1. In its search for more revenue the State of Andhra Pradesh has been tapping every possible source, to the maximum extent possible. Section 47-A was introduced by A.P Amendment Act 22 of 1971, in the Indian Stamp Act for this very purpose. This Section introduced the concept of market value of the property as the basis for payment of stamp duty, instead of the consideration that passed between the parties. By the very same Amendment Act, several Entries in the Schedule to the Stamp Act relating to conveyance, exchange, and gift etc, were also amended, introducing the concept of market value of the subject-matter of the transaction, in the place of consideration. For example, in item 20 of Schedule I-A relating to conveyance, the stamp duty now became payable on the consideration stated in the conveyance, or the market value of the property, whichever is higher. Similar amendments were made in other Entries relating to exchange and gift, among others. From the date of the said amendment, stamp duty became payable net on the consideration stated in the deed of conveyance, gift, or exchange, but on the market value of the property conveyed, exchanged, or gifted, as the case may be. Section 47-A conferred a power upon the registering-officer to refer the matter to the Collector for determination of market value of the property which is the subject-matter of such deed, where he has reason to believe that the market value of the property, which is the subject-matter of such instrument, has not been truly set forth in the instrument. He was of course to register the document first, and then refer the matter to the Collector, On receipt of reference, the Collector was empowered to hear the parties and, after holding such enquiry as may be prescribed by the Rules made under the Act, determine the value of the property and the stamp duty payable thereon. On such determination the person liable to pay the duty was bound to pay the same The Section also conferred a suo motu power upon the Collector to revise the value of any property mentioned in the document, within a period of two years from the date of registration of the document, and to collect the difference from the person liable to pay the stamp duty. An appeal was provided against the order of the Collector. The Section defined the expression ‘market value’ thus:—
“For the purposes of this Act, Market value of any property shall be estimated to be the price which in the opinion of the Collector or the appellate authority, as the case may be, such property would have fetched or would fetch if sold in the open market on the date of execution of the instrument of conveyance, exchange, gift, partition of settlement”.
2. Having enacted Section 47-A, the Government of Andhra Pradesh proceeded to prepare a ‘Basic Value Register’ for the entire Stat;. Values were fixed for urban properties, and agricultural properties, all over the State and instructions were given to registering officers not to register a document until and unless the market-value shown in the deed of conveyance/exchange/gift is stated at a figure not less than the value mentioned for such property in the basic-value register. Values in the Basic Value Register have been revised from time to time, and on all occasions upwards. Cases have come before this Court where the complaint was that the value stated in the Basic Value Register in respect of a particular property is far higher than its true market-value, and yet the registering officers were insisting upon payment of Stamp duty on such inflated value stated in the Basic Value Register. One such case was dealt with by me in N. Ranga Reddy v. Government of Andhra Pradesh 1987 1 A.P.L.J 131. (The decision was rendered on 17-7-1985). The petitioner's complaint in that case was that the value of land in his village was not more than Rs. 2,500/- per Acre, but the Government had fixed the value of the said land, in the Basic Value Register, at Re. 1-/per sq. yard prior to 1982; that, in the year 1982 it was raised to Rs. 3/- per sq. yard, and again in 1985 to Rs. 15/- per sq. yard. The petitioner's case was that fixation of market value at that figure was totally unrealistic, and unrelated to reality. In the writ petition he made an offer to the Government to acquire the said laud at one-fourth of the value fixed in the Basic Value Register, i.e, at the rate of Rs. 3.75 Ps. per sq. yard. His grievance was that the registering officer was refusing to register the document at the true consideration for which he sold the land, and was insisting upon the payment” of stamp duty on the basis that the market value of the said land is Rs. 15/- per sq. yard. After referring to the relevant provisions of the Stamp Act and to Section 47-A, the following observations were made:—
“It is contended by the learned counsel for the petitioner, and is conceded by the learned Government Pleader, that there is no other provision in the Stamp Act or the Rules made thereunder, which deals with, or provides for what should be done in the case of documents presented for registration wherein the subject-matter of conveyance is under-valued with a view to avoid the stamp duty.
It is evident from a reading of sub-section (1) of Section 47-A, and from a perusal of the Act, that the Government has no power in law to fix the values of lands or properties for the purposes of the Stamp Act, and/or to direct the registering authorities not to admit documents for registration unless the value stated in the documents conforms to the value fixed by the Government. This is also conceded in the counter-affidavit. It is contended by the learned Government Pleader that the said instructions, issued after an elaborate enquiry and verification, are merely meant as administrative instructions for the guidance of registering authorities and that, at no stage, the Government prohibited or restrained the registering authorities from registering the documents which, in their opinion, are under-valued. The learned Government Pleader stated that the only procedure available to the Registrar is the one indicated by subsection (1) of Section 47-A of the Act and that, the registering authorities will, wherever they think that the property is under-valued, follow the procedure prescribed by the said sub-section. The counter-affidavit states categorically that none of the registering authorities are refusing to admit any document for registration on the said ground and that none is refusing registration on such a ground. The learned Government Pleader stated before me that the registering authorities will register the documents irrespective of their opinion with respect to the value stated therein, and that if they are of the opinion that the property referred to in the document is under-valued, they will follow the procedure prescribed by sub-section (1) of Section 47-A. In forming the opinion as to the value of the property, no doubt, the learned Government Pleader states, the registering authorities will take into consideration the instructions of the Government, or for that matter, any other relevant material or information….”.
