Tata Coffee Limited Vs The State of Tamil Nadu On 3 November, 2010

Tata Coffee Limited vs The State Of Tamil Nadu on 3 November, 2010
Madras High Court Madras High Court Tata Coffee Limited vs The State Of Tamil Nadu on 3 November, 2010 Dated : 3-11-2010 Coram The Honourable Mr.Justice N.PAUL VASANTHAKUMAR W.P.Nos.31059 and 31062 of 2007 & M.P.No.1 of 2007 in W.P.No.31059 of 2007 Tata Coffee Limited, rep.by M.K.C.Pai, its Company Secretary, 57, Railway Parallel Road, Kumara Park West, Bangalore Vs. 1. The State of Tamil Nadu, rep.by the Secretary to Government, Commercial Taxes & Registration, Government of Tamil Nadu, Fort St.George, Chennai 600 009. 560 020. ..Petitioner in both writ petitions
2. The Sub-Registrar, Anamalai, Police Station Road, Anamalai 642 104,
Coimbatore District. 3. The District Revenue Officer (Stamps), Office of the District Collector, Collectorate,
Indian Kanoon - http://indiankanoon.org/doc/39947/ 1
Coimbatore
641 018.
4. Tata Tea Limited, 1, Bishop Lefroy Road, Calcutta 700 001. ..Respondents in both writ petitions
Prayer in W.P.No.31059/2007: This writ petition is filed under Article 226 of the Constitution of India, praying this Court to issue a writ of Certiorari calling for the impugned notice in Form-1 dated 27.7.2007 issued by the third respondent, the District Revenue Officer (Stamps) and to quash the same. Prayer in W.P.No.31062/2007: This writ petition is filed under Article 226 of the Constitution of India, praying this Court to issue a writ of Certiorari calling for the impugned reference dated 21.5.2007 of the second respondent Sub-Registrar and to quash the same. For Petitioner : Mr.AL.Somayaji, Sr.Counsel for Mr.C.Saravanan For Respondents 1 to 3 : Mr.P.S.Raman, Advocate General assisted by Ms.Pushpa Menon Mr.S.Sivashanmugam, Government Advocate For 4th Respondent : Mr.Joy Joseph COMMON ORDER The Tata Coffee Limited, Bangalore, represented by its Company Secretary has filed both these writ petitions. W.P.No.31059 of 2007 is filed to quash the notice dated 27.7.2007 issued by the third respondent and W.P.No.31062 of 2007 is filed to quash the reference dated 21.5.2007 made by the second respondent. 2. The brief facts necessary for disposal of these writ petitions are as follows: (a) The petitioner Company is registered under the Companies Act, 1956, and is having its registered Office at Pollibetta, South Kodagu, Karnataka State. The petitioner is a subsidiary of Tata Tea Limited, doing business of growing and processing Coffee and Tea in various places including Anamalai Hills, Coimbatore District. (b) The petitioner is a subsidiary company of 4th respondent Tata Tea Limited, having its registered office at No.1 Bishop Lefroy Road, Calcutta, which also owned Estates at Pannimedu, Pachaimalai, Uralikal, Velonie and Valparai in Anamalai Hills village in Coimbatore District. In Anamalai Hills Estate, the 4th respondent is having an extent of 9873.86 acres of lands. (c) Except in Valparai Estate, the remaining Estates were principally planted with tea, whereas the Valparai Estate was planted with Coffee. According to the petitioner, the said Estates were purchased by the then Tata Finlay Ltd (the name since changed to Tata Tea Limited) from two sterling companies with effect from 1.1.1976 with the permission of the Reserve Bank of India in
terms of the Foreign Exchange Regulation Act, by way of two transfer deeds. (d) The Pannimedu Estate was transferred by Amalgamated Tea Estate Company Ltd., by transfer deed bearing document No.1028/1977 dated 31.12.1976 at the District Registrar's Office, Madras North for a consideration of Rs.27,40,555/-. The remaining Estates were transferred by Anglo American Direct Tea Trading Company Ltd., in favour of the then Tata Finlay Ltd by transfer deed bearing Document No.1029/1977 dated 31.12.1976 of the District Registrar's Office, Madras North for a consideration of Rs.75,03,224/-. (e) According to the petitioner, Tata Tea Ltd., was holding large extent of Tea Estates in South India also. It has decided to restructure its business and exit from plantations and concentrate on the development of its branded tea business. It is stated by the petitioner in the affidavit that the Board of Directors of Tata Tea Limited passed a resolution on 11.2.2005 authorising the sale of four Tea Estates and one Coffee Estate in Anamalai in Tamil Nadu and three Tea Estates in Kerala including Malakiparai Estate, which is adjoining Anamalai Estate, together with plant and machineries and other fixed assets. It is also stated that the 4th respondent also incurred heavy loss and therefore decided to sell the Anamalai Hills Estate and other Tea Estates. (f) The 4th respondent appointed M/s.Ernst & Young to value the business of the aforesaid five Estates in Anamalai and adjoining Malakiparai Estate in Kerala as on 31.12.2004 and the said Valuer valued the same between Rs.26.37 crores and Rs.31.64 crores. It is the case of the petitioner that based on the bids submitted, four qualified bidders including the petitioner were shortlisted by ICICI