SHANTI BHUSHAN (D) THR. LR. & ORSversusSTATE OF U.P. AND ORS

                         [2023] 6 S.C.R. 513                              513


            SHANTI BHUSHAN (D) THR. LR. & ORS.                            A
                                  v.
                     STATE OF U.P. AND ORS.
                    (Civil Appeal No. 8388 of 2017)
                           APRIL 25, 2023                                 B
          [ABHAY S. OKA AND RAJESH BINDAL, JJ.]
       Stamp Act,1899 – ss.31,32, 47-A and Art. 23 of the Schedule
IB – Market Value of property – Determination of – A property was
purchased by the appellants under a registered sale deed from the
                                                                          C
vendor – Appellants were already in possession land as tenants –
The appellants calculated Rs.6,67,200/-as the market value of the
property and paid the stamp duty quantified at Rs. 46,700/- – The
Assistant Stamp Collector, held that the market value of the land
will have to be calculated at the rate of Rs. 24,000/per sq. meter –
Thus, on the date of the sale deed, the market value of the sale          D
deed property was Rs.19,23,08,305/- on which stamp duty of
Rs.1,34,61,630/- was payable – Appellants were directed to pay a
deficit stamp duty along with penalty and the interest – The appellants
preferred an appeal against the order of Assistant collector, which
was dismissed by the Appellate Authority – The above orders were
                                                                          E
challenged before the High Court – The High Court affirmed the
market value fixed by the authorities but set aside the demand for
penalty – On appeal, held: Stamp duty on a conveyance will be
payable as per the market value prevailing on the date of conveyance
unless consideration shown therein is more than the prevailing
market value – The market value fixed by appellants was fixed by          F
adopting method used for levy of property tax under the Municipal
laws, such a value cannot be taken as basis for determining the
market value for the purpose of Art. 23 – Further, a property in
possession of a tenant will fetch lesser value in the open market
than the market value of a similar property exclusively in possession
                                                                          G
of the vendor as the buyer will not get actual possession of the
portion of the property in possession of the tenant – The market
value can be determined by the comparison method even in case of
a property in possession of tenants – If no comparable instances
are found, the market value can be fixed of the property in possession
of tenants by making an appropriate deduction from the market             H
                                 513
514            SUPREME COURT REPORTS                      [2023] 6 S.C.R.


A     value of a comparable property in which there are no tenants –
      Even if the guidance value of Rs. 24,000/- per sq. meter is to be
      taken as the market value of the sale deed land, necessary deductions
      will have to be made from the market value as the appellants were
      already in possession of the sale deed land as tenants – The extent
      to which deduction can be made will depend upon the nature of the
B
      tenancy and other material factors – Case sent back to the Assistant
      Stamp Collector for determination of the market value of the sale
      deed land.
             Stamp Act, 1899 – Interpretation of – In interpreting a taxing
      statute, equitable considerations cannot be applied – The rule of
C     literal construction must be applied while interpreting a taxing
      statute – It must be interpreted in terms of the natural construction
      of the words used – There is no scope to imply anything which is not
      expressly provided.
            Allowing the appeal, the Court
D
            HELD:1. The Stamp Act is a taxing statute. In interpreting
      such a statute, equitable considerations cannot be applied. A
      taxing statute has to be interpreted in accordance with what is
      clearly expressed therein. While interpreting such a statute and
      determining the liability to pay tax, the provisions are required
E     to be construed strictly. In other words, the rule of literal
      construction must be applied while interpreting a taxing statute.
      It must be interpreted in terms of the natural construction of the
      words used. There is no scope to imply anything which is not
      expressly provided. [Para 18][524-D-E]
F           2. In view of Article 23 of Schedule I of the Stamp Act, the
      stamp duty payable on a conveyance will be in accordance with
      the market value of the subject property on the date of the
      conveyance unless the consideration shown therein is more than
      the prevailing market value. When a sale deed is presented for
G     registration, the registering authority must ascertain the correct
      market value of the property subject matter of the document on
      the date of execution of the document. The stamp duty is payable
      on the basis of such market value and not on the consideration
      mentioned in the document. If the consideration mentioned is

H
  SHANTI BHUSHAN (D) THR. LR. & ORS. v. STATE OF U.P.                  515
                     AND ORS.