3. It was observed in the judgment that the said statement and the clarifications made in the counter-affidavit filed by the Government and affirmed by the Government Pleader in Court-leave no room for grievance on the part of the petitioner. It was observed that all registering authorities in the State shall be bound by the said clarifications and sha???l act accordingly.
4. sub-section (1) of Section 47-A, at the relevant time, read thus:—
“(1) Where the registering officer appointed under the Registration Act, 1908, while registering any instrument of conveyance, exchange, gift, partition, or settlement has reason to believe that the market value of the property which is the subject matter of such instrument has not been truly set forth in the instrument, he may, after registering such instrument, refer the matter to the Collector for determination or the market value of such property and the proper duty payable thereon”.
5. It is relevant to note that many of the States in India have intro duced a similar provision. From the Commentary of Sanjiva Row on Indian Stamp Act (Sixth Edition - 1986),. it appears that besides Andhra Pradesh, Goa, Daman and Diu (Goa Act 14 of 1975), Haryana (Haryana Act 37 of 1967), Madhya Pradesh (Madhya Pradesh Act (8 of 1975), Megha laya (Meghalaya Act 8 of 1983), Orissa (Orissa Act 35 of 1962 as amended by Orissa Act 11 of 1965), Punjab (Punjab Act 21 of 1982), Pondicherry (Pondicherry Act 24 of 1970 as amended by Regulation 12 of 1976), Rajasthan (Rajasthan Act 10 of 1982), Tamil Nadu (Tamil Nadu Act 24 of 1967), and Uttar Pradesh (Uttar Pradesh Act 11 of 1969 as amended by three Amendment Acts) have all introduced a similar provision, numbered as 47-A. All these amendments arc substantially on the same lines as the Andhra Pradesh amendment. All of them levy stamp duty on the market value of the subject-matter of the instrument. The only change is that in case of some State enactments, an alternative basis is also provided. For example, in Haryana, Section 47-A introduced by Haryana Act 37 of 1967, provides that if the registering officer “has reason to believe that the value of the property or the consideration, as the case may be, has not been truly set forth in the instrument, he may, after registering the instrument refer the same to the Collector for determination of the value or consideration, as the case may be, and the proper duty payable thereon”. Section 47-A introduced by Meghalaya and Orissa also adopts the same basis. One striking feature of all these State amendments is that all of them provide that the registering officer shall first register the document and then refer the same to the Collector for determination of market value or consideration, as the case may be and to determine the proper duty payable on such instrument. There is however one significant feature in the UP. amendment. Sub-Sections (1) and (2) of Section 47-A, introduced by UP. Acts, read thus:—
“S. 47-A: Instruments of conveyance etc, if under-valued, how to be dealt with:
(1) If the market-value of any property, which is the subject of an instrument of conveyance, exchange, gift, settlement, award or trust, as set forth in such instrument, is less than even the minimum value determined in accordance with any rules made under this Act, the Registering Officer, appointed under the Indian Registration Act, 1908 shall refer the same to the Collector for determination of the market value of such 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 of conveyance, exchange, gift, settlement, award or trust, has reason to believe that the market-value of the property, which is the subject of conveyance, exchange, gift, settlement, award or trust, 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
6. The U.P amendment thus provides for Rules being made under the Act, providing for determination of minimum values of properties, and only where the document shows a consideration less than such minimum value, is the registering officer expected to refer the matter to Collector. Sub-section (2). of course, is again identical with sub-section (1) of the Andhra Pradesh amendment. Rules framed by the U.P State, if any, in pursuance of sub-section (1) of Section 47-A are not available to me and it is, therefore, not possible to mention the procedure and the basis according to which minimum values have to be determined. One of the Rules, R. 341 is referred to in Kaka Singh v. Addl. Collector (MR 1986, Allahabad 107). The Rule fixed the minimum value at 800/400 times the land revenue. One thing, however, is clear that the U.P amendment itself provides for framing Rules for determining the minimum values of properties, which is significantly absent in the A.P amendment, or for that matter, in other State amendments.
7. Now coming back to the position obtaining in our State, the Government appears to have found the above state of affairs, particularly after the clarification made in the aforesaid judgment of this Court, unsatisfactory. Accordingly, it amended sub-section (1) of Section 47-A by A.P Amendment Act 17 of 1986. By this amendment the Legislature empowered the registering officer—where be has reason to believe that the market value of the property which is the subject matter of an instrument of conveyance, exchange, gift, partition, settlement, or release has not been truly set forth in the instrument—to keep the instrument pending and refer the matter to the Collector for determination of market value of such property and the proper duty payable thereon. Whereas under sub-section (1) of Section 47-A before it was amended, the registering officer was bound to register first and then refer the matter to the Collector for determination of true market value, the registering officer is now empowered to withhold registration and refer the matter to Collector for determination of market value, The other provisions in Sec. 47-A remains untouched, which means that the Collector shall, on reference, give notice to parties, make an enquiry, and determine the proper market value of the property which is the subject-matter of such instrument, and also the duty payable thereon, On such determination, the person liable to pay the stamp duty on such instrument is bound to pay the same The provision of appeal against the order of the Collector, and the suo motu power in the Collector continue to be available. Similarly, the definition of ‘market value’ in sub-section (6) also remains the same It is not clear whether any such amendment has been carried out in any of the other States.