Securities. The shareholders of Tata Tea Limited approved the proposal for sale by way of postal ballots. According to the petitioner Company, it also obtained valuation report, based on which it improved its offer for the purchase of the Estates by finally quoting Rs.55 crores including net current assets, which was approved by the Tata Tea Limited. (g) An agreement was entered into between the petitioner Company and the 4th respondent Tata Tea Limited on 26.8.2005 agreeing to sell the aforesaid five estates in Anamalai including Coffee Estates and adjoining Malakiparai Estate in Kerala to the petitioner for a total consideration of Rs.55 crores inclusive of net current assets estimated at Rs.4 crores. After the execution of the said agreement 4th respondent approached the District Collector and Chairman, District Forest Committee, Coimbatore for sanction to transfer the Estates in Anamalai and the said sanction was accorded by the District Collector by his proceedings dated 15.12.2005. The balance Rs.51 crores were apportioned between the five Estates in Anamalai in Tamil Nadu and the adjoining Malakiparai Estate in Kerala, viz., Rs.40,08,00,000/- for the immovable property comprised in five Anamalai Estate in Tamil Nadu and Rs.1,11,09,000/- towards movables therein and the balance of Rs.9,69,47,000/- towards immovable properties and Rs.11,44,000/- towards movables for the Malakiparai Estate in Kerala. The deed of transfer was executed on 31.12.2005 between the petitioner Company and 4th respondent Company for an aggregate consideration of Rs.40,08,00,000/-. (h) The Transfer deed was presented before the second respondent on 4.1.2006 for registration and according to the petitioner the same was registered on the same day as Document No.2/2006 and kept as pending document for production of original patta passbook. The patta passbook was presented before the second respondent, the next day. According to the petitioner, the said document was not released in spite of repeated representations. The petitioner paid stamp duty of Rs.3,20,64,000/- in addition to registration fee of Rs.40,08,000/-. The extent of the immovable property transferred was 9873.86 acres. (i) On 2.5.2007 the petitioner, by way of representation requested the second respondent to release the registered document. No action having been taken, petitioner filed W.P.No.25721 of 2007 before this Court and prayed for direction to release the transfer deed to the petitioner. In the meanwhile the second respondent by letter bearing C.No.202/2007 dated 23.7.2007 informed the petitioner that the transfer deed cannot be released as proceedings under Section 47A(1) of the Indian Stamp Act, 1899, is being initiated. The document number given by the second respondent, even according to the petitioner is Document No.2026/2007. The petitioner filed another W.P.No.2652 of 2007 and challenged the letter refusing to return the document. (j) After the reference made by the second respondent for under-valuation, the third respondent also issued notice to the petitioner under Section 47A(2) of the Indian Stamp Act, 1899 without enclosing the report of the second respondent and the petitioner has challenged the Form-1 notice dated 27.7.2007 issued by the third respondent. In the said notice the third respondent intimated the petitioner that a reference has been received under sub-section (1) of Section 47A of the Indian Stamp Act, 1899 from the Registering Officer for determination of the stamp value of the document registered as Document No.2026/2007 dated 21.7.2007. The initiation of the proceedings by the second respondent under Section 47A(1) is challenged by the petitioner in W.P.No.31059 of 2007. The notice issued by the third respondent under Section 47A(2) is
challenged in W.P.No.31062 of 2007. 3. In the common counter affidavit filed by the second respondent it is stated as follows: (i) The petitioner Company purchased the property in question from the 4th respondent, which is none other than the parent Company of the petitioner Company and the sale deed is dated 31.12.2005. The subject matter of the property conveyed is land, buildings and machineries. (ii) The value set forth in the instrument having been grossly under-valued, the second respondent kept the same pending registration on the date of presentation, that was on 4.1.2006 as pending document No.2/2006. It was kept pending without registration as the land value was grossly under-valued and also the value mentioned for buildings and machineries have to be ascertained from the Assistant Executive Engineer, PWD and also from the Valuer approved by the Income Tax Department. The valuation report of the Assistant Executive Engineer, PWD was received on 11.12.2006. (iii) Since the valuation mentioned in the document was not according to the market value, the third respondent registered the document in question only on 21.5.2007 as Document No.2026 of 2007 and a reference was made under section 47A(1) of the Indian Stamp Act, 1899, for determination of the correct market value of the