MULAKH RAJ DUA vs THE STATE, GOVT. OF N.C.T. OF DELHI & ANR.

2024-05-07 Information

$~13
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 07th MAY, 2024
IN THE MATTER OF:
+ W.P.(C) 4589/2024 & CM APPL. 18797/2024
MULAKH RAJ DUA ….. Petitioner
Through: Mr. B.S. Chauhan and Mr. Ranvir Singh, Advocates.

versus

THE STATE, GOVT. OF N.C.T. OF DELHI & ANR.
….. Respondents
Through: Mr. Prashant Manchanda, ASC with
Ms. Nancy Shah, Advocates.

CORAM:
HON’BLE MR. JUSTICE SUBRAMONIUM PRASAD
JUDGMENT (ORAL)

1. Petitioner has approached this Court for a direction to the Respondents to decide the application dated 23.03.2023, filed by the Petitioner seeking refund of the amount of stamp duty of Rs.23,58,000/- and also seeking refund of the registration fee of Rs.3,93,136/-.
2. The facts, in brief, leading to the present Writ Petition are that the Petitioner purchased an industrial land being Plot No.458-466, Gali No.8, Friends Colony, Industrial Shahdara, Delhi, in an auction conducted by the Bank of Baroda. It is stated that for execution of the sale deed, the Petitioner purchased the stamp duty of Rs. 23,58,000/- and also paid Rs.3,93,136/- towards registration fee to the Office of the concerned Sub-Registrar, Delhi. It is stated that proceedings were initiated challenging the sale deed before the DRT-III. It is stated that the Petitioner herein filed an application, being IA No.1701/2019 for impleadment of the Petitioner as a party to the said proceedings. The said application was allowed vide Order dated 21.03.2022 and the Petitioner herein was impleaded as a party to the proceedings before the DRT-III. It is stated that vide Order dated 01.04.2022, the DRT-III set aside the auction and directed the Bank to return the auction amount to the Petitioner herein with interest @ 10% and the Petitioner was directed to handover the physical possession of the property in question to Respondents No.3 to 8 therein. It is stated that the Order of the DRT-III was challenged by the Petitioner by filing an appeal before the DRAT and the DRAT vide Order dated 13.03.2023 disposed of the appeal by permitting the Petitioner herein to move an appropriate application before the concerned authorities for refund of the stamp duty and the registration charges. It is stated that pursuant to the Order of the DRAT, the Petitioner filed an application before the Respondent No.2 herein for refund of the stamp duty and registration charges, however, the said application has yet not been decided. The Petitioner has, therefore, approached this Court seeking refund of the stamp duty and the registration charges.
3. Though this Court could have disposed of the Writ Petition by directing the concerned authorities to decide the application of the Petitioner within a particular period of time, however, learned Counsel for the Respondents, on instructions, states that the application filed by the Petitioner would be hit by Section 54 of the Indian Stamp Act, 1899 and the same could not be entertained as the same has been filed beyond the stipulated time.
4. A Division Bench of this Court in Citius Real Estate v. Union of India, 2023 SCC OnLine Del 7514, has decided a similar issue as to whether the stamp papers which were purchased but remained unutilized and are presented after a particular period of time then the period of limitation, as prescribed under the Indian Stamps Act, is not mandatory and the Collector can take a decision for refund of the stamp duty depending on the facts of that particular case. The Division Bench in the said Judgment as observed as under:
“42. Undisputedly, if Section 54 of the Act is understood in the manner as explained by the Supreme Court in Rajeev Nohwar case [Rajeev Nohwar v. State of Maharashtra, (2021) 13 SCC 754] , the said provision cannot be construed as arbitrary. It does not in any manner conflict with the scheme of Section 50 of the Act read with Section 49 of the Act.

43. Allowance for stamps are available in cases that fall under Section 49 of the Act provided that an application is made within the time as prescribed under Section 50 of the Act. This would include cases where the charging event has not occurred, that is, an instrument has not been executed. It would also cover cases where an instrument has been engrossed on the stamp paper but the transaction has not been consummated by one of the parties as contemplated under Section 49(d)(5) of the Act.

44. A person who holds an unused stamp paper is also entitled to apply to the Collector for a refund of the same within the period of six months upon his becoming aware that the same would not be of immediate use during the said period. However, this highlights a gap in the statutory provisions in respect of a case, where a person with the bona fide intention purchases the stamp paper by making full payment for the same and discovers after a period of six months that the stamp paper is of no use. In light of the decision of Supreme Court in Rajeev Nohwar case [Rajeev Nohwar v. State of Maharashtra, (2021) 13 SCC 754] , Section 54 of the Act is not applicable to such a case as the person purchasing the stamp duty did not have the knowledge, within the period of six months of purchasing the stamps, that the stamps purchased would be of no immediate use. If the contentions advanced by the respondents are accepted, then such a person would have no remedy to seek any allowance in respect of the stamp paper.

45. We are unable to accept that the legislative intention of the Act was to exclude such a person from claiming any allowance in respect of an unused stamp paper. Thus, the controversy raised by the petitioner arises because of absence of any unambiguous provisions for refund in the given case.

46. Article 265 of the Constitution of India proscribes levy of collection of tax except by authority of law. The Act is a law and therefore, it is erroneous to contend that the collection of duties is without authority of law. The lack of express provisions for refund of stamp duty under the Act is required to be tested on the anvil of other provisions of the Constitution of India. [Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 : (1998) 111 STC 467]

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51. As noticed above, the charging event for levy of stamp duty is the execution of an instrument chargeable to duty. As also noticed above, the Act contains provisions for refund of stamps that are either spoiled or remain unused. Duty levied on the instruments recording a transaction that has been rendered void, is also refundable.