8. The effect of this amendment, according to the petitioners, is this: It, in effect, compels the parties to an instrument of conveyance, exchange, gift, partition, settlement, or release to pay stamp duty in accordance with the value prescribed for such property in the Basic-Value Register. It is evident that no vendor of property, or no purchaser of property would like to wait indefinitely awaiting the decision of the Collector with respect to market value of the property. It is well known that Collector, who is one of the busiest administrators in the State, is over-burdened with official, duties. He cannot be blamed if he does not attend to this matter promptly. Morever, he has to hear the parties, hold an enquiry, and then determine the market value. All this may take time and, in the normal course, no party to a transaction of sale would like to put off the registration of his document in this uncertain fashion. The vendor would like to have full consideration of his property and be done with the registration of document, while the purchaser would like to have the document registered soon, so that he can get title and possession of the property, In these circumstances, they would rather pay the stamp duty, on the value mentioned in the Basic Value Register than wait for an indefinite time, awaiting the decision of the Collector. In this context, the petitioner says, it is necessary to remember that the stamp and registration charges in force today for a deed of conveyance, are very substantial. The A.P Amendment Act 17 of 1986 has, in fact, introduced a new Entry in Schedule I-A, i.e, Entry 47-A relating to “sale as defided in Section 54 of the T.P Act, 1882”. Where the property is situated in any local area comprised in a Municipal Corporation, the stamp duty is 8%, whereas in the case of selection grade/special grade Municipalises, it is 7%. In case of other areas, it is 6%. At the time of registration of document, the parties have not only to pay registration charges, but also the Transfer of Property Tax. Thus, in the case of proper ties within the local areas of Municipal Corporations, the total charges on account of stamp and registration come to around 14% and this 14% is not tacked on to the consideration, but to the market value of the property as stated in the Basic Value Register. It is difficult to say there is no force in the above reasoning. It is not difficult to imagine transaction of sale where the true consideration passing between the parties is less than the market value. The reasons may be many. It may be because the parties are related, or because the vendor is in dire need of money, or for any other reason whatsoever. Similarly, there may be instances where the true consideration passing between the parties is more than the market value, But the Legislature has thought it fit to ignore the true consideration, and has taken the market value of the property as defined in sub-section (6) of Section 47-A, as the basis for levy of stamp duty. The competence of the Legislature to levy stamp duty on market value instead of levying it on the true consideration passing between the parties, is not questioned before me. The learned Government Pleader has brought to my notice that a similar amendment made by the Madras Legislature has been upheld by a Division Bench of the Madras High Court in State of Tamil Nadu v. T.N Chandrasekharan AIR 1974, Madras 117.. A Division Bench of Madhya Pradesh High Court too has taken the same view in Ramkishori v. State AIR 1988 M.P 145.. I need not express any opinion on the said question, since it is not put in issue, or argued before me. The only question is, whether the Government was justified and did it have the power to instruct the registering officers to register a document only where the consideration shown therein accords with the value shown for that property in the Basic Value Register? The petitioners contend that the very preparation of the Basic Value Register and the instructions given by the Government to registering officers to abide by the values stated therein, are contrary to Section 47-A (1).
9. Before, however, I deal with the said contention, it may be appropriate to refer to the facts in WP. No. 3276/1989, in brief. The petitioner in this case is ‘Sagar Cements Ltd., a Company registered under the Indian Companies Act, and engaged in manufacture of cement. It is having a plant in Mattempalli village. According to the petitioner, its factory is situated at a distance of 4 K. Ms. from the village proper. In the year 1983 the petitioner had purchased 80 Acres of agricultural dry land at the rate of Rs. 3,000/- per Acre, and established a factory therein. It has also constructed a compound wait around the said 80 Acres. Survey No. 429.AA abuts the said extent The owners of the said survey-number have been complaining that their land has become unproductive on account of the cement dust, emanating from the petitioner's cement plant, falling upon the said survey-number. They requested the petitioner to purchase the said land. The petitioner agreed to purchase the same at the rate of Rs. 3,000/- per Acre. Accordingly, a deed of sale was prepared, engrossed upon Non-Judicial Stamp of the requisite value, and presented for registration. The registering authority, however, stated that since the land is being purchased for an industrial purpose, stamp duty must be paid calculating the value at Rs. 9/- per sq. yard. According to this, the value would be more than Rs. 40,000/- per Acre. The registering authority refused the register the document, when presented. The petitioner further says that it has purchased another piece of land in Survey No. 202, of an extent of Ac. 5-23 cents for a consideration at the rate of Rs. 12,500/- per Acre. The agreement of sale in that behalf was executed on 13-12-1988. The Basic Value Register, however, states the value of this land at Rs. 28/- per sq. yard, with the result that the petitioner is not in a position to obtain the sale-deed for this land until and unless it pays stamp duty as well as registration charges—at such exaggerated value.
10. Though an extract of the Basic Value Register is not filed before me, the petitioner has placed before me a letter dated 29-9-1988 from the Sub-Registrar, Huzurnagar, addressed to the General Manager of the petitioner-Company, mentioning the values of the lands concerned herein according to the Basic Value Register. It would be appropriate to extract the letter in full:
“… GOVERNMENT OF ANDHRA PRADESH
(REGISTRATION & STAMPS DEPARTMENT)
Office of the
SUB-REGISTRAR,
HUZURNAGAR.
