Deficit Stamp Duty, Interest Demand Must Be Raised Within Reasonable Time: Madras High Court

The Madras High Court on 7 September held that a demand for deficit stamp duty and interest must be raised within a reasonable period, while clarifying that proceedings to determine deficit stamp duty need only be initiated within five years of registration.

A Division Bench of Justices Abdul Quddhose and R. Rajesh Vivekananthan dismissed an appeal filed by the Special Deputy Collector (Stamps) and upheld the direction to release two documents presented for registration by K.K.V. Seetharaman and K. Anitha. The judges held:

“The question of payment of interest by the respondents 1 and 2 for the alleged delay in payment of the deficit stamp duty does not arise.”

The documents were presented for registration in 2013. On 3 August 2018, the District Collector passed an order under Section 47A of the Indian Stamp Act, 1899, determining the deficit stamp duty.

Seetharaman and Anitha submitted that the 2018 order had never been served on them and that they obtained a copy only through the Right to Information Act.

The Court noted that the Department could not produce any acknowledgment showing service of the 2018 order. It further noted that the respondents paid the principal deficit stamp duty in 2023, which the Department accepted without immediately raising a demand for interest.

Further, the Bench noted that the respondents' representation dated 8 May 2023 seeking release of the documents had received no response.

Accordingly, the Division Bench of the High Court upheld the Single Bench's direction to release the documents presented for registration.