more than the market value, the stamp duty will be payable on          A
the consideration shown. Moreover, the market value mentioned
in the agreement for sale or the market value prevailing on the
date of the agreement or the market value prevailing on the date
on which the bargain was struck is of no relevance for deciding
the stamp duty. The relevant market value is the one which prevails
                                                                       B
on the date of execution of the conveyance. Therefore, this Court
had no manner of doubt that the appellants were under an
obligation to pay stamp duty calculated on the market value of
the sale deed property on the date of execution of the sale deed.
[Paras 19, 20][524-F; 525-H; 526-A-C]
     3. Stamp duty was paid by the appellants by taking the            C
market value of the sale deed property at Rs.6,67,200/- . This
market value was fixed by adopting method used for levy of
property tax under the Municipal laws. Such a value cannot be
taken as the basis for determining the market value for the
purposes of Article 23. [Para 21][526-D]                               D
      4. The test for determination of the market value is very
simple. The market value is the one which a bona fide and willing
buyer will offer. It is apparent that if the property subject matter
of the sale is in possession of the vendor himself, the bona fide
purchaser will offer more price for the property than the price        E
which he may offer for a similar property which is in possession of
a tenant. There is no doubt that a property in possession of a
tenant or tenants will fetch lesser value in the open market than
the market value of a similar property exclusively in possession
of the vendor. The reason is that the buyer will not get actual
possession of the portion of the property in possession of the         F
tenant. [Para 24][529-G-H; 530-A-B]
      5. The market value can be determined by the comparison
method even in case of a property in possession of tenants. For
example, if there is a sale transaction of a property in possession
of a tenant which is comparable to the property sought to be           G
valued and if the said sale transaction is held to be a genuine
transaction, market value can be fixed on the basis of the sale
transaction. If no comparable instances are found, the market

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516            SUPREME COURT REPORTS                        [2023] 6 S.C.R.


A     value can be fixed of the property in possession of tenants by
      making an appropriate deduction from the market value of a
      comparable property in which there are no tenants. [Para 25][530-
      C]
            6. The Assistant Collector, the Appellate Authority, and the
B     High Court have not decided the issue in terms of what this Court
      have held above. Even if the guidance value of Rs. 24,000/- per
      sq. meter is to be taken as the market value of the sale deed
      land, necessary deductions will have to be made from the market
      value as the appellants were already in possession of the sale
      deed land as tenants. The extent to which deduction can be made
C     will depend upon the nature of the tenancy and other material
      factors. Some tenancies may be protected under the relevant rent
      control legislation, whereas some may not be protected. That is
      all a matter of evidence. [Para 27][530-F-G]
            7. The issue regarding the market value of the sale deed
D     land on the date of execution of the sale deed is required to be
      decided by permitting the parties to adduce oral and documentary
      evidence. The Assistant Collector will have to ascertain whether
      a comparable sale instance of a property in possession of tenants
      is available. If it is not available, the Assistant Collector will have
E     to ascertain the market value of the sale deed property on the
      relevant date again by comparison method by taking market value
      of a comparable property which does not have encumbrance of
      tenancy. Thereafter, he will have to determine the percentage of
      the deduction which should be made from the market value in
      the facts of this case. These questions are to be decided by the
F     Assistant Collector on the basis of the evidence on record.
      Therefore, subject to what this Court have held in the judgment,
      this Court proposed to send back the case to the Assistant Stamp
      Collector for determination of the market value of the sale deed
      land on the date of execution of the sale deed. [Para 28][530-G-
G     H; 531-A-B]
            Special Land Acquisition & Rehabilitation Officer,
            Sagar v. M.S. Seshagiri Rao & Another [1968] 2 SCR
            892; Mangat Ram and Others v. State of Haryana and
            Others (1996) 8 SCC 664 : [1996] 1 Suppl. SCR 634;
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  SHANTI BHUSHAN (D) THR. LR. & ORS. v. STATE OF U.P.                        517
                     AND ORS.

      State of Rajasthan and Others v. Khandaka Jain                         A
      Jewellers (2007) 14 SCC 339 : [2007] 12 SCR 105 –
      referred to.
      O. N. Talwar v. The Collector of Stamps (1971) 7 DLT
      319; The Commissioner of Wealth Tax Mysore,
      Bangalore v. V. C. Ramachandran (1966) 60 ITR 103                      B
      – referred to
                        Case Law Reference
[1968] 2 SCR 892                 referred to                para 10
[1996] 1 Suppl. SCR 634          referred to               para 10           C
[2007] 12 SCR 105                referred to                para 19
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8388
of 2017.
      From the Judgment and Order dated 23.01.2013 of the High Court
                                                                             D
of Judicature at Allahabad in CMWP No. 55473 of 2012.
     Rohit Kumar Singh, Pavan Bhushan, Amartya Bhushan, Tushar
Bhushan, Harsh Jain, Advs. for the Appellants.
      R. K. Raizada, Sr. Adv., Bhakti Vardhan Singh, Ankit, Advs. for
the Respondents.                                                             E
      Jayant Bhushan, in Person/Sr. Adv.
      The Judgment of the Court was delivered by
      ABHAY S. OKA, J.
      FACTUAL ASPECTS                                                        F
      1. The dispute involved in this appeal is about the determination of
the market value of a property at Allahabad purchased by the appellants
under a registered sale deed dated 29th November 2010 (the sale deed)
from Hari Mohan Das Tandon (the vendor). The property has been
described in the Schedule to the sale deed which reads thus:                 G
               “SCHEDULE OF THE PROPERTY”
      Part Portion of Free Hold Site No. 49 Civil Station, Allahabad of
      which Nagar Nigam No. is 19 Old, 77/29 New, and 19-A Old 79/
      31 New, Lal Bahadur Shastri Marg (Elgin Road), Allahabad
                                                                             H
518             SUPREME COURT REPORTS                           [2023] 6 S.C.R.