Sri Md. Faizur Rahman,
Sub-Registrar,
Huzurnagar.
The General Manager, Sagar Cements Ltd.,
Mattampally.
No. 504/88: dated 29-9-88
Sub: Registration of agricultural lands-proposed to purchase in Matlampally and Peddaveedu villages-requesting to furnish the prevailing market value for registering the same—Reg.
Ref.: 1. Your letter No. Nil, dated 29-9-88.
2. I.G Proc. MV3/977/85, dt. 4-9-86.
With reference to the above, the rates of agricultural survey numbers are furnished below:—
Name of the Village
Survey Nos.
Rate per Acre/Sq. Yard:
429.A
429.AA
430.A
Rs. 3,000/- per acre for agriculture purpose. Rs. 18/- per sq. yard if the land located at road side. Rs. 9/- per sq. yard inside.
Mattampally
430.AA
431.A
431.AA
432.A
432.AA
432.E
432.EE
433.A
433.AA
Peddaveedu
202
Rs. 15, 200/- per acre. Rs. 28/- per Sq. Yard.
As per the reference 2nd cited, the house site value is applicable for the above lands.
Yours faithfully,
Sub-Registrar, Huzurnagar
29-9-88
11. It would be relevant to notice that according to the above letter, value of the land differed depending upon the purpose for which the land is purchased. The very same land, if purchased for agricultural purposes, is valued at Rs. 3,000/- per acre; but if it is purchased for a non-agricultural purpose, it is valued at Rs. 18/- per sq. yard “if the land located at road side”, and at Rs. 9/- per sq. yard if it is located “inside”. This is in the case of S. No. 429.AA, whereas in the case of Survey No. 202, the value is Rs. 15,200/- per acre if it is purchased for agricultural purposes, and Rs. 28 per sq. yard if it is purchased for other purposes. It is not clear, what does the expression “if the land located at roadside” mean? Similarly, it is not clear, what does the expression “if the land located…………………………………………………………………………inside mean? There is an inherent vagueness in the said letter. It is equally un-understandable as 10 how the value will differ having regard to the purpose for which the land is purchased. It is one thing to say that having regard to the potential of the land, it should be valued at a particular figure; it may be said that a particular land has the potential of being used for housing purposes, or for industrial purposes, as the case may be. But, it is rather curious to say that the very same land, if purchased for agricultural purposes, would cost Rs. 3,000/- per acre, and if purchased for other purposes, it would cost about Rs. 85,000/- per acre, or Rs. 40,000/- per acre, as the case may be. Be that as it may, by virtue of the letter dated 4-9-1986, all the said lands are treated as fit for house sites—which means that the higher value will be applicable. It is evidently for this reason, the registering authority is insisting upon such higher valuation. The question is: whether the Government has the power to instruct the registering officers to register a document only where the value stated therein is not less than the value mentioned in the Basic Value Register for that property, and in all other cases to withhold registration and refer the matter to the Collector? For this purpose, it would be appropriate to read sub-section (1) of Section 47-A, as amended by A.P Amendment Act 17 of 1986. It reads:
“(1) Where the registering officer appointed under the Registra tion Act, 1908, while registering any instrument of conveyance, exchange, gift, partition, settlement, or release has reason to believe that the market value of the property which is the subject-matter of such instrument, has not been truly set forth in the instrument, he may keep pending such instrument and refer the matter to the Collec tor for determination of market value of such property and proper duty payable thereon……………
12. The contention of the learned counsel for the petitioner, Sri. M. Chandra-sekhara Rao, is that the sub-section leaves the matter to the discretion of the registering authority. If the registering authority has reason to believe that the consideration set forth in the instrument is less than the market value, then alone he will defer the registration and refer the matter to the Collector for determination of the market value of such’ property and the duty payable thereon. This discretion vested by law in the registering officer cannot be taken away, or curtailed, by administrative instructions issued by administrative superiors-not even by the Government by issuing instructions in exercise of its executive power. Neither the Government, nor an administrative superior of the registering authority has the power to deprive the registering authority of the discretion vested in him by law. Since the Act does not contemplate preparation of a Basic Value Register, the said register has no statutory significance, and it cannot be made binding upon the registering officers, argues the Counsel.
13. On the other hand, the contention of the learned Government Pleader, Sri B. Sudarshan Reddy, is that neither the Government, nor the Inspector-General of Stamps & Registration, has ever tried to deprive the registering authority of the discretion vested in him. All that they have tried to do is to provide guidance to the registering authority in the matter of exercise of that discretion. They have merely tried to ‘structure’ his discretion. They have enunciated certain guidelines which the registering authority has to keep in mind while forming the belief, referred to in subsection (1). It has been done with a view to eliminate arbitrariness on the part of the registering-authority, and also with a view to eliminate any room for complaint of discrimination from case to case. The preparation of Basic Value Register is preceded by an elaborate enquiry, and the values fixed therein correspond to true market values. The mere fact that in a few cases the figures in the Basic Value Register do not accord with the true market value is no ground to disregard the entire Register. When a register is prepared for properties in the entire State, there are bound to be some instances where the market value may differ from the value stated in the Register. The said register ensures uniformity of treatment to all the citizens of this State, and eliminates arbitrariness on the part of the registering authorities, besides eliminating any room for under-hand, or undesirable practices. The learned Government Pleader submitted that the said register is meant for guidence of the registering authorities alone. When the matter comes before the Collector on reference, the Collector is not bound by the said register. He will determine the market value exclusively on the basis of his enquiry, says the learned Government Pleader.
