose stamp duty retrospectively on resale of old properties for which nominal duty had been paid decades agoThe caseCut to November 2018 when the Napean Sea apartment was auctioned for R38 crore The collector of stamps refused to register the new sale agreement unless stamp duty was paid on the earlier chain agreement and penalty was paid for nonregistration in 1979 The stamp duty alone would have amounted to nearly Rs 2 crore if paid at the ready reckoner rate The Sub Registrar of Assurances also declined to register the new buyer Vijay Jindals transfer document dated November 14 2018 on the grounds that the anterior title documents to this very flat were insufficiently stampedJindal as he had bought the property through a Court Receiver auction had approached the HC to get directives that the seller should bear the previous stamp duty and penalty While one of the original owners Lajwanti Godhwani agreed the other former coowners refused The high court was hearing their dispute According to Advocate Ajay Panicker who represented the plaintiff Lajwanti Godhwani and Others The flat located on the 19th floor of Tahnee Heights Cooperative Housing Society measuring over 3300 sq feet belonged to my client who was a coowner Our clients late father with others had purchased this flat in 1979 on a stamp duty of R10 It was not registered eitherCourt orderWhat sets this case apart from other such disputes however is the judges gamechanging order Stamp is attracted by the instrument not the underlying transaction and not by any historical narrative in the instrumentWhat this means is that stamp duty should not be calculated retrospectively for a property that was sold at a time when the law was different Justice Gautam Patel in his order on December 13 stated As regards the question of stamp duty on antecedent documents there is no clear or wellconsidered response from that officeNeither the officer present or Himanshu Takke Assistant Government Pleader AGP is able to state under what provision of law old documents prior to the amendments to the Stamp Act could be legitimately or lawfully said to be unstamped or even insufficiently stamped if according to the law as it stood at that historical point in time the document itself was not liable to stamp in the first placeThe court further stated Takke agrees that any such assessment would have to be on the basis of the law as it stood at that time of the older transactions not at todays ratesProperty expert and advocate says many will benefit from HC orderAdvocate Vinod Sampat from the Stamp Duty and Registration Payers Association said This is a good judgment which has brought clarity and many resale flat purchasers will benefitHe added Stamp duty is levied on the market value of the property calculated on builtup area In fact it is a settled position that the ratio of carpet and builtup area will vary from building to building even if constructed by the same builder but stamp authorities refuse to accept the same fact and add 20 per cent to carpet area to arrive at the builtup areaSection 3 of the Maharashtra Stamp Act stipulates that it is the instrument which is liable for stamp duty I as a buyer am executing an agreement with my seller and I can only be held liable on that transaction The authorities should recover stamp duty from the parties who had executed the document then the lawyer saidLandmark rulingAdvocate Ajay Panicker who represented one of the original owners of the apartment said This is a landmark judgment by Justice Gautam Patel as lakhs of old flats agreements are neither sufficiently stamped nor registered and when the owners resell the flat the collector of stamps charges at the current rate and also imposes a penalty With this order this practice will come to an endCatch up on all the latest Mumbai news crime news current affairs and also a complete guide on Mumbai from food to things to do and events across the city here Also download the new midday Android and iOS apps to get latest updates