Bombay High Court Quashes ₹1 Crore Stamp Duty Demand On Romell Real Estate's Slum Redevelopment Agreement

The Bombay High Court on Tuesday set aside a stamp duty demand of over Rs. 1 crore raised against Romell Real Estate Pvt. Ltd., holding that the authorities erred by adding the cost of constructing a Permanent Transit Camp (PTC) while recalculating the market value in a slum redevelopment project.

A Single Judge Bench of Justice Somasekhar Sundaresan found that the Chief Controlling Revenue Authority (CCRA) acted arbitrarily in enhancing the market value by including the PTC construction cost and also ruled that revision proceedings under Section 53A of the Maharashtra Stamp Act must be completed within six years.

Romell Real Estate had entered into an agreement for sale in 2017 to acquire land for a slum redevelopment project. The draft agreement was adjudicated under Section 31 of the Stamp Act, and stamp duty of Rs. 3.15 crore was computed and paid in March 2017.

Nearly five years later, the Collector of Stamps issued a demand alleging a deficit of Rs. 1.01 crore, later confirming that the deficit along with penalty was payable. The enhancement was based on adding Rs. 20.33 crore representing the cost of constructing the PTC to the stated consideration of Rs. 63 crore.

The authorities treated the agreement as akin to a development agreement and concluded that the PTC construction area should be included in the market value calculation.

Romell Real Estate's petition challenged demand notices issued in 2021 and 2023 and an order dated 20 June 2024 passed under Section 53A of the Maharashtra Stamp Act.

The Court examined the Annual Statement of Rates (ASR) and held that Guideline No. 26 specifically governs valuation of slum rehabilitation agreements. It noted that there was “simply no basis” for including the PTC construction cost in the consideration.

Justice Sundaresan observed:

“Once it is clear that Guideline No. 26 has to be applied, it is evident that the CCRA has completely missed the point. There is simply no basis for adding the construction cost of the PTC.”

The Court clarified that under Guideline No. 26, the value to be considered includes the consideration receivable by the landowner and the value of the free sale component receivable by the developer, after deducting rehabilitation costs. Since the PTC component is to be handed over to the Slum Rehabilitation Authority and constitutes a cost to the developer, it cannot be treated as consideration. Therefore, the Court held that the impugned order was arbitrary and liable to be quashed.

On the second issue, the Court held that the six-year limitation period prescribed under Section 53A covers the entire process, including passing of the final order. It agreed with earlier judgments that recovery orders must be passed within six years from the date of the original adjudication certificate.

In the present case, the original adjudication order was passed on 19 January 2017, while the impugned order was passed on 20 June 2024, well beyond the six-year limit.

Holding that the delay was inordinate and contrary to the statutory mandate, the Court quashed the impugned order and the demand notices.

Accordingly, the writ petition was allowed.

 For Petitioner: Senior Advocate Girish Godbole instructed by Shivraj Patne

For Respondents: AGP P. J. Gavhane