14. Before proceeding to deal with the rival contentions, I think it appropriate to refer to the guidelines issued by the Inspector-Geaeral of Registration & Stamps in his proceedings dated 4-9-1986 aforementioned. These guidelines serve to explain the Entries in the Basic Value Register, viz, the entries which say that if the land is soil for agricultural purposes, the rate is lower; but if the very same land is sold for industrial or housing purposes, the rate should be very much higher. The proceeding dated 4.9.1986 refers to earlier proceeding dated 30.4.1985 (which, however, has not been placed before me), and states thus:
“In the reference cited instructions were issued to assess the market value of agricultural lands sold in bits presumably for construction of houses, applying the rates applicable to house sites. It has been observed that there is some confusion and divergence of opinion in this regard. In order to have a uniform procedure the following guidelines are issued:
(i) House site rates should be applied to the agricultural lands sold to Co-operative Housing or House Building societies, industrial enterpreneurs, teal estate agents acting as agreement-holders, educational, religious institutions, etc., irrespective of the extent involved, since the said lands are purchased by these agencies for non-agricultural purpose and notwithstanding the fact that some portions of such lands are to be set apart for the purpose of other than constructions.
(ii) When agricultural land is sold in bits which are not viable units for agriculture, house site rates should be applied though the land is described as agricultural land in the document keeping in view the locations of these lands, the experience in (he vicinity, etc.
(iii) When agricultural lands are sold in bulk to any individual or group of individuals at a rate abnormally higher than the rate fixed adopted for such land, if taken for really agricultural purpose it should be presumed that the purpose is other than agriculture and the market value should be calculated at house-site rates; and
(iv) the boundaries and surroundings of the land under transfer should also be taken into consideration to determine the nature and purpose of such land for applying the market value rates. House site rates should be applied in respect of the lands nearer to any proposed housing colony, commercial or industrial complex, bus-complex, market yard etc., as there would be ample scope for building activity in the vicinity either for residential, commercial or industrial purpose.
15. All District Registrars are requested to acknowledge the receipt of this proceedings. They are also requested to communicate these guidelines to the registering officers and internal audit Sub-Registrars under their control and obtain acknowledgments……
16. The instructions contained in the above proceedings explain why the Sub-Registrar is saying that more stamp duty is payable for survey No. 429.A, i.e, at the rate of Rs. 9/- per sq. yard. It is because the land abuts an industrial complex. Similarly, in respect of Survey No. 202, it is asked to be valued at higher rate because it is near an industrial Complex, i.e, the petitioner's Cement Factory.
17. Now coming to the Basic Value Register, it is not disputed that it has no statutory sanction behind it. Neither the Stamp Act nor any other provision of law empower the Government to prepare such a register More over the register was prepared on the basis of its own enquiries—no doubt said to be elaborate—by the Government. The position in this behalf thus remains the same as was obtaining in July 1985, when the decision in N. Ranga Reddy case (supra) was rendered. Of course even now the Government does not specifically admit that it has given instructions as such to registering authorities not to register documents until and unless the consideration shown therein accords with the value shown for the property in the Basic Value Register. But the fact remains that no registering authority would feel bold enough to disregard the instructions issued by his administrative superiors, or by the Government, as the case may be. For this reason, in practice, the registering authorities are insisting upon the documents (of the nature mentioned in Section 47-A) showing a consideration in accord with the value determined for such property in the Basic Value Register. At the same time, I cannot ignore the merit of the argument of the learned Government Pleader that the said instructions ensure uniformity of treatment and serve to eliminate arbitrariness on the part of the registering authorities and more important, eliminate any room for corruption and harassment. This consideration, however, has to be weighed and judged in the light of the statutory provisions.
18. Section 47-A says that where the registering authority has reason to believe that the market value of the property has not been truly set forth in the instrument, he may defer registration and refer the matter to the Collector. The belief contemplated by the sub-section should be formed by the registering authority. It must be a reasonable belief. It must be based upon relevant material. The formation of belief is, no doubt, subjective, for, it is well settled that expressions like this have been held to mean and refer to subjective satisfaction on the part of the authority; (vide paragraph 62 in Barium Chemicals Ltd. v. Company Law Board AIR 1967 S.C 295 at p. 323-324.. The fact that the reasonable belief has to be formed by the registering authority may not preclude the Government from laying down a policy, or preclude the Government, or the Head of the Department, from issuing guidelines for the guidance of the registering authorities, so long as such policy and/or guidelines do not run counter to the provisions of the statute. In other words so long as the guidelines, do not deprive the registering authority of its power and function, they may not be held to be impermissible. Where a particular power or discretion is vested in an authority, and where the statute does not prescribe the manner in which, or the material on the basis of which, or the procedure in accordance with which the belief/satisfaction is to be formed, the Government or the Head of the Department may, in the interest of ensuring uniformity of treatment and elimination of arbitrariness and undesirable practices, issue such guidelines, applying which the authority has to form the requisite belief. Such guidelines cannot be said to be impermissible, nor pan they be labelled as amounting to taking away the power and function vested in the authority by the statute. In this context, it is necessary to notice the nature of the power and function as well as the nature of the authority in whom such power and function is vested. The power, or discretion, if it can be called that, conferred upon the registering authority by Section 47-A (I) is not judicial in nature. It is not even quasi-judicial in nature. The belief, though it ought be a reasonable belief, is still to be formed by a process of subjective satisfaction. The following statement of law by de Smith in his book “Judicial Review of Administrative Action” is relevant in this behalf:—
“Authorities directly entrusted with statutory discretions, be they executive officers or members of distinct tribunals, are usually entitled and are often obliged to take into account consideration of public policy, and in some contexts the policy of a Minister or of the Government as a whole may be a relevant factor in weighing those considerations; but this will not absolve them from their duty to exercise their personal judgment in individual cases, unless explicit statutory provision has been made for them to be given binding instructions by a superior, or (possibly) unless the cumulative effect of the subject-matter and their hierarchical subordination (in the case of civil servants and local government officers) make it clear that it is constitutionally proper for them to receive and obey instructions conveyed in the proper manner and form…………….; (see page 310, Fourth Edition).