A           measuring 7818.00 sq.mts. land alongwith construction and super
            structure standing thereon shown in Red Colour in the annexed
            map and bounded as under:-
            BOUNDARIES
            East : Part Portion of Freehold Site No. 49 Civil Station, Allahabad,
B           facing Strachey Road which has been released in the favour of
            the Sellers- 1st Party as per the compromise.
            West : Site No. 50 Civil Station, Allahabad
            North : Elgin Road (Lal Bahadur Shastri Marg)
C           South : Site No. 30 Civil Station, Allahabad”
            This property is hereinafter referred to as the sale deed property.
              2. According to the case of the appellants, Bungalow No.19 and
      Cottage No.19-A existed on the larger property. According to their case,
      in the year 1939, Bungalow No.19, together with appurtenant land and
D
      outhouse as well as cottage no.19-A, was taken on rent by the first
      appellant’s father. The appellants claimed to be protected tenants under
      the United Provinces (Temporary) Control of Rent and Eviction Act,
      1947 and subsequently under the U.P. Urban Buildings (Regulation of
      Letting, Rent and Eviction) Act 1972. According to the case made out
E     by the appellants, by two letters dated 2nd September 1966 and 10th
      September 1966, the vendor agreed to sell the sale deed property to the
      first appellant’s father for a total sale consideration of Rs. 1 lakh. A sum
      of Rs. 5000/- was paid to the vendor as earnest money. The land was a
      leasehold land. It was converted into a freehold land on 8th June 2000 by
      virtue of a freehold deed executed in favour of the vendor. The first
F
      appellant filed a suit for specific performance in the same year.
             3. On 29th September 2010, a compromise was arrived at between
      the vendor and the appellants under which the appellants agreed to give
      up approximately 1/3rd of the land which was a part of the original
      agreement for sale covered by the aforesaid two letters, and agreed to
G     take land measuring 7818 sq. meters along with existing structures for
      the same consideration which was fixed in the year 1966. An application
      to record compromise was made in the pending suit on 5 th October 2010.
      On the basis of the said compromise, on 12th October 2010, an agreement
      for sale was executed by and between the parties. A compromise decree
H     was passed by the Civil Court on 16th November 2010.
  SHANTI BHUSHAN (D) THR. LR. & ORS. v. STATE OF U.P.                        519
            AND ORS. [ABHAY S. OKA, J.]

       4. Prior to the execution of a fresh agreement for sale, on           A
29th September 2010, the appellants filed an application under Section
31 r/w 32 of the Indian Stamp Act, 1899 (for short ‘the Stamp Act’) for
adjudication of the stamp duty payable on the sale deed by forwarding a
copy of the proposed sale deed. However, no adjudication was made.
On 29th November 2010, the sale deed was executed by the vendor in
                                                                             B
favour of the appellants.
       5. Two notices were issued to the appellants on 8th February 2011
and 15th April 2011 by the Assistant Stamp Commissioner in the exercise
of powers under Section 47-A of the Stamp Act, informing the appellants
that the Assistant Stamp Collector was considering the question of payment
of appropriate stamp duty on the sale deed.                                  C

        6. We may note here that by using the rent capitalisation method,
the appellants calculated Rs.6,67,200/- as the market value of the sale
deed property and paid the stamp duty on the said market value quantified
at Rs. 46,700/-. In the notice dated 15th April 2011, it was alleged that
the deficiency in the stamp duty was to the extent of Rs.1,33,07,900/-.      D
The appellants contested the notices by filing written submissions. The
Assistant Stamp Collector, by order dated 6th January 2012, held that the
market value of the land having an area of 7818 sq. meters will have to
be calculated at the rate of Rs. 24,000/- per sq. meter. The Assistant
Collector noted that four sales had taken place in 2010 in respect of a      E
part of the same property showing the market value at Rs.24,000/- per
sq. meter. By calculating the market value of the land at Rs.24,000/- per
sq. meter, the Assistant Stamp Collector added the value of the structures
as well as mango trees. The Collector came to the conclusion that on
the date of the sale deed, the market value of the sale deed property
was Rs.19,23,08,305/- on which stamp duty of Rs.1,34,61,630/- was            F
payable. Taking into account the stamp duty of Rs. 46,700/- paid by the
appellants, they were directed to pay a deficit stamp duty of
Rs.1,34,14,930/-. A penalty of Rs. 27,00,000/- was imposed on the
appellants. Moreover, they were directed to pay interest at the rate of
1.5% per month on the deficit stamp duty from the date of the sale deed      G
till the realisation of the amount.
      7. According to the case of the appellants, on 1st February 2012,
they paid a stamp duty of Rs.70 lakhs by demand draft as coercive
action was likely to be taken against them. The appellants preferred an
appeal against the order dated 6th January 2012, which was dismissed         H
520             SUPREME COURT REPORTS                           [2023] 6 S.C.R.


