Deficit Stamp Duty Demand Must Be Raised Within 3 Years Of Instrument Registration: Madras High Court

The Madras High Court has ruled that the three-year limitation for recovering deficit stamp duty runs from the date a document is registered and not from the date the Registration Department initiates proceedings.

A Division Bench of Justice Abdul Quddhose and Justice R. Rajesh Vivekananthan observed:

“Therefore, as per second proviso to Section 33-A of the Indian Stamp Act, for the purpose of calculating limitation, the starting date for calculating the period of limitation, is the date of registration of the instrument and not the date, when the proceedings were initiated by the Registration Department for collection of deficit stamp duty.”

The ruling came in a case concerning a partition deed registered by N. Natarajan on September 26, 2014.

The Registration Department made its first demand for alleged deficit stamp duty only on June 26, 2025, more than 10 years later. The court held that the demand was barred by limitation.

The registration authorities had challenged a Single Judge's October 31, 2025, order that went in Natarajan's favour. They argued that proceedings to recover the deficit stamp duty had been initiated within three years of registration.

According to the authorities, the demand should not be treated as time-barred merely because the final demand came after three years. Their case was that the proceedings leading to it had already begun within the prescribed period.

Natarajan's counsel argued that the three-year period had to be counted from the date the partition deed was registered. The counsel relied on the Madras High Court's 2024 decision in The Chief Controlling Revenue Authority and Inspector General of Registration v. Hiranandani Township Private Limited.

The dispute centred on Section 33-A of the Indian Stamp Act, 1899. The provision deals with situations where the stamp duty payable on a registered document was either not paid or was paid in an insufficient amount.

Such a shortfall can be recovered on a certificate from the District Registrar. But a certificate can be issued only after an inquiry and after giving the person liable to pay the duty an opportunity to be heard.

The law also places a three-year cut-off on starting that inquiry. The second proviso to Section 33-A states that no inquiry can be commenced after three years from the date the document was registered.

The court held that the date of registration is therefore the starting point for calculating limitation. Starting proceedings within three years was not enough to overcome the statutory restriction on a later demand.

The Bench also agreed with the earlier Hiranandani Township ruling that the three-year restriction is “mandatory and not directory”.

In Natarajan's case, the partition deed was registered on September 26, 2014. The first demand for deficit stamp duty came only on June 26, 2025.

The court held that the demand was “hopelessly barred by limitation”. It found no infirmity in the Single Judge's order and dismissed the writ appeal.

There was no order as to costs, and the connected miscellaneous petition was closed.

For Appellants: K. Maheshwaran, Additional Government Pleader

For Respondent: S. Kaithamalaikumaran