19. The question is whether the instructions in question fall within the above principles of Law and can be justified?
20. Now, the Governments case is that the administrative instruction and guidelines issued by it are actuated by considerations of public policy) viz., to ensure uniformity of treatment and to eliminate room for arbitrariness and undesirable practices. As the registering authority has no machinery or time to enquire and determine the market value of the property concerned in each case, it is stated, the register is prepared to serve as a guide The learned Government Pleader contended that the registering officer is bound to adopt and abide by the values stated therein though, according to him, the Collector is not so bound.
21. After giving my earnest consideration to the issue, I am of the opinion that the values stated in the Basic Value Register, lacking any statutory sanction, cannot bind the registering officer. The Basic Value Register is prepared by the Government on the basis of its own enquiries. It has been revising those values from time to time, again unilaterally. When the values are determined for all the properties in the State, the exercise is bound to be generalized in nature. It can never be accurate with respect to each individual property, or piece of land. For example, in urban areas the values differ radically, depending upon whether the land is abutting the main road, or is just ‘10 or 15’ away from the main road. The values of properties depend upon several variable factors. Even in the case of agricultural properties the value of one survey-number may differ from the value of adjoining survey-number. Even within the same survey-number, if its extent is fairly large, one part may differ in value from the other part. Take the letter of the Sub-Registrar, Huzurnagar, dated 29-9-1988, referred to hereinbefore. It determines the value of a group of survey-numbers comprised in 429, 430, 431, 432, and 433 at Rs. 3,000/- per Acre if it is sold for agricultural purposes. At the same time, it says that its value would be Rs. 18/- per Sq. Yard if the land is “located at road side”. It further says that its value would be Rs. 9/- per sq. yard if it is located “inside”. What does the expression “land located at road side” mean? Is that value confined only to a strip of land along the road, or to the entire survey-number, whatever be its extent? Similarly, it is not known what does the expression “inside” mean. A land situated 15’ away from the main road would be ‘inside’, as well as a land situated 1,500 metres away from the main road. Can both the lands be treated on the same par? Besides the above inherent ambiguities, it is not known, how can the value differ depending upon the purpose/for which the land is purchased? This aspect has already been commented upon by me hereinbefore. All this discloses the inherent difficulty in determining the value of each survey-number or each piece of property in the entire State by a single exercise. It appears from the U.P amendment, referred to above, that Section 47-A as introduced by the U.P Legislature contemplates Rules being made for determining the minimum values of properties. Only where the value shown in a document is less than such minimum value, is the registering officer expected to refer the matter to Collector after registering the document. In our case, the concept of minimum value is not there. The value fixed is said to be the true and correct value-and, as pointed out above, it cannot be that In my considered opinion, therefore, the instructions issued by the Government and the Inspector-General of Stamps and Registration to the registering officers, to abide by the values stated in the Basic Value Register and not to register any document which does not accord with the value stated in the Basic Value Register, are not only not sanctioned by law, but cannot also be justified by the principle enunciated in the preceding paragrah No. (13). These instructions are not mere guidelines issued to guide and help the registering officers in forming the requisite opinion, they are more in the nature of a ‘diktat’. It leaves no room for any discretion on the part of the registering officers. The registering officers are bound by the said Register. Having regard to the high incidence of stamp and registration charges, and the constant upward revisions effected by the State Government in the Basic Value Register from time to time, it would be extremely bard upon the citizens to hold that they should willy-nilly abide by the values stated in the Basic Value Register. It may be that stamp revenue may have been one of the important sources of revenue in the days of yore; but, today it constitutes an insignificant portion of the total State revenue. Other heads of revenue—very substantial in nature—have come into being over the years, like Sales Tax. Other types of revenue, like excise, revenue, have increased substantially. Levying stamp and registration charges at such a high figure and then tacking them on to artificially determined values is bound to operate as a very heavy burden upon citizens. It is precisely because of such high incidence of stamp and registration charges that in many rural areas, particularly in Telangana region of the State, rural folk, particularly the poorer persons who purchase small pieces of land, do not get their documents stamped and registered according to law, and on account of that, they come into trouble more often that not. A welfare State should try to reduce the incidence of such charges rather than trying to increase them. As a matter of fact, this high rate of stamp and registration charges is also operating to drive the values of properties upwards. If a property changes hands five times, the total expenditure on stamp and registration charges would be equal to the value of the property itself. This is not to deny the legitimate right of the State to raise revenue by means of levying stamp duty. I only wish to emphasize that both the considerations should be evenly balanced; raising revenue alone should not be the criterion. The stamp and registration charges should be maintained at a reasonable level, keeping in view the fact that any abnormal incidence operates as an uncalled for burden upon citizens and also tends to hamper the free dealings in properties. The result of this discussion is that the values stated in the Basic Value Register cannot be treated as binding upon the registering officers, or upon parties who present documents for registration and that, at the most, it can be treated as a guideline, a relevant material, by the registering officers.