property, to the third respondent, under section 47A(2). The details of the valuation worked out by the third respondent based on guideline value registered and reports of the Assistant Executive Engineer, PWD and the Valuer are as follows: Land Value of 9873.86 acres ... Rs.2376,70,11,018 as per guideline value Value of the Building as per ... Rs. 56,24,51,856 AEE report Value of the Plant and machinery... Rs. 6,50,85,000 as per Valuer's report The total value estimated by the respondent is Rs.2439,45,47,874/- as against the value of Rs.40,08,00,000/-. The deficit stamp duty payable is Rs.191,82,98,130/-. (iv) The said reference made under Section 47A(1) by the third respondent dated 21.5.2007 and Form-1 notice issued by the third respondent on 27.7.2007 under Section 47A(2) are justified in the counter affidavit by further contending that though the document was dated 31.12.2005, the same was presented on 4.1.2006 due to non-production of patta passbook as well as for perusal of the guideline values and the surrounding values to find out the market value. It was kept pending registration No.2/2006. The said fact establishes the genuine doubt raised by the third respondent even at the time of presenting the document and the document was registered only on 21.5.2007 as stated supra and immediately proceeding was initiated by referring the document under Section 47A(1) and there is no illegality in the said proceeding initiated by the second respondent and in the consequential Form-1 notice issued by the third respondent. (v) It is further stated in the counter affidavit that only after following the procedures as contemplated under Rule 4 of the Tamil Nadu Stamps (Prevention of Under Valuation of Instruments) Rules, 1968, the third respondent will decide the issue and the writ petitions filed challenging the initiation of proceeding and Form-1 notice are premature. (vi) It is also stated that the second respondent has reason to believe that the market value has not been truly set forth in the document, which was ascertained from the guideline value register and from the reports of the Assistant Executive Engineer, PWD and Valuer. The third respondent also referred certain decisions of this Court and of the Honourable Supreme Court and justified the initiation and issuance of notice and prayed for dismissing the writ petitions. 4. A reply affidavit was filed by the writ petitioner reiterating the contentions raised in the original affidavit and further stating that the charge of under-valuation of the value stated in an instrument presented for
registration being a serious matter, prima facie conclusion of under-valuation has to be recorded and the petitioner being one of the serious bidder for the purchase of the property as per the transfer deed, purchaser shall take into its service the staff, employees and labourers numbering about 4000 in the said Estates and continue them in service on their terms and conditions with liability, and after the transfer it cannot be lightly concluded that there is under-valuation and as such the initiation of proceedings without recording reasons by the second respondent cannot be justified. 5. Mr.A.L.Somayaji, learned Senior Counsel appearing for the petitioner Company submitted that the petitioner Company purchased the property from the 4th respondent Company by submitting its bid and the amount quoted in the bid was increased by negotiation and final valuation was agreed, based on which sale deed was executed on 31.12.2005, presented before the second respondent on 4.1.2006 and the second respondent also gave a number as pending Document No.2/2006, which was not registered due to non-production of the patta passbook and on producing the same, the document was registered by assigning Document No.2026/2007 and therefore no doubt was raised by the Registering Officer regarding the valuation mentioned in the document and therefore the initiation of proceedings under Section 47A(1) by referring the matter to the third respondent on 21.5.2007, that too without recording any reason to satisfy the mandatory requirement of the statutory provision, and the consequential notice issued by the third respondent in Form-1 under Section 47A(2) of the Indian Stamp Act, 1899, then again without recording any reason by the third respondent are unsustainable as there are statutory violations committed by the respondents 2 and 3 and therefore the petitioner Company rightly challenged the said proceedings in these writ petitions and obtained an order of status-quo. It was also argued that unless there is fraudulent evasion of stamp duty, proceedings cannot be initiated. The learned Senior Counsel also cited several decisions in support of his contentions and contended that recording of reasons before initiation of reference by the third respondent is a mandatory requirement and the same having not been followed, the impugned orders are liable to be set aside. 