"It may be pertinent to mention that, in order to ensure that there is no evasion of stamp duty, circle rates are fixed from time to time and the notification is issued to that effect. The issuance of said notification has become imperative to arrest the tendency of evading the payment of actual stamp duty.
"It is a matter of common knowledge that usually the circle rate or the collector rate is lower than the prevalent actual market rate but to ensure registration of sale deeds at least at the circle rates or the collector rates, such notifications are issued from time to time by the appellants (Government)," a bench of Justices Dalveer Bhandari and Mukundakam Sharma observed in a judgement.
The apex court passed the judgement in a case where the buyer and the seller allegedly colluded and undervalued the property to avoid paying the official rate fixed by the authorities.
The bench quashed the ruling of the Punjab & Haryana High Court which took a contrary view that circle rates fixed by the government cannot be the sole deciding factor.
In the instant case on November 10, 1999, Manjula Gulati entered into an agreement to sell a commercial plot measuring 788 sq yards located at Delhi-Mathura Mewla Maharajpur with Manoj Kumar.
The total value of the land at the rate of Rs 4,200 per sq yard was Rs 33,09,600 entailing a stamp duty of Rs 5,13,050.
Manoj Kumar, however, paid a stamp duty of Rs 31,000 by claiming that the property was valued at only Rs two lakh and managed to obtain a decree from a trial court.
The District Collector rejected Kumar's claim and demanded Rs 5,13,050 towards stamp duty. The buyer then filed an appeal before the Commissioner Land Revenue who dismissed his appeal.
Aggrieved, Kumar appealed in the Punjab and Haryana High Court which ruled in his favour, following which the Haryana government appealed in the apex court.
Upholding the state's appeal, the apex court said, "The high court erroneously observed that 'the authenticity of the decree passed by the court cannot be questioned. Therefore, the genuineness of the sale price has to be presumed'. This finding of the high court cannot be sustained. It would have far reaching ramifications and consequences.
"If the genuineness of the sale price entered into by the buyer and the seller cannot be questioned, then in majority of the cases it is unlikely that the state would ever receive the stamp duty according to the circle rate or the collector rate. The approach of the high court is totally unrealistic," the apex court said.
Hence, it directed Kumar to pay the balance amount.