The landmark decision that , under Article 25 of the Maharashtra Stamp Act, 1958, the stamp duty payable on a Development Agreement is the same as the duty payable on a Conveyance, and that, as a result, Development Agreements must be processed in the same way as conveyance is upheld by the High Court of Bombay through the learned bench led by HONOURABLE MR. JUSTICE SUNIL B. SHUKRE AND HONOURABLE SMT. JUSTICE M.S. JAWALKAR in the case of M/s. Sandeep Dwellers Private Limited Versus The State of Maharashtra (WRIT PETITION NO.3622/2021).
Brief facts of the case are that the petitioner is a corporation that is in the business of construction of buildings in Nagpur. The petitioner had signed three development agreements, the first of which was due on December 28, 2020, and the other two on December 31, 2020. These agreements were eventually filed between January and June 2021 on various dates. The developer had filed an application under section 31 of the Maharashtra Stamp Act, 1958, for adjudication of the stamp duty owed on the development agreements prior to their execution. The developer argued that the three agreements would be covered by the August 28, 2020 announcement permitting stamp duty reductions because they would amount to conveyance under Article 25(b) of Schedule I of the Act, according to the developer. The developer’s case was rejected by the Joint District Registrar (Class-1) cum Collector of Stamps, Nagpur, in a decision dated December 18, 2020, which declared that full stamp duty at the rate of 5% must be paid as per Article 5(g-a) read with Article 25(b)(i) of Schedule I of the Stamp Act. According to the order of December 18, 2020, the developer executed the agreements and paid the stamp duty, and then filed a petition disputing the order and seeking a refund.
The counsel for petitioner, Kartik Shukul, argued that the Development Agreement is a Conveyance as defined by Section 2(g), and that the stamp duty payable on a Development Agreement is the same as that levied on a Conveyance under clause (b) or (c) of Article 25 read with Article 5(g-a)(i) of Schedule I of the Stamp Act.
The counsel for respondents, N R Patil, argued that the State government’s scheme was public record, and that the petitioner could not seek a refund of excess stamp duty after accepting the December 18, 2020 ruling and paying the required stamp duty.
After reviewing the notification dated August 28, 2020 and the relevant sections of the Maharashtra Stamp Act, along with listening to the arguments of both the sides, the court determined that the stamp duty on conveyances, which include agreements to sell in respect of any immovable property, was originally charged at a rate of 5% of the market value of the property under Article 25 of the Maharashtra Stamp Act (b). Between the dates specified in the notification, the stamp duty on instruments of conveyance or agreements to sell was decreased. The bench noted that under the three agreements, the various owners and developers agreed to jointly develop the immovable property described in each agreement, with a 25% share of the built property going to the owners collectively and a 75% part going to the developer.
The court ruled that, while a Development Agreement is provided for in Article 5(g-a)(i) of Schedule I of the Stamp Act, the amount payable on a Development Agreement was the same as the amount chargeable on a Conveyance under clauses (b) or (c) of Article 25 of Schedule I of the Stamp Act, and that, as a result, a Development Agreement would have to be treated in the same way as a Conveyance. The bench held that the date of execution of the agreements would be important for stamp duty computation since the agreements were executed before December 31, 2020, but were registered later, and the rate of relief in stamp duty was different for the two periods. As a result, the court granted a 2% reduction in the amount due in stamp duty.
JUDGEMENT REVIEWED BY- ATIVA GOSWAMI