6. Mr.P.S.Raman, learned Advocate General appearing for respondents 1 to 3 on the other hand submitted that the petitioner Company, even though presented the document on 4.1.2006, it was not registered due to two reasons, namely, (i) non-production of patta pass book, (ii) under-valuation made in the document, and therefore the second respondent thought fit to get a valuation report from the Executive Engineer of PWD and also from the Valuer, approved by the Income Tax Department, apart from going through the guideline value. The report of the Valuer in respect of the plant and machineries was received on 11.12.2006. The valuation report in respect of the buildings was obtained from the Assistant Executive Engineer, PWD on 24.4.2007. The guideline value of the land registered shows the value of the extent of land transferred (9873.86 acres) at Rs.2376,70,11,018/- and value of the buildings as per the Engineer's report was Rs.56,24,51,856/-. The plant and machineries as per the Valuer's report is Rs.6,50,55,000/- and the total value estimated by the third respondent is Rs.2439,45,47,874/- (Rupees Two Thousand Four Hundred and Thirty Nine Crores, Forty Five Lakhs, Forty Seven Thousand, Eight Hundred and Seventy Four) as against the value of Rs.40,08,00,000/(Rupees Forty Crores and Eight Lakhs) and the deficit stamp duty payable comes to Rs.191,81,98,130/(Rupees One Hundred and Ninety One Crores, Eighty One Lakhs, Ninety Eight Thousand, One Hundred and Thirty). Since the true value is not reflected in the document, the document was treated as under-valued and immediately on registration, the second respondent referred the matter to the third respondent in terms of Section 47A(1) of the Indian Stamp Act, 1899 for determination of the market value of the property, pursuant to which the third respondent issued Form-1 notice under Section 47A(2) in compliance with the procedures contemplated under the Tamil Nadu Stamps (Prevention of Under Valuation of Instruments) Rules, 1968, and there is no illegality in the said order initiating proceedings under Section 47A(1) by the second respondent and the consequential commencement of proceedings by the third respondent under Section 47A(2). It was also urged by the learned Advocate General that for initiation of proceedings for collection of revenue, fraud need not be established. The learned Advocate General also submitted that if this Court comes to the conclusion that while making reference reasons are bound to be recorded on the basis of the materials, which were available even at the time of making reference, the second respondent is willing to record reasons and make a fresh reference by recording reasons and such liberty may be granted by this Court, otherwise the State exchequer will incur huge loss. The learned Advocate General also cited various decisions in support of
his contentions. 7. I have considered the rival submissions made by the learned Senior Counsel appearing for the petitioner Company as well as learned Advocate General, appearing on behalf of the respondents 1 to 3. 8. The issues arise for consideration in these writ petitions are, (a) Whether the proceedings initiated by the second respondent under Section 47A(1) of the Indian Stamp Act, 1899, by making a reference on 21.5.2007 and the consequential notice issued by the third respondent on 27.7.2007 calling for the petitioner to show cause, are just and proper ? and (b) In case the reference made already is vitiated on any ground, whether the second respondent can be given liberty to initiate fresh reference ? 9. The facts narrated above clearly establish that by Transfer Deed dated 31.12.2005, an extent of 9873.86 acres belonging to the 4th respondent Company along with certain buildings, plant and machineries were sought to be transferred for a sum of Rs.55 Crores by paying a stamp duty of Rs.3,20,64,000/-. The second respondent, who is the registering authority, raised doubts regarding the valuation of the document on presentation of the document on 4.1.2006 and consequently he withheld registration, also on the ground that the patta passbook was not produced. The second respondent registered the document only in the year 2007 and assigned Document No.2026/2007. 10. To satisfy himself as to whether the valuation mentioned in the document is the true market value of the land, buildings, plant and machineries, the second respondent called for valuation report from the Assistant Executive Engineer, PWD in respect of the buildings and from the Valuer approved by the Income Tax Department in respect of the plant and machineries and also perused the guideline value of the land as per records available. After receiving the valuation reports from the Assistant Executive Engineer, PWD, and from the Valuer, and after perusing the guideline value of the land, the second respondent found that as per the guideline value, the land sought to be transferred was worth Rs.2376,70,11,080/- (Rupees Two thousand Three Hundred and Seventy Six Crores, Seventy Lakhs, Eleven Thousand and Eighty). Similarly, he found that there is under-valuation of the buildings and plant and machineries and he has estimated the valuation of the