A     by the Appellate Authority. The appellants deposited an additional amount
      of Rs. 30 lakhs towards the stamp duty on 9th November 2012. The
      orders of the Assistant Collector and the Appellate Authority were
      subjected to a challenge by the appellants before the Allahabad High
      Court by invoking writ jurisdiction under Article 226 of the Constitution.
      While affirming the market value fixed by the authorities, the High Court
B
      granted limited relief to the appellants vide judgment dated 23 rd January
      2013. The limited relief was of setting aside the demand of the penalty
      of Rs.27,00,000/-. The present appeal is directed against the judgment
      and order of the High Court.
            SUBMISSIONS
C
             8. Shri Jayant Bhushan, the learned senior counsel who is appellant
      no.3, appeared in person and made submissions on his behalf as well as
      on behalf of the other appellants. He has taken us through the facts
      leading to the filing of the writ petition. Learned senior counsel submitted
      that though the appellants were entitled to purchase total land measuring
D     11428 sq. meters as per the agreement for sale, they agreed to give up
      an area of 3614 sq. meters by agreeing to purchase a lesser area of
      7814 sq. meters. However, the agreed monetary consideration was not
      reduced.
             9. The learned senior counsel submitted that the first appellant’s
E     father was already inducted in the sale deed property as a tenant. He
      submitted that when a property is in possession of a tenant, the market
      value considerably diminishes. He stated that when a willing purchaser
      acquires a property in possession of a tenant, he is aware that he will
      have to follow a long process of law to evict the tenant. Therefore, the
F     value fetched by such property is less than the market value of a
      comparable property which is in possession of the owners. He urged
      that the sale, in this case, was of an encumbered property which was on
      “as is where is” basis.
            10. The learned senior counsel submitted that the market value of
G     a property is ascertained by applying the test of what a willing buyer
      would pay. He submitted that while determining the market value of a
      property in possession of a tenant, when the property is sold to the tenant,
      the market value has to be apportioned as per the principles laid down in
      several decisions of this Court in connection with fixation of the market
      value of the acquired land under the Land Acquisition Act, 1894. He
H
    SHANTI BHUSHAN (D) THR. LR. & ORS. v. STATE OF U.P.                       521
              AND ORS. [ABHAY S. OKA, J.]

relied upon decisions of this Court in the case of Special Land               A
Acquisition & Rehabilitation Officer, Sagar v. M.S. Seshagiri Rao
& Another1and Mangat Ram and Others v. State of Haryana and
others2. He submitted that the market value is liable to be reduced if
there are encumbrances on the property. The market value will be the
real market value minus the value of encumbrances or liabilities. He
                                                                              B
relied upon a decision of the Delhi High Court in the case of O.N. Talwar
v. The Collector of Stamps3.
      11. He submitted that the market value of the property further
diminishes due to the fact that there was already an agreement of sale in
favour of the appellants under which the vendor had agreed to sell the
property for a price of Rs. 1 lakh.                                           C

       12. He submitted that though an application for adjudication of
the stamp duty payable on the proposed sale deed was submitted, there
was no response to the said application, and on that ground, the order of
penalty imposed by the Assistant Collector has been set aside by the
High Court.                                                                   D

       13. He submitted that as per the compromise between the vendor
and the appellants, the consideration agreed to be paid by the appellants
was of Rs.1 lakh plus the release of 1/3rd of the property. He submitted
that the actual conveyed property to the appellants was 2/3rd of the land
in respect of which they were tenants. Therefore, the value of 2/3 rd land    E
would be 2/3rd x (1/3rd of the value of the entire land plus Rs.1 lakh). He
submitted that the market value will have to be calculated accordingly.
       14. The learned senior counsel also pointed out that even the
direction to pay interest @ 1.5% per month under Section 47-A (4A) of
the Stamp Act was not justified as even before the execution of the sale      F
deed, the appellants had voluntarily sought adjudication of the amount
payable by way of stamp duty on the draft sale deed. Moreover, he
pointed out that by interim order dated 23rd September 2013, the High
Court had stayed the recovery proceedings. Lastly, he pointed out that a
total amount of Rs.1 crore has already been deposited by the appellants.      G
       15. Shri R. K. Raizada, learned senior counsel, submitted on behalf
of the State that stamp duty payable by the appellants is to be calculated
1
  (1968) 2 SCR 892
2
  (1996) 8 SCC 664
3
  (1971) 7 DLT 319                                                            H
522                SUPREME COURT REPORTS                           [2023] 6 S.C.R.


