MUMBAI: In a judgement that offers far-reaching relief to prospective sellers and buyers of old properties in Mumbai where stamp duty is steep now, Bombay high court held stamp duty authorities cannot levy tax on old “historically concluded transactions”.
“Stamp is attracted by the instrument (sale deed), not the underlying transaction…,” said justice Gautam Patel in an order on December 13.

The HC passed the order in a matter where a spacious flat on Napean Sea Road in south Mumbai was sold in an auction.

Lajwanti Godhwani, who co-owned a 3,300 sq ft flat in Tahnee Heights CHS, had filed a suit in 2008 over a family property dispute. Her late father with others had purchased the flat in 1979 on stamp duty of Rs10. It was not registered either. Eventually, the flat was auctioned to Vijay Jindal, a businessman and resident of the same building, for Rs 38 crore.

Jindal’s counsel Karl Tamboly and Sharan Jagtiani had earlier pointed out the Sub Registrar of Assurances initially declined to register his transfer document dated November 14, 2018 on the ground that the anterior title documents were insufficiently stamped.

A day after the HC issued notice to the registrar’s office, it was registered on November 30.

The HC had, on December 6, issued notice to the stamp authorities. G Shah, counsel for defendants, and Ajay Panicker, counsel for the plaintiff, had questioned if acceptance of documents now meant the authorities no longer required old documents to be stamped.

There was no clear response from the stamp office on provisions which would justify stamping antecedent documents, observed the HC.

The HC said, “…the entire approach seems prima facie to be entirely incorrect.”

“ It is unclear just how far into the past the authority imagines it can travel by front-loading a current taxing regime on historically concluded transactions; and that too transactions that are in every sense complete...”

There is no question of either the purchaser or the flat’s co-owners being liable to pay stamp duty on the older documents, the HC order stated.

“This is a landmark judgement as lakhs of old flat agreements are neither sufficiently stamped nor registered and when they sell the flat, the collector of stamps charges present rate and penalty. With this order, such practices will come to an end,” said Panicker.