Supplementary Deed Changing Payment Terms Not Fresh Conveyance For Stamp Duty: Bombay High Court

The Bombay High Court on Monday held that a supplementary deed that only changes the manner of satisfying an already agreed consideration cannot be treated as a fresh conveyance for imposing stamp duty.

Justice Amit Borkar set aside a stamp duty demand of ₹21.08 lakh and penalty of ₹51.18 lakh against Om Shivam Builders Private Limited.

The Court held that the Stamp Authority must first establish that a document contains a transaction chargeable to stamp duty before proceeding to value the property mentioned in it.

The Court observed, “A distinct matter for the purpose of valuation does not become a separate conveyance for the purpose of a charging Article. There must first be a transaction which is chargeable.”

The dispute concerned leasehold rights in Plot Nos. 8A and 9 at Kamothe. Under documents executed in 2009, the original owners had relinquished their rights in the plot and the developer was substituted as the new licensee. A Deed of Assignment executed that year fixed the total consideration at ₹3 crore. Of this, ₹60 lakh was paid, leaving ₹2.40 crore payable.

In 2013, the parties executed a Supplementary Deed under which the unpaid ₹2.40 crore was to be satisfied by giving the original owners six shops and 20 flats instead of money. The Stamp Authorities treated the shops and flats as a separate chargeable subject matter and valued them for calculating the alleged deficit stamp duty.

The High Court disagreed. It found that the Supplementary Deed did not transfer the plot again or give the developer any new right in it. The 2013 document only changed the manner in which the existing balance consideration was to be satisfied.

The Court said valuation cannot itself create stamp duty liability. The Authority must first determine whether the document is chargeable under the relevant provision of the Maharashtra Stamp Act. Only then can the property be valued for calculating duty.

The Court also held that merely mentioning six shops and 20 flats did not make the Supplementary Deed a second conveyance. The 2009 documents and the 2013 Supplementary Deed had to be read together to determine the nature of the transaction.

The Court accordingly set aside the stamp duty demand of ₹21,08,512 and penalty of ₹51,18,652. It directed that any amount recovered from the petitioner pursuant to the impugned orders be dealt with in accordance with law and refunded within eight weeks.

For the Petitioner (Om Shivam Builders Pvt. Ltd.): Advocate Rajesh S. Datar, instructed by Akshay J. Kandarkar

For State: Ketan V. Joshi, 'B' Panel Counsel, along with Hamid D. Mulla, AGP,