A     as per the prevailing market value of the sale deed land on the date of
      the execution of the sale deed. He submitted that the value of the property
      fixed by the parties under the agreement for sale has no relevance to the
      determination of the market value. The learned senior counsel submitted
      that even the consideration amount shown in the compromise decree
      has no relevance. He submitted that when a tenant purchases an
B
      immovable property, he becomes full owner of the property, and he takes
      the property without any encumbrances. The learned senior counsel
      submitted that the determination of rateable value for the purposes of
      determination of property taxes is always made on the basis of
      hypothetical rent which the property may fetch. He submitted that the
C     rateable value fixed under municipal laws is not the market value for the
      purposes of the Stamp Act. He would submit that the Assistant Collector,
      the Appellate Authority, and the High Court have concurrently held that
      the appellants are liable to pay deficit stamp duty. The said orders call
      for no interference.
D           16. As far as the determination of market value is concerned,
      learned senior counsel appearing for the appellants relied upon the
      decision of Karnataka High Court in the case of The Commissioner of
      Wealth Tax Mysore, Bangalore v. V.C. Ramachandran4.
                CONSIDERATION OF SUBMISSIONS AND OUR VIEWS
E            17. It is not in dispute that stamp duty on a conveyance will be
      payable as per the market value prevailing on the date of conveyance.
      In fact, the appellants themselves have relied upon Article 23 of Schedule
      IB of the Stamp Act as applicable to the State of Uttar Pradesh. They
      have placed reliance on the said provision in their written submissions
F     filed before the Assistant Collector. Paragraphs 2 to 4 of their written
      submissions read thus:
                “2. The stamp duty payable on a sale deed is governed by Article
                23 of Schedule I of the Indian Stamp Act. In the Central Act,
                Article 23 a stamp duty is payable on the value of the consideration
G               of such conveyance as set forth in the sale deed. The consideration
                as contained in the sale deed is Rs.1 lakh and therefore, if the sale
                deed was governed by the Central Act only, without the UP
                Amendment the Stamp Duty would have been payable on the
                amount of Rs.1 lakh.
      4
H         (1966) 60 ITR 103.
  SHANTI BHUSHAN (D) THR. LR. & ORS. v. STATE OF U.P.                         523
            AND ORS. [ABHAY S. OKA, J.]

      3. However, the Indian Stamp Act in its application to UP has           A
      been amended by the UP (Stamp Amendment Act 1952) and
      Article 23 of Schedule IB as applicable to UP provides as below:-
          “Article 23 conveyance (as defined by Section 2 (10) not being
          a transfer charge or exempt under No.62. Where the amount
          or value of the consideration of such conveyance as set             B
          forth therein or market value of the property which is
          the subject of such conveyance, whichever is
          greater…….”
      4. So this provision which is applicable to the case in hand provides
      that if the market value of the immovable property is higher than       C
      the value of the consideration as set forth in the deed of
      conveyance, the stamp duty will be payable on the market value
      of the immovable property which is the subject matter of the
      conveyance deed.”
                                                        (emphasis added)      D
       Article 23 of Schedule IB applicable to the State of Uttar Pradesh,
reads thus: -
      “Description of Instrument               Proper Stamp-duty
      23. Conveyance [as defined               Sixty rupees.
                                                                              E
      by section 2(10)] not being a
      Transfer charged or
      exempted under No.62 –
      (a) if relating to immovable                                            F
      property where the amount or
      value of the consideration of such
      conveyance as set forth therein
      or the market value of the
      immovable property which is the
      subject of such conveyance,                                             G
      whichever is greater does not
      exceed Rs.500.
             Where it exceeds Rs.500           One hundred and twenty-
             but does not exceed               five rupees.
                                                                              H
524               SUPREME COURT REPORTS                          [2023] 6 S.C.R.


A                     Rs.1,000.
                      and for every Rs.1,000           One hundred and twenty-
                      or part thereof in excess        five rupees.
                      or Rs.1,000.                     Provided that the
                                                       duty payable shall
                                                       be rounded off to the
B
                                                       next multiple of ten
                                                       rupees.
               (b) if relating to movable property     Twenty rupees
               where the amount or value of the
               consideration of such conveyance
C              as set forth therein does not
               exceed Rs.1,000.
                       and for every Rs.1,000 or part Twenty rupees”
                       thereof in excess of Rs.1,000.
             18. At this stage, we may note that the Stamp Act is a taxing
D     statute. In interpreting such a statute, equitable considerations cannot be
      applied. A taxing statute has to be interpreted in accordance with what
      is clearly expressed therein. While interpreting such a statute and
      determining the liability to pay tax, the provisions are required to be
      construed strictly. In other words, the rule of literal construction must be
      applied while interpreting a taxing statute. It must be interpreted in terms
E     of the natural construction of the words used. There is no scope to imply
      anything which is not expressly provided.
             19. In view of Article 23 of Schedule I of the Stamp Act, the
      stamp duty payable on a conveyance will be in accordance with the
      market value of the subject property on the date of the conveyance
F     unless the consideration shown therein is more than the prevailing market
      value. A useful reference can be made to a decision of this Court in the
      case of the State of Rajasthan and others v. Khandaka Jain
      Jewellers5. Paragraphs 18 and 19 of the said decision read thus:
               “18. The contention of the learned counsel for the State that as
G              per Section 17 of the Act, the market value has to be taken into
               consideration because Section 17 stipulates that all the instruments
               chargeable with duty and executed by person of India shall be
               stamped before or “at the time of execution”. The word

      5
H         (2007) 14 SCC 339
  SHANTI BHUSHAN (D) THR. LR. & ORS. v. STATE OF U.P.                        525
            AND ORS. [ABHAY S. OKA, J.]