property sought to be transferred was worth Rs.2439,45,47,874/- as against the value of Rs.40,80,00,000/and thereafter registered the said document on 21.5.2007 as Document No.2026/2007 as he is bound to register the same and immediately made a reference to the third respondent under section 47A(1) of the Indian Stamp Act, 1899, for determination of the correct market value of the property in accordance with the Indian Stamp Act, 1899, by following the procedures contemplated under the Rules to ascertain the difference in stamp duty payable by the petitioner, pursuant to which the third respondent, who is the statutory authority to determine the correct stamp duty, has issued notice on 27.7.2007 and called upon the petitioner to submit its reply regarding the said proceedings. 11. The contention of the learned Senior Counsel for the petitioner is that the second respondent initiated proceedings under section 47A(1) without following the mandatory proceedings as contemplated in the said section and therefore the initiation of the proceedings without mentioning any reason cannot be sustained and therefore the consequential notice issued by the third respondent is also unsustainable. 12. To answer the said issue, Section 47A of the Indian Stamp Act, 1899, is to be referred, which is extracted hereunder. "47-A. Instruments of conveyance etc., under-valued how to be dealt with.- (1) If the registering officer appointed under the Indian Registration Act,1908 (Central Act XVI of 1908) while registering any instrument of conveyance, exchange, gift, release of benami right or settlement, has reason to believe that the market value of the property which is the subject matter of conveyance, exchange, gift, release of benami right or settlement, has not been truly set forth in the instrument, he may, after registering such instrument, refer the
same to the Collector for determination of the market value of such property and the proper duty payable thereon. (2) On receipt of a reference under sub-section (1), the Collector shall, after giving the parties a reasonable opportunity of being heard and after holding an enquiry in such manner as may be prescribed by rules made under this Act, determine the market value of the property which is the subject matter of conveyance, exchange, gift, release of benami right or settlement and the duty as aforesaid. The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty. (3) The Collector may, suo motu or otherwise, within five years from the date of registration of any instrument of conveyance, exchange, gift, release of benami right or settlement not already referred to him under sub-section (1), call for and examine the instrument for the purpose of satisfying himself as to the correctness of the market value of the property which is the subject matter of conveyance, exchange, gift, release of benami right or settlement and the duty payable thereon and if after such examination, he has reason to believe that the market value of the property has not been truly set forth in the instrument, he may determine the market value of such property and the duty as aforesaid in accordance with the procedure provided for in sub-section (2). The difference, if any in the amount of duty, shall be payable by the person liable to pay the duty." Rule 3(3) of the Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968, reads as follows: "3(3) The registering officer may, for the purpose of finding out whether the market value has been correctly furnished in the instrument, make such enquiries as he may deem fit. He may elicit from the parties concerned any information bearing on the subject and call for and examine any records kept with any public officer or authority." From the perusal of the above provisions, under which the proceedings are initiated and pending, it is evident that if the Registering Authority has reason to believe that the instrument presented has not truly set forth the market value of the property, he may, after registering such instrument, refer the same to the District Collector for determination of the proper stamp duty payable. 13. The reference made by the second respondent to the third respondent dated 21.5.2007 reads as follows (translated version): "Office of the Sub-Registrar, Anaimalai Report sent to District Revenue Officer U/s 47A(1) of Indian Stamps Act 1. Sl.No. 2007 2. Document No.Year, Date, etc. 2026/2007, dated 21.5.2007 3. Executor Krishna Kumar, S/o.R.Lakshmanan,
Minto Park, Flat No.14B, D.L.Khan Road, Kolkatta, Senior Vice President, Tata Tea Limited. D.K.Sen, S/o. S.R. Sen, Flat No.201, Swastik, 51/D, Gariakat Road, Kolkatta, Secretary and Tata Tea Limited. 4. Name and Full Address of the Executant M.H.Ashraff, S/o.Late M.A.Ashraff, No.550/52, 'Dodsworth Enclave' II, K.R.Pura Hobli, Mahadevapura, Whitefield (Village), Bangalore East Taluk, Bangalore District. 5. Nature and Value of the document Transfer Deed Rs.40,08,00,000/6. Village in which property located Anamalai Hills (East) 7. Nanja or Punja Estate 8. Survey No. and Extent Enclosed.
