HC ruling to Maharashtra govt- refund Rs 23 lakh towards 2% stamp duty to builder

Many registrars had denied concession offered by the state revenue and forest department to many builders for agreements registered between September 1, 2020, and March 3, 2021. The ruling will have a big impact on the realty sector all over the state said petitioner’s lawyer Kartik Shukul.

The Nagpur bench of Bombay high court has ordered joint registrar-cum-collector of stamps to refund 2% excess amount charged from a builder while registering development agreement of three properties in 2020. This has come as a big setback to Maharashtra government.

Many registrars had denied concession offered by the state revenue and forest department to many builders for agreements registered between September 1, 2020, and March 3, 2021. The ruling will have a big impact on the realty sector all over the state said petitioner’s lawyer Kartik Shukul. The concession offered was to boost the reality sector, which suffered massive losses due to Covid-19 pandemic.

The August 28, 2020, notification reduced the stamp duty by 2% from September 1 to December 21, 2020, and by 1.5% from January 1 to March 31, 2021.

Director Gaurav Agrawal of Sandeep Dwellers Private Limited appealed for the concession in stamp duty for three schemes. However, joint district registrar (Class-1)-cum-collector of stamps rejected his demand and passed an order on December 18, 2020, asking him to pay full duty as per Maharashtra Stamp Act, 1958.

Though the petitioner paid full duty for registration of his schemes, he challenged the registrar’s order, contending that the concession as per August 2020 notification was applicable to him. He also pressed for refund of Rs 23 lakh, which he paid as excess towards stamp duty along with 18% interest per year.

A division bench comprising justices Sunil Shukre and MS Jawalkar, repressing the registrar’s December 18, 2020, order, cleared out that the stamp duty chargeable on conveyance which includes an agreement to sell in respect of any immovable property is originally chargeable at the rate of 5% of the market value of the property as per the Stamp Act.

“The August 2020 notification has reduced this duty to 3% till December 31, 2020, and then 3.5% till March 31, 2021, in respect of the instrument of conveyance. The stamp duty payable on the development agreement is similar to the conveyance under the Act. Therefore, the development agreement would have to be treated at par with an instrument of conveyance and hence it is squarely covered by the August 2020 notification,” the bench said.

While partly allowing the plea, the bench added there are other rights and liabilities created in favour of and against the petitioner which are akin to transfer of immovable property to him by the owners. “Therefore, the development agreements are conveyances within its definition as per the Stamp Act.”

Rejecting the builder’s demand to refund Rs23 lakh with 18% interest, the judges said no interest can be granted as the application of August 2020 notification depends upon interpretation of provisions of law and its position has become clear only now.

“Of course, the petitioner has complied with the registrar’s order but that would not defeat something which is given to him as a matter of right. The August 2020 notification creates a right in those parties who have executed an instrument of conveyance or agreement of sale in respect of any immovable property between the periods mentioned in the 2020 notification.”

What HC said

* August 2020 notification reduced stamp duty on instrument of conveyance

* Duty payable on development agreement is similar to conveyance under Act

* Devp agreements are conveyances within its definition as per Stamp Act

* Pacts would have to be treated at par with instrument of conveyance

* It’s an instrument which is squarely covered by August 2020 notification * Notification creates a right in parties executing agreement of sale.

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