      “execution” has been defined in Section 2(12) of the Act which         A
      says that “execution” used with reference to the instruments, mean
      “signed” and “signature”. Therefore, it shows that the document
      which is sought to be registered has to be signed by both the
      parties. Till that time the document does not become an instrument
      for registration. A reading of Section 2(12) with Section 17 clearly
                                                                             B
      contemplates that the document should be complete in all respects
      when both the parties should have signed it with regard to the
      transfer of the immovable property. It is irrelevant whether the
      matter had gone in for litigation.
      19. It may be mentioned that there is a difference between
      an agreement to sell and a sale. Stamp duty on a sale has to           C
      be assessed on the market value of the property at the
      time of the sale, and not at the time of the prior agreement
      to sell, nor at the time of filing of the suit. This is evident
      from Section 17 of the Act. It is true that as per Section 3,
      the instrument is to be registered on the basis of the                 D
      valuation disclosed therein. But Section 47-A of the
      Rajasthan (Amendment) Stamp Duty Act contemplates that
      in case it is found that properties are undervalued then it is
      open for the Collector (Stamps) to assess the correct market
      value. Therefore, in the present case when the registering
      authority found that valuation of the property was not correct as      E
      mentioned in the instrument, it sent the document to the Collector
      for ascertaining the correct market value of the property.”
                                                       (emphasis added)
      Ultimately in paragraph 22, this Court held thus:                      F
         “22. In this background, if we construe Section 17 read with
         Section 2(12) then there is no manner of doubt that at the
         time of registration, the registering authority is under
         an obligation to ascertain the correct market value at
         that time, and should not go by the value mentioned in              G
         the instrument.”
                                                       (emphasis added)
       20. Hence, when a sale deed is presented for registration, the
registering authority must ascertain the correct market value of the
                                                                             H
526            SUPREME COURT REPORTS                          [2023] 6 S.C.R.


A     property subject matter of the document on the date of execution of the
      document. The stamp duty is payable on the basis of such market value
      and not on the consideration mentioned in the document. If the
      consideration mentioned is more than the market value, the stamp duty
      will be payable on the consideration shown. Moreover, the market value
      mentioned in the agreement for sale or the market value prevailing on
B
      the date of the agreement or the market value prevailing on the date on
      which the bargain was struck is of no relevance for deciding the stamp
      duty. The relevant market value is the one which prevails on the date of
      execution of the conveyance. Therefore, we have no manner of doubt
      that the appellants were under an obligation to pay stamp duty calculated
C     on the market value of the sale deed property on the date of execution
      of the sale deed.
             21. As stated earlier, stamp duty was paid by the appellants by
      taking the market value of the sale deed property at Rs.6,67,200/-. This
      market value was fixed by adopting method used for levy of property
D     tax under the Municipal laws. Such a value cannot be taken as the basis
      for determining the market value for the purposes of Article 23.
            22. Now we turn to the provisions of Section 47-A of the Stamp
      Act as applicable to the State of Uttar Pradesh at the relevant time.
      Section 47-A reads thus:
E           “47A. Instruments of conveyance etc., if undervalued, how to be
            dealt with: – (1)(a) If the market value of any property which is
            the subject of any instrument on which duty is chargeable on the
            market value of the property as set forth in such instrument is less
            than even the minimum value determined in accordance with the
F           rules made under the Act, the registering officer appointed under
            the Registration Act, 1908 shall, notwithstanding anything contained
            in the said Act, immediately after presentation of such instrument
            and before accepting it for registration and taking any action under
            section 52 of the said Act, require the person liable to pay stamp
            duty under section 29, to pay the deficit stamp duty as computed
G           on the basis of the minimum value determined in accordance with
            the said rules and return the instrument for presenting again in
            accordance with section 23 of the Registration Act, 1908.
            (b) When the deficit stamp duty required to be paid under clause
            (a), is paid in respect of any instrument and the instrument is
H
SHANTI BHUSHAN (D) THR. LR. & ORS. v. STATE OF U.P.                          527
          AND ORS. [ABHAY S. OKA, J.]