9. Market Value of the property as per the valuation of the party Rs.40,08,00,000/ 10 Value of the property as suggested by the Sub Registrar Value of the Ground : Rs.2376,70,11,018/Building Value : Rs.56,24,51,856/Value of the machine : Rs.6,50,85,000/11 Stamp duty payable in respect of amount in Column 10 Rs.195,02,62,130/12 Stamp duty paid by party Rs.3,20,64,000/13 Deficient stamp duty to be collected Rs.191,81,98,130/The original deed is annexed herewith in order to collect the deficient stamp duty of Rs.191,81,98,130/(Rupees Hundred and Ninety One Crores, Eighty One Lakhs, Ninety Eight Thousand, One Hundred and Thirty only). Enclosure: 1. Original Deed No.2026/2007 (67 sheets) 2. Patta pass Book (xerox) 3. N.O.C. (xerox) 4. Machinery valuation (xerox) 5. Field Inspection notes. // True Copy //
Sd/- xxxx Sd/- xxx Special Tahsildar Sub Registrar (Stamps) Anamalai." After the said reference, the third respondent issued notice in Form-1 under Rule 4 on 27.7.2007, which reads as follows: "From To Thiru K.Maharabushanam Thiru M.H.Ashraff, S/o.M.A.Ashraff, District Revenue Officer 550/52 Dods worth EnclaveII, (Stamps), K.R.Pura Mobli, Mahadevapura, Coimbaore. Whitefield Village, Bangalore East Taluk, Bangalore Dist. FORM 1 (See Rule 4) FORM OF NOTICE PRESCRIBED UNDER RULE 47(A) OF TAMIL NADU STAMP (PREVENTION OF UNDER VALUATION OF INSTUMENT) RULES, 1968. Please take notice that under Sub-section (1) of Section 47-A of the Indian Stamp Act, 1899 (Central Act II of 1899) a reference has been received from the registering officer for determination of the market value of the properties covered by an instrument of conveyance/exchange registered as document No.2026/07 dated 21.5.07 and the duty payable on the above instrument as follows:Document Number Details of land S.R.Value as per Guideline Value as per Document Deficit Stamp Duty to be paid 2026/07 Anamalai Kunrukal Valparai Taluk 2439,45,47,874/ 40,08,00,000/191,81,98,130/Indian Kanoon - http://indiankanoon.org/doc/39947/ 10
2. You are hereby required to submit your representation if any, in writing to the undersigned within 21 days from the date of service of this notice to show that the market value of the properties has been truly and correctly set forth in the instrument. You may also produce all evidence in support of your representation within the time allowed. 3. If no representations are received within the time allowed, the matter will be disposed of on the basis of the facts available. Sd/- xxxxxxxxx 27.7.07 District Revenue Officer (Stamps, Coimbatore. / True Copy /" From the perusal of the above extracted reference of the second respondent dated 21.5.2007 it is evident that the second respondent assessed the market value of the lands based on the guideline value. However, no specific reason is mentioned therein, other than the amounts mentioned in the sale deed, the guideline value and his valuation. The third respondent in his notice mentioned the guideline value, value of the document and the proposed deficit stamp duty payable and called upon the petitioner to make representations with supporting evidence as to why the said stamp duty shall not be fixed as the difference stamp duty payable. 14. The condition contained in the statutory provision above extracted having stipulated a requirement to satisfy the reason to believe, recording of reason, however short it may be, is mandatory in terms of the decision of the Full Bench of this Court reported in 2007 (5) CTC 737 (G.Karmegam v. The Joint Sub-Registrar, Madurai), and Division Bench decisions of this Court reported in 1999 (2) LW 579 (S.P.Padmavathi v. State of Tamil Nadu), 2008 (6) CTC 759 (Hindustan Petroleum Corporation Ltd. v. The Inspector General of Registration). In the Full Bench decision cited supra, I was also a party. In para 7 of the judgment, the Full Bench held as follows: "7. Registration of document is a sine qua non for referring the matter to the Collector, if the registering officer believes that the property is undervalued. No jurisdiction has been conferred on the registering officer to refuse registration, even if the document is undervalued. Besides, there is no authority for him to call upon the person concerned to pay additional stamp duty. Collector is the prescribed authority to determine the market value, after affording a reasonable opportunity of hearing the parties. The registering officer cannot make a roving enquiry to ascertain the correct market value of the property by examining the parties. However, it is expected that he has to give reasons for his conclusion for undervaluation, however short they may be. He can neither delay nor refuse registration of the instrument, merely because the document does not reflect the real market value of the property. In order to reach a conclusion, there is no bar for the registering officer to gather information from other sources, including official or public record. Valuation guidelines, prepared by the revenue officials periodically, are intended with an avowed object of assisting the registering officer to find out prima facie, whether the market value set out in the instrument has been set forth correctly." In view of the said decisions, recording of reasons by the second respondent for initiation of proceedings under Section 47A of the Indian Stamp Act, 1899, referring the matter, for finding out the correct value of the property mentioned in document, to the third respondent is mandatory. 