22. The question then arises: on what basis should the registering officer determine whether the subject matter of an instrument, like a saledeed, is under-valued? In this connection, I respectfully agree with, and adopt the following observations made by a Division Bench of Madras High Court in State of Tamil Nadu v. T.N Chandrasekharan, (2 supra) while dealing with Section 47-A introduced by the Tamil Nadu Legislature. The Bench observed:
“We are inclined to think that the subject of the Amending Act being to avoid large scale evasion of stamp duty, it is not meant to be applied in a matter of fact fashion and in a haphazard way. Market value itself, as we already mentioned, is a changing factor and will depend on various circumstances and matters relevant to the consideration. No exactitude is in the nature of things possible. In working the Act, great caution should be taken in order that it may not work as an engine of oppression. Having regard to the object of the Act, we are inclined to think that normally the consideration stated as the market value in a given instrument brought for registration should be taken to be correct unless circumstances exist which suggest fraudulent evasion”, (emphasis added)
23. These observations have been quoted approvingly by a Division Bench of Allahabad High Court in Kaka Singh v. Addl. Collector & District Magistrate5. In this connection, the heading/marginal note of Section 47-A is also worth noticing. It reads:—
“Instruments of conveyance etc., under-valued—how to be dealt with”.
24. The Section is meant to meet cases of ‘under-valuation’. A Section in the Income-Tax Act with a similar expression has been explained and dealt with in K.P Varghese v. I.T Officer Ernakulam 1981 4 SCC 173. Section 52, including its marginal note, reads as follows:—
“52. Consideration for transfer in cases of understatement:
(1) Where the person who acquires a capital asset from an assessee is directly or indirectly connected with the assessee and the Income-tax Officer has reason to believe that the transfer was effected with the object of avoidance or reduction of the liability of the assessee under Section 45, the full value of the consideration for the transfer shall, with the previous approval of the Inspecting Assistant Commissioner, be taken to be the fair market value of the capital asset on the date of the transfer.
(2) Without prejudice to the provisions of sub-section (1), if in the opinion of the Income-tax Officer the fair market value of a capital asset transferred by an assessee as on the date of the transfer exceeds the full value of the consideration declared by the assessee in respect of the transfer of such capital asset by an amount of hot less than fifteen per cent of the value declared, the full value of the consideration for such capital asset shall, with the previous approval of the Inspecting Assistant Commissioner, be taken to be its fair market value on the date of its transfer”.
25. The Section occurs in Chapter IV-E of the Income-Tax Act, which provides for levy of income-tax on capital gains, and the matters connected therewith. Sub-Section (2) of Section 52, it is evident, runs on similar lines to Sec. 47-A of the Stamp Act. Dealing with Section 52(2), the Supreme Court observed:—
“It is not enough to attract the applicability of sub-section (2) that the fair market value of the capital asset transferred by the assesses as on the date of the transfer exceeds the full value of the consideration declared in respect of the transfer by not less than 15% of the value so declared, but it is further more necessary that the full value of the consideration in respect of the transfer is understated or in other words, shown at a lesser figure than that actually received by the assessee. Sub-section (2) has no application in case of an honest and bonafide transaction where the consideration in respect of the transfer has been correctly declared or disclosed by the assessee, even if the condition of 15% difference between the fair market value of the capital asset as on the date of the transfer and the full value of the consideration declared by the assessee is satisfied/If therefore the Revenue seeks to bring a case within sub-section (2), it must show not only that the fair market value of the capital asset as on the date of the transfer exceeds the full value of the consideration decla red by the assessee by not less than 15% of the value so declared, but also that the consideration has been understated and the assessee has actually received more than what is declared by him. There are two distinct conditions which have to be satisfied before sub-section (2) can be invoked by the Revenue and the burden of showing that these two conditions are satisfied rests on the Revenue. It is for the Revenue to show that each of these two conditions is satisfied and the Revenue cannot claim to have discharged this burden which lies upon it, by merely establishing that the fair market value of the capital asset as on the date of the transfer exceeds by 15% or more the full value of the consideration declared in respect of the transfer and the first condition is therefore satisfied. The Revenue must go further and prove that the second condition is also satisfied. Merely by showing that the first condition is satisfied, the Revenue cannot ask the Court to presume that the second condition too is fulfilled, beca use even in a case where the first condition of 15% difference is satis fied, the transaction may be a perfectly honest and bona fide transaction and there may be no understatement of the consideration. The fulfilment of the second condition has therefore to be established independently of the first condition and merely because the first condition is satisfied, no inference can necessarily follow that the second condition is also fulfilled………………………………….”