   presented again for registration, the registering officer shall certify   A
   by endorsement thereon, that the deficit stamp duty has been paid
   in respect thereof and the name and the residence of the person
   paying them and register the same.
   (c) Notwithstanding anything contained in any other provisions of
   this Act, the deficit stamp duty may be paid under clause (a) in          B
   the form of impressed stamp containing such declaration as may
   be prescribed.
   (d) If any person does not make the payment of deficit stamp
   duty after receiving the order referred to in clause (a) and presents
   the instrument again for registration, the registering officer shall,     C
   before registering the instrument, refer the same to the Collector
   for determination of the market value of the property and the
   proper duty payable thereon.
   (2) Without prejudice to the provisions of sub-section (1), if such
   Registering Officer, while registering any instrument on which            D
   duty is chargeable on the market-value of the property, has reason
   to believe that the market-value of the property, which is the subject
   of such instrument, has not been truly set forth in the instrument,
   he may, after registering such instrument, refer the same to the
   Collector for determination of the market-value of such property
   and the proper duty payable thereon-                                      E

   (3) On receipt of a reference under sub-section (1) or sub-section
   (2), the Collector shall, after giving the parties a reasonable
   opportunity of being heard and after holding an enquiry in such
   manner as may be prescribed by rules made under this Act,
   determine the market value of the property which is the subject           F
   of the instrument and the duty as aforesaid. The difference, any,
   in the amount of duty shall be payable by the person liable to pay
   the duty.
      Explanation. - The payment of deficit stamp duty by any person
      under any order of registering officer under sub-section (1)           G
      shall not prevent the Collector from initiating proceedings on
      any instrument under sub-section (3).
   (4) The Collector may, suo motu, or on a reference from any
   court or from the Commissioner of Stamps or an Additional
   Commissioner of Stamps, or a Deputy Commissioner of Stamps                H
528      SUPREME COURT REPORTS                            [2023] 6 S.C.R.


A     or an Assistant Commissioner of Stamps or any Officer authorized
      by the Board of Revenue in that behalf, within four years from
      the date of registration of any instrument on which duty is
      chargeable on the market value of the property, not already
      referred to him under sub-section (1) or sub-section (2), call for
      and examine the instrument for the purpose of satisfying himself
B
      as to the correctness of the market value of the property which is
      the subject of such instrument and the duty payable thereon and if
      after such examination, he has reason to believe that the market
      value of such property has not been truly set forth in the instrument,
      he may determine the market value of such property and the duty
C     payable thereon in accordance with the procedure provided for in
      sub-section (3). The difference, if any, in the amount of duty shall
      be payable by the person liable to pay the duty.
         Provided that, with the prior permission of the State Government,
         an action under this sub-section may be taken after the period
D        of four years but before the period of eight years from the
         date of the registration of the instrument on which the duty is
         chargeable on the market value of the property.
         Explanation - The payment of deficit stamp duty by any person
         by any order of the registering officer under sub-section (1)
E        shall not prevent the Collector from initiating proceedings on
         any instrument under sub-section (3).
      (4) If on enquiry under sub-section (2) and examination under
      sub-section (3) the Collector finds the market value of the property
      –
F        (i) truly set forth and the document duly stamped, he shall certify
         by endorsement that it is duly stamped and return it to the
         person who made the reference;
         ii) not truly set forth and not truly stamped, he shall require the
         payment of the proper duty or the amount required to make up
G        the deficiency in the same together with a penalty of an amount
         not exceeding four times the amount of proper duty or the
         deficit portion thereof.
      (4A) The Collector shall also require along with the deficit stamp
      duty or penalty required to be paid under clause (ii) of sub-section
H     (4), the payment of a simple interest at the rate of one and half
  SHANTI BHUSHAN (D) THR. LR. & ORS. v. STATE OF U.P.                         529
            AND ORS. [ABHAY S. OKA, J.]

      per cent per mensem on the amount of deficit stamp duty calculated      A
      from the date of the execution of the instrument till the date of
      actual payment:
          Provided that the amount of interest under this sub-section
          shall be recalculated if the amount of deficit stamp duty is
          varied on appeal or revision or by any order of a competent         B
          Court or authority.
      (4B) The amount of interest payable under sub-section (4A) shall
      be added to the amount due and be also deemed for all purposes
      to be part of the amount required to be paid.
      (4C) Where realisation of the deficit stamp duty remained stayed        C
      by any order of any Court or authority and such order of stay is
      subsequently vacated, the interest referred to in sub-section (4A)
      shall be payable also for any period during which such order of
      stay remained in operation.
      (4D) Any amount paid or deposited by, or recovered from, or             D
      refundable to, a person under the provision of this Act, shall first
      be adjusted towards the deficit stamp duty or penalty outstanding
      against him and the excess, if any, shall then be adjusted towards
      the interest, if any, due from him.”
       23. Accordingly, in this case, an adjudication was made by the         E
Assistant Stamp Collector. After inspection of the sale deed property,
the Assistant Stamp Collector came to the conclusion that the description
of the property in the sale deed was incorrect. The Assistant Collector
observed that in the sale deed, the covered area of the land is shown as
970 meters, but actually, it was found to be 995 sq. meters. The Assistant    F
Collector referred to four sale transactions of the year 2010 which were
in relation to the properties which were a part of the same larger property
wherein the market value shown was Rs. 24,000/- per sq. meter. The
determination of market value by taking the market value at Rs. 24,000/
- per sq. meters has been approved by the Assistant Collector, Appellate
Authority and the High Court.                                                 G
       24. It appears to be an accepted position that the appellants were
tenants of the vendor in respect of the sale deed property. The test for
determination of the market value is very simple. The market value is
the one which a bona fide and willing buyer will offer. It is apparent
that if the property subject matter of the sale is in possession of the       H
530             SUPREME COURT REPORTS                            [2023] 6 S.C.R.