15. Whether the third respondent at the time of issuing notice under Rule 4 in Form-1 shall record his reasons while calling for objections is also considered by me in the decision reported in 2010 (4) TLNJ 170 (Civil) (G.Gnanasekaran v. The Inspector General of Registration, Chennai-28). In the said case it is held that the third respondent therein being a quasi-judicial authority, must state reasons while issuing notice calling for explanation from the person in whose favour the document is registered.
16. The decision of the Supreme Court reported in (2009) 7 SCC 438 (V.N.Devadoss v. Chief Revenue Control Officer-cum-Inspector) relied on by the learned Senior Counsel for the petitioner Company has no application to the facts of these cases. In the said case, sale was conducted by way of public auction after fixing upset price and therefore the under-valuation was ruled out. Here, the petitioner Company is a sister concern of the 4th respondent Company and hence no presumption can be made that the valuation mentioned in the document is the actual market value of the land. 17. The next issue to be considered is whether by not recording reasons alone the respondents 2 and 3 can be prohibited from initiating fresh action under section 47A(1) and 47A(2) of the Act. The records filed before this Court as well as the counter affidavit filed prima facie disclose that there is huge difference between the stamp duty paid by the petitioner Company and the actual stamp duty payable by the petitioner Company. The guideline value of the land is to be taken as prima facie evidence to arrive at the market value of the land conveyed. The said facts having been verified even before initiating the proceedings under section 47A of the Act by the second respondent, merely because detailed reasons are not recorded in the reference order, the petitioner cannot contend that the second respondent shall not be given liberty to record reasons and initiate fresh proceedings based on the records and materials already available, which were collected by the second respondent before registration and started proceedings immediately. 18. Similarly the third respondent shall also be given liberty to proceed with enquiry as required under section 47A(2) and Rules framed thereunder after fresh reference is made by the second respondent. The issue to be decided by the second respondent is whether the petitioner Company has given correct market value of the property and paid the true and correct stamp duty for the lands registered and transferred from the 4th respondent company. If liberty is not granted as prayed for by the learned Advocate General, it would cause great prejudice to the State exchequer as it may have to lose huge amount of stamp duty payable by the petitioner, if ultimately the stamp duty paid by the petitioner is found to be not the correct stamp duty payable by the petitioner Company. Merely because the authorities vested with the powers while exercising their powers either diligently or otherwise committed a mistake by not recording reasons, the State cannot be denied of its revenue payable by the petitioner company while registering the document on 27.5.2007, which was presented on 4.1.2006. 19. The Indian Stamp Act, 1899, is like a taxing statute. The taxing statutes are not depending on any contingency and the same have to be strictly viewed irrespective of the hardships faced by the person, who is liable to pay taxes as held by the Supreme Court in the decision reported in (2010) 4 SCC 350 (State of Haryana v. Manoj Kumar) and (2007) 14 SCC 339 (State of Rajasthan v. Khandaka Jain Jwellers). 20. Further, the petitioner Company has challenged the initiation of proceedings under Section 47A(1) and the notice issued under Section 47A(2) of the Act and obtained an order of status-quo from this Court by filing these writ petitions in the year 2007 and the matter is pending for over three years. Pendency of the issue before this Court cannot be taken advantage of by the petitioner Company, merely because at the time of final disposal a defect of not recording reasons by the respondents, is found by this Court. The said defect is a curable defect as already materials are collected and available on the file of the second respondent based on the guideline value of the land conveyed. It is well settled in law that if there is a procedural violation committed by the statutory authority, the Courts are setting aside the subsequent proceedings and granting liberty to the authority to start proceedings afresh from the stage where it got vitiated. Hence I am of the view that the petitioner cannot prevent the respondents from proceeding with the matter afresh. 21. The last submission made by the learned Senior Counsel for the petitioner Company is that there is no fraudulent evasion of the stamp duty and therefore proceedings cannot be initiated by the second and third respondents. The second respondent can very well register the document and make a reference if he is not satisfied with the valuation mentioned in the document as per the judgment of the Supreme Court in (2001) 1 SCC 742 (Government of Tamil Nadu v. Park View Enterprises). In the said judgment in paragraph 9 the Supreme Court held thus, "9. Incidentally, the Tamil Nadu Stamp (Prevention of Undervaluation of
