Stamp Duty Can’t Be Levied Retrospectively, Rules Bombay HC
The Bombay High Court (HC) has ruled that stamp duty should not be calculated retrospectively. The verdict was passed by the court during a hearing of a petition involving a 3,300-sq-ft flat on the Napean Sea Road in south Mumbai.
Passing its order in the matter, the HC ruled that authorities cannot levy tax on “historically concluded transactions”. This decision came as a relief for many buyers and sellers across the city.
The property in question was sold in 1979 when the stamp duty paid was merely Rs 10. In 1985, due to an amendment in the Maharashtra Stamp Act, the stamp duty had to be paid at the ready reckoner rate that is declared by the government every year. Going forth, the government started imposing stamp duty retrospectively on the resale of properties. In 2018, this property was auctioned for Rs 38 crore but the authorities refused to register the new sale agreement until the stamp duty was paid on the previous agreement and penalty was paid because it was unregistered in 1979 when it moved hands. Vijay Jindal who had bought the property through a court auction then approached the HC for direction.
The HC ruled that it is not right to levy stamp duty retrospectively because the law was different at that time.
“ It is unclear just how far into the past the authority imagines it can travel by frontloading a current taxing regime on historically concluded transactions and that transactions that are in every sense complete..” noted the HC. The practice of thus imposing a penalty on non-registration of property and stamping as per the current value is now put to an end. This is a major victory for prospective buyers and sellers of an old property in Mumbai.
Before July 1980, there was no concept of market value and the agreement value was what was taken into account for stamp duty payment. Starting December 1985, one had to pay stamp duty on the market value of the property that was transferred as a deemed conveyance due to amendments.