Delhi High Court issues notice to Delhi government, others on petition seeking refund of stamp duty on rent agreement

The Delhi High Court has issued notice to the Government of National Capital Territory of Delhi, Sub Divisional Magistrate (Rajouri Garden), Sub Registrar (SR-II) of Basai Darapur, Revenue Department, State of NCT of Delhi and the Inspector General of Registration on a petition seeking refund of stamp duty and GST levied on a rent agreement.

The order was passed by the Single-Judge Bench of Justice Yashwant Varma on November 15 on a petition filed by Amarjeet Kaur. Justice Varma directed the respondents to file a reply within a period of six weeks and gave the petitioner two weeks thereafter to file a rejoinder affidavit. The High Court fixed March 20, 2023 as the next date of hearing.

Representing the petitioner, Advocate Gagan Gandhi contended that Amarjeet Kaur, a senior citizen, had licensed her property situated at Kirti Nagar to Pidilite Industries Limited for a period of five years on November 2, 2021.

On November 3, 2021, the Sub Registrar (SR-II) of Basai Darapur impounded the above license deed under Section 33 of the India Stamp Act, 1899 on the ground of not paying stamp duty on GST amount. He further forwarded the complaint to the Collector of Stamp.

On January 24, 2022, the Sub Divisional Magistrate of Rajouri Garden imposed penalty of Rs 1,000 on the petitioner for deficient stamp duty paid by her at the time of executing a license deed and also directed her to pay stamp duty on the GST amount on the Rent/License fees without any consideration to the reply filed by the petitioner on November 17, 2022.

The plea challenged the January 24 order passed by the SDM on the grounds that it was ex-facie wrong, incorrect and untenable in law since the imposition of Stamp Duty on the License fees amount including GST was violative of Article 265 of the Indian Constitution, which said that no tax would be levied or collected except the authority of law.

Gandhi further said that the action of Basai Darapur Sub Registrar impounding the license deed vide notice No.1102 on November 3, 2021 was against the settled principle of law as has been held by the High Court of Madhya Pradesh in case of Komalchand & Anr vs State of MP, AIR 1966 MP 20 (FB), whereby it was held that the Registration Act did not bar registration of the deed, if it was insufficiently stamped.

He cited the Supreme Court order in Government of Uttar Pradesh vs Raja Mohammad Amir Ahmad Khan AIR 1961 SC 787, which said that as soon as the registering officer registered a document presented to him for registration, the function in the performance of which the document was produced before him was over and thereafter, he became the functus officio having no power
under Section 33 of the Indian Stamp Act to impound the instrument.

He said neither in the Registration Act nor in the Stamp Act was there any provision giving the Basai Darapur Sub-Registrar any power to examine whether an instrument
already registered was or was not duly stamped and to impound the same.

The Basai Darapur Sub-Registrar has no power to hold an enquiry regarding the value of property covered by the deed and call upon the executant to pay the deficit
stamp duty, he added.

As per the petitioner, the impounding could be possible only if the document was presented in evidence, as held by the High Court of Kerala at Ernakulam in Dr Abdul Rasheed@ Dr A.R Babu vs State of Kerala & Ors, (2018) 3 KLJ 535 decided on 29/05/2018.

Gandhi said the GST on rent was not a recurring charge on property. It was relevant to note that when the lessee undertook to pay any recurring charges such as
Government revenue, the landlord’s share of cess or municipal tax, such amount shall be deemed to be part of the rent. However, the same cannot be the case for GST on rent.

The GST payable by the landlord was paid to the Government and does not remain with him/her and hence, the same was not liable for stamp duty as per Article 35 of Schedule-I of the Indian Stamp Act,1899.

Gandhi said a representation was made on behalf of the petitioner to the respondents seeking refund of the deficient stamp duty amounting to Rs 19,700, including penalty amounting to Rs 1,000 and quashing of the Notice issued by the SR-II/lmpound/ 202/No.1102 on November 3, 2021 and order dated November 24, 2022, which were not replied. Therefore, the petitioner was compelled to move the High Court.

Apart from Gagan Gandhi, Advocates Akash Bassi, Sushant Kumar and Ratakshi Sarvaria appeared for the petitioner.

The Respondents Sub-Divisional Magistrate of Rajouri Garden were represented by Udit Malik, ASC for GNCTD.