Instruments) Rules, 1968 were framed on 22-4-1968 in terms of the provision of Section 47-A read with Section 75 of the Indian Stamp Act. The Rules prescribe as to the circumstances under which the authority ought to calculate the market value of the property as required under Section 27 of the Act and the functions of the registering authority on that count. Specific reference has, however, been made to Rule 3.3 which reads as under: .3 The registering officer may, for the purpose of finding out whether the market value has been correctly furnished in the instrument, make such inquiries as he may deem fit. He may elicit from the parties concerned any information bearing on the subject and call for and examine any records kept with any public officer or authority. In the said judgment it is further held that the circular issued by the Inspector General of Registration prohibiting registration being contrary to the statutory provisions the same was set aside. In paragraph 12 the Supreme Court further held as follows: "12. ...... While it is true that the government revenue should be protected and there cannot be any exception, provided however, the same is otherwise in consonance with the principles of law and not dehors the same. The statute itself expressly provides that it is only after registration that the Registrar or an officer authorised in that behalf can take certain steps and in the wake of such a statutory provision question of taking steps before the registration does not and cannot arise and it is this conclusion which has prompted the High Court to decry the validity of the circular. We also think it fit to lend our concurrence therewith. The judgment decrying the validity of the circular cannot possibly be faulted in any way whatsoever." 22. Thus, the registration of document by the second respondent even though he has reason to believe that the valuation given is not to his satisfaction is perfectly legal and valid. 23. Fraudulent evasion of stamp duty need not be alleged by the second respondent while referring the document to the third respondent to assess the correct stamp duty payable. The Supreme Court in the decision reported in (2008) 8 Supreme 206 (Union of India v. M/s.Dharmendra Textile Processors & Others) held that for imposing penalty under the Income Tax Act, 1961, the revenue need not satisfy the wilful concealment for attracting civil liability, which is required for prosecution, since penalty can be imposed to remedy the loss of revenue. Applying the said principle to the facts of these cases, I hold, the submission made by the learned Senior Counsel is unsustainable. 24. For all these reasons, the impugned reference of the second respondent dated 21.5.2007 and the consequential notice issued by the third respondent dated 27.7.2007 are set aside and the matter is remitted back to the second respondent to consider afresh on the basis of the materials already available on record and make a reference in accordance with the statutory provisions within four weeks from the date of receipt of this order and on receiving the reference the third respondent shall record his reasons and issue notice at the time of calling for explanation from the petitioner and proceed further in accordance with law. The writ petitions are disposed of with the above directions. No costs. Connected miscellaneous petitions are closed. vr To 1. The Secretary to Government, Commercial Taxes & Registration, Government of Tamil Nadu, Fort St.George, Chennai 600 009.
2. The Sub-Registrar, Anamalai, Police Station Road, Anamalai 642 104, Coimbatore District.
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Indian Kanoon - http://indiankanoon.org/doc/39947/
3. The District Revenue Officer (Stamps), Office of the District Collector, Collectorate, Coimbatore 641 018
Indian Kanoon - http://indiankanoon.org/doc/39947/
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Tata Coffee Limited Vs The State of Tamil Nadu On 3 November, 2010

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Tata Coffee Limited Vs The State of Tamil Nadu On 3 November, 2010

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Tata Coffee Limited vs The State Of Tamil Nadu on 3 November, 2010

2. The Sub-Registrar, Anamalai, Police Station Road, Anamalai 642 104,