52. Given the scheme of the Act, there is no doubt that the legislative intent is to refund the stamp duty to refund the amount paid for the purchase of stamps if the same are not used or cannot be used for discharging of the liability to pay stamp duty. As noted above refund of duty is provided even in cases where the stamp duty is paid on execution of the instrument but the transactions are subsequently held to be void. However, as noted above, there is lacuna in as much as it does not expressly provide for the refund of unused stamps where the cause of action for seeking refund in respect of unused stamps has arisen after the period of six months. As observed by the Supreme Court in Rajeev Nohwar case [Rajeev Nohwar v. State of Maharashtra, (2021) 13 SCC 754] , Section 52 of the Maharashtra Stamp Act, 1958 (which is similarly worded as Section 54 of the Act) is applicable only in cases where the applicant had knowledge that the stamp purchased would not be used within a period of six months from the date of purchase. Thus, the words immediate use as used were read in the context of the limitation period as prescribed by the said provision. The words immediate use are interpreted to mean the permanent abandonment of the purpose for which the stamps were purchased or a delay of more than six months for the purpose for which it was purchased.

53. We are of the view that denial of refund of the stamp duty collected even though no duty is payable because the charging event has not occurred and the cause of action for claiming the refund has not arisen, militates against the scheme of providing for allowance of stamps. Clearly, if the provisions of the Act are construed in a manner so as to permit collection and retention of stamp duty, which is not chargeable without any recourse for refund whatsoever, it would run contrary to the scheme of the Act. If Section 54 of the Act is read as restricting the right for seeking refund in a case such as the present one, it would suffer from the vice of arbitrariness and fall foul of Article 14 of the Constitution of India.

54. However, as noted above, it is well-settled that an enactment must be presumed to be constitutionally valid and the court must make every effort to uphold the constitutional validity of the statute [State of Bihar v. Bihar Distillery Ltd., (1997) 2 SCC 453, para 17] even if it requires giving a statutory provision a strained meaning, or narrower or wider meaning, than what appears on the face of it. It is only when all efforts to do so fail should the court declare a statute to be unconstitutional [State of A.P. v. P. Laxmi Devi, (2008) 4 SCC 720] .

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58. A plain reading of Section 54(c) of the Act indicates that it provides for a period of six months for claiming refund from the date when the stamp duty was purchased. However, this provision has no application if the person is not aware that he has no immediate use for the stamp paper within the said period as held by the Supreme Court in Rajeev Nohwar case [Rajeev Nohwar v. State of Maharashtra, (2021) 13 SCC 754] . It is also apparent that the legislative intent is not to usurp the amount deposited for payment of stamp duty where no such duty is chargeable. As noticed hereinbefore, even in the cases where the stamp paper is faulted or obliterated, the legislature has made express provision for allowing of refund within a period of six months from the date that the stamps are spoiled or obliterated which may be beyond the period of six months from the date the stamps are purchased.

59. As stated above, if the provisions of Section 54(c) of the Act are read in a manner as is contended on behalf of the Revenue, refund of duty would be admissible in case of a stamp paper that is spoiled beyond the period of six months of its purchase but no refund would be admissible in respect of an unspoiled stamp beyond the said period, even though the cause of action for seeking a refund has not arisen. We are unable to accept this interpretation. We are of the view that the language of Section 54 of the Act does admit an interpretation where the provisions of Section 54(c) of the Act are applicable only in cases where the person seeking a refund is aware, within a period of six months from the date of the purchase of the stamps, but he is aware that he has no immediate use of the stamps within a period of six months from the date of its purchase. The said requirement of Section 54(c) of the Act would be inapplicable in cases where the applicant is not aware that he would have no immediate use of the stamp paper within a period of six months from the date of its purchase. In National Investor Forum case [National Investor Forum v. Golden Forests India Ltd., 2014 SCC OnLine Del 4935] , a Coordinate Bench of this Court had observed that it saw no bar in per se grant of refund in the given circumstances. This Court had also observed that the limitation ought to be reckoned from the date when the cause for refund arises and not from the date when the stamp paper is procured.

60. The question that arises is that what would be the period of limitation if the provisions of Section 54(c) of the Act are inapplicable. In State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd. [State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd., (2007) 11 SCC 363] , the Supreme Court held that in cases where the period of limitation is not prescribed, the application must be made within a reasonable period. In case no time is provided for an Act, the same must be done in a reasonable period. What would be a reasonable period must be construed in the context of the provisions of the Act. Section 54(c) of the Act and Section 50 of the Act indicate that the legislative intent to confine the period for seeking allowance to not exceed six months after the cause of action has arisen. Thus, in cases where the applicant applies for refund of unused stamps/stamp certificate within a period of six months of becoming aware that he has no immediate use of the same, the claim for refund cannot be stated to be delayed and must be admitted. This is, obviously, subject to the applicant satisfying clauses (a) and (b) of Section 54 of the Act the stamps must have been purchased for full consideration with the bona fide purpose to use them.”

5. In view of the above, the concerned Collector is, therefore, directed to consider the application of the Petitioner in light of the abovementioned Judgment and decide the same within four weeks from today.
6. The Writ Petition is disposed of along with the pending applications, if any.

SUBRAMONIUM PRASAD, J
MAY 7, 2024
Rahul

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