A     vendor himself, the bona fide purchaser will offer more price for the
      property than the price which he may offer for a similar property which
      is in possession of a tenant. There is no doubt that a property in possession
      of a tenant or tenants will fetch lesser value in the open market than the
      market value of a similar property exclusively in possession of the vendor.
      The reason is that the buyer will not get actual possession of the portion
B
      of the property in possession of the tenant.
             25. The market value can be determined by the comparison method
      even in case of a property in possession of tenants. For example, if there
      is a sale transaction of a property in possession of a tenant which is
      comparable to the property sought to be valued and if the said sale
C     transaction is held to be a genuine transaction, market value can be
      fixed on the basis of the sale transaction. If no comparable instances are
      found, the market value can be fixed of the property in possession of
      tenants by making an appropriate deduction from the market value of a
      comparable property in which there are no tenants.
D            26. In the written submissions, the learned counsel appearing in
      person has suggested a formula for calculating the market value by taking
      into consideration the market value on the date of agreement for sale
      (1966) and the market value of the 1/3rd of the land given up by the
      appellants by way of compromise. However, this contention is obviously
E     not acceptable as the market value of the property sold will have to be
      determined on the date of execution of the sale deed.
             27. The Assistant Collector, the Appellate Authority, and the High
      Court have not decided the issue in terms of what we have held above.
      Even if the guidance value of Rs. 24,000/- per sq. meter is to be taken as
F     the market value of the sale deed land, necessary deductions will have
      to be made from the market value as the appellants were already in
      possession of the sale deed land as tenants. The extent to which deduction
      can be made will depend upon the nature of the tenancy and other material
      factors. Some tenancies may be protected under the relevant rent control
      legislation, whereas some may not be protected. That is all a matter of
G     evidence.
             28. The issue regarding the market value of the sale deed land on
      the date of execution of the sale deed is required to be decided by permitting
      the parties to adduce oral and documentary evidence. The Assistant
      Collector will have to ascertain whether a comparable sale instance of a
H     property in possession of tenants is available. If it is not available, the
  SHANTI BHUSHAN (D) THR. LR. & ORS. v. STATE OF U.P.                          531
            AND ORS. [ABHAY S. OKA, J.]

Assistant Collector will have to ascertain the market value of the sale        A
deed property on the relevant date again by comparison method by taking
market value of a comparable property which does not have
encumbrance of tenancy. Thereafter, he will have to determine the
percentage of the deduction which should be made from the market
value in the facts of this case. These questions are to be decided by the
                                                                               B
Assistant Collector on the basis of the evidence on record. Therefore,
subject to what we have held in the judgment, we propose to send back
the case to the Assistant Stamp Collector for determination of the market
value of the sale deed land on the date of execution of the sale deed.
       29. The appellants have already deposited a sum of Rs.1 crore
towards the amount made payable by them. The sum amount will be                C
subject to the final adjudication by the Assistant Stamp Collector. If the
Assistant Stamp Collector comes to the conclusion that the market value
of the land and structures is lesser than what was determined earlier by
the Assistant Stamp Collector, the appellants will be entitled to a refund
of the excess amount paid with interest at the rate of 8% per annum            D
from the date on which the amount was paid till the date on which the
refund is made. If it is found that the deficit stamp duty exceeds Rs.1
crore, the appellants will have to make good the said amount. Sub-section
4A of Section 47A is in mandatory terms. The use of the word ‘shall’
make it clear that the Collector has no choice but to impose interest at
the rate of 1.5% per month on the deficit amount. We are not disturbing        E
the judgment of the High Court insofar as it relates to penalty as the
State Government has not challenged that part.
       30. Hence, we set aside the impugned judgment of the High Court
as well as the judgment of the Assistant Stamp Collector and the Appellate
Authority and remand the case for fresh consideration to the Assistant         F
Stamp Collector. However, we confirm that part of the impugned judgment
of the High Court, by which it was held that the appellants are not liable
to pay penalty. The Assistant Stamp Collector shall permit the appellants
to lead evidence on the issue of valuation. The Assistant Stamp Collector
is directed to conclude the proceedings as early as possible and preferably
within a period of six months from today.                                      G
       31. The appeal is, accordingly, allowed on the above terms with
no order as to costs.

Ankit Gyan                                                   Appeal allowed.
(Assisted by : Raoul Sawant and Aarsh Choudhary, LCRAs)                        H