26. Applying the principle of the said decision, it must be held that for attracting Secttcn 47-A it is not enough to show that the consideration stated in the instrument of sale etc., is less than the prevailing market value. It must be further shown that it is a case of under-valuation. Even though the expression ‘under-valuation’, or ‘under-valued’ is not used in the body of Section 47-A but only in marginal note, still the relevance of marginal note cannot be ignored. Even in the case of Section 52(2) of the Income-tax Act, the expression “understatement” did not occur in the body of subsection (2), or sub-section (1), but only in the marginal note, and yet the Supreme Court held that the marginal note is relevant to ascertain the intention of the Legislature. At this stage, I must hasten to make one aspect clear. In the case before the Supreme Court, the Court was dealing with the powers and procedure of the Income-tax Officers. The function of an Income-Tax Officer is quasi-judicial in nature. He has to make an assessment after following the prescribed procedures, all of which are absent in the case of a registering officer acting under Section 47-A (1). The function of a registering officer cannot be said to be quasi-judicial. He has neither time nor the machinery to determine the market value of properties which are subject-matter of each of the documents brought before him. No law prescribes the procedure which he must follow while making the said determination. It would, therefore, be not proper to equate the function of a registering officer under Section 47-A (I) to that of an Income-Tax Officer under Section 52(2) of the Income-tax Act. I may also clarify that in proceedings under the Income-Tax Act, Wealth Tax Act, or Gift Tax Act, or for that matter, under any other enactment, the authorities acting under those enactments are not bound by the recitals in a sale-dead, etc., relating to the amount of consideration. The ITO/WTO/GTO perform quasi-judicial functions; they are assessing authorities, and they are obliged to make an enquiry in accordance with the prescribed procedure. They will make their own enquiry, and come to their own conclusion as to the true consideration that may have passed under a particular deed of sale, exchange, or gift, as the case may be. I am concerned herein only with the powers of registering officers under Section 47-A (1). Having regard to the nature of the function, the language of the Section, and all other concerns and considerations mentioned hereinbefore, 1 hold that ordinarily the registering officer shall accept the consideration stated in the document as representing the true market value, unless there is clear material before him to hold that the parties to the document have deliberately under-stated the consideration with a view to avoid stamp duty. In this connection, he may also be entitled to look into the values stated in the Basic Value Register for that property. Having regard to the generalized nature of the Basic Value Register, he may, as a working rule, treat a document as under-valued if the consideration stated therein is less than 50% of the value stated in the Basic Value Register as in force on 30-6-1989. If the consideration stated in the document is equal to 50% of the value stated in the Basic Value Register (as on 30-6-1989), or more, he shall register the same forthwith. Similarly, where the Basic Value Register (as on 30-6-1989), states two or three different values depending upon the purpose for which the land is being purchased, as has happened in this case, he shall ignore the higher values and shall adopt the lowest value as the value prescribed in the Basic Value Register. This position shall obtain till a statutory basis is provided to the Basic Value Register.
27. For the above reasons, W.P No. 3276/1989 is allowed. The sale deed relating to Survey No. 429.AA shall be registered, if presented for registration, at a consideration calculated at the rate of Rs. 3,000/- (Rupees three thousand only) per Acre. Similarly, the sale-deed with respect to Survey No. 202 shall be registered, if presented, if the consideration shown in the document is calculated at the rate of Rs. 12,500/- (Rupees Twelve Thousand Five Hundred only) per Acre.
28. The writ petition is allowed in the above terms. There shall be no order as to costs. Advocate's fee Rs. 500/-.
29. W.P No. 8365/1989; The petitioner in this case is “Auto Technical Workers' Welfare Association, Machilipatnam”. It says, it purchased certain lands at the consideration stated in paragraph 3 of the writ-affidavit. The land purchased is comprised in five survey-numbers, and the total extent purchased is Ac. 18-40 cents. According to the petitioner, the said lands have been purchased at the rate of Rs. 7,850/- per Acre. Besides the above, the petitioner has purchased Ac. 2-45% cents of land in two other survey-numbers; that when the vendors refused to execute the sale-deed, the petitioner filed O.S No. 55/1957 on the file of the Principal District Munsif, Machilipatnam, for specific performance of the contract of sale, and that the same has been decreed on 16-6-1987. The petitioner says that in pursuance of the decree, the vendors-J. Ds. have received the entire sale consideration and agreed to execute the sale-deed. The petitioner says further that it has entered into another agreement for the purchase of Ac. 21-42 cents in two other survey-numbers, again at the consideration of Rs. 8,750/- per Acre. According to the petitioner, when it presented the documents of sale for registration, the registering officer refused to register the same unless the subject-matter of the sale-deeds is valued at the rale of Rs. 10/- per sq. yard. Thereupon, the petitioner says, it made a representation to the District Registrar, Krishna District, but received no response from him. It again approached the registering officer in July, 1988 for registering the documents, when the petitioner was told that the District Valuation Committee has valued the said land at Rs. 20/- per sq. yard. In other words, the petitioner was worse off by approaching the District Registrar and the District Valuation Committee. Whereas the registering officer was prepared to register if the sale-deeds valued the subject matter at Rs. 10/- per sq. yard, the District Valuation Committee has now fixed the value at Rs. 20/- per sq. yard. In this case, however, the extract of Basic Value Register relating to these survey-numbers is not placed before me.
30. In the circumstances, the only direction that can be given in this case is to the registering officer to act in accordance with the directions given in paragraph (17) above. So far as lands covered by the decree in O.S 55/87 are concerned, the consideration stated in the judgment and decree shall be treated as the market value, irrespective of the values stated in Basic Value Register.
31. The writ petition is disposed of with the above direction. There shall be no order as to costs. Advocate's fee Rs. 500,’.