Noting that there was an emerging trend among purchasers of properties in public auctions to seek issue of ‘Certificates of Sale’ rather than ‘Deeds of Sale’, the Judge recalled that in Shree Vijayalakshmi Charitable Trust case [Shree Vijayalakshmi Charitable Trust vs Sub-Registrar, Erode Dt (2009 (5) CTC 15], the view that a certificate of sale did not attract stamp duty had found acceptance.

But the question as to whether stamp duty was payable on a certificate of sale was not examined in the said case on a comparative analysis of all provisions of the Transfer of Property Act, 1882, the Stamp Duty Act and the Registration Act, 1908, and issues of repugnancy and the overriding effect of one Act over the other, the Judge said. Analysing the Transfer of Property Act, the Judge recalled that the Apex Court made it clear in Raghunath vs Kedar Nath [1969 (1) SCC 497] that the documents of which registration was necessary, fell within the scope of Section 49 of the Registration Act and that if not registered, they were not admissible as evidence of any transaction affecting any immovable property comprised therein.

Under the Stamp Act, the Judge said, irrespective of and de hors provisions of the Registration Act, a certificate of sale issued to a purchaser of property sold in public auction, was required to be stamped as per Article 18 read with Article 23 if the purchase money exceeded Rs 50 of Schedule I of the Stamp Act. The provisions of the Stamp Act and the Registration Act operated on parallel lines. Neither of them contains a non-abstante clause so as to exclude operation of the other. Therefore, the option given under the Registration Act to makers of certain documents, to register them or not, was not to be construed as an exemption from payment of stamp duty.

Therefore, the only conclusion that could be drawn by a combined reading of the three Acts was that by whatever name the instrument was called, it was chargeable with stamp duty, the judge held.

In view of the above, the application was disposed of with a direction to the Official Liquidator to issue a certificate of sale or execute a sale deed in line with the choice of the auction purchaser.

Courtsey : Taxguru

In other 5 zonal offices, now token are given from the website of Stamp Duty and Registration. On phone adjudication is closed as of now.

Limitation available is 13 years under Article 62 of the Limitation Act 1963. When the mortgage is created by a limited company over its property such mortgage must be registered with the registrar of companies within 30 days of its creation irrespective of the type of mortgage.
Right of Mortgagor (Sec 60 of TP Act)
Mortgagor after fulfilling his part of the Contract, that is by paying e money secured, may require the mortgagee to deliver the mortgage deed and all documents relating to the mortgaged property. If the mortgagee is in a position to deliver back the possession and execute required document and at the cost of the mortgagee.
This right of the mortgagor is called Redemption of Mortgage.
However, such right of redemption can be invoked before the mortgagee files a suit for enforcement of mortgage.
Limitation period available is 30 years from the date on which the mortgagor performs his part of the contract, paying the money secured. Article 61 (a) of the limitation Act, 1963.

Important amendment with regard to factual position under the Bombay Stamp Act, 1958 relating to the provisions of investment : -

By virtue of ordinance no. Mah. Ord. II of 2005 dated 7th May 2005 wherein, a new article is introduced namely 5(g-d) (ii) :-

“(ii) if relating to the purchase of one or more units in any scheme or project by an investor from a developer Same duty as is leviable on conveyance under clause (a), (b), (c), or (d), as the case may be of Article 25 on the market value of the unit”

For the purpose of this clause, the investments in the unit shall include a flat, apartment, tenement, block or any other unit by whatever name called, as approved by the Competent Authority in the building plan.

By virtue of above amendment in the said Article, the purchase would get a set off of Stamp Duty to the extent of the amount of Stamp Duty paid by the seller, on the second document of conveyance made by the purchaser and if no duty is required to be paid, then the minimum duty for the conveyance shall be Rs. 1,000/-. The said amendment can be explained with the help of an illustration which is as under :-

1) Mr. A who purchased a Flat for Rs. Lacs whereby, Stamp Duty paid by Mr. A on the consideration of Rs. Lacs was Rs. 33,750/- as per the rates applicable under the Bombay Stamp Act, on conveyance of the said flat within three years, when Mr. B purchases said flat for Rs. 112 Lacs consideration then Stamp duty payable by Mr. B on 11 lacs consideration would be Rs. 38,750/- but, Mr. B would be liable to pay only Rs. 5,000/- as he would get a set off of Rs. 33,750/- which is duly paid by Mr. A initially on the Agreement duly entered by him/.

However, alternatively if Mr. A, sells the said flat to Mr. B, for Rs. 10 Lac only then, although the Stamp duty of Rs. 33,750/- has already been paid by Mr. A, then, on the second transaction, Mr. B would be liable to pay only Rs. 1,000/- as the consideration involved is same.

Hundreds of properties transactions were refused to be registered which were on collector’s land in Mumbai after Shri D N Abade, Sr. Officer of Revenue & Forest Department wide circular dated 25th January 2008 given direction to the office of Superintendent General of Registration & Collector of Stamps Mumbai as well as all the deputy Inspectors General of Registration, Controller of Stamp & Sub Registrar of Assurance, stating that if the property is situated on Collector’s land then in case of sale of such properties or giving such properties on leave & license basis, registration of such property documents cannot be stamped. This was necessitated on account of suit filed in Supreme Court bearing suit no. 7800 of 2001.
The Collector had given directions to Sub Registrar office Mumbai in a circular bearing no. 2640/2001/1130 dated 13th March 2001, not to register documents of properties situated on Collector’s land until and unless No Objection Certificate (NOC) received from Collector’s office.
Wide circular dated 25th January 2008 bearing no. 2007/389/M1, Revenue & Forest department directives have been given to Register such documents.
Properties situated on collector’s land , especially in South Mumbai, were badly affected. The sale value of such properties were all time down. Nariman Point, oldest CBD area of Mumbai was deserted due to enhanced lease from collector. Now such properties will be having a clear documentation without any NOC and hitch.

(i) for a period not exceeding Two Thousand rupees;
one year without any renewal
clause;

(ii) for a period exceeding one Ten thousand rupees;
year but not more than three
years without any renewal
clause;

(iii) For a period exceeding three The same duty as is
years with or without any leviable on a lease
renewal clause; article 36;

(b) Where the leave and licence The same duty as is
agreement is executed for leviable under clause
security deposit or money (a)(i), (ii) or (iii),
advanced with or without licence as the case may be and
fee or rent fixed. in addition one percent of security deposit or
money advanced or to be
advanced.

Considering 36A (a) (i) & ( ii) – very interesting situation arises. 36A (a) (i) & (ii) provides stamp duty in a case where the licence is for a period not exceeding one year without any renewal clause. What happens if licence is not for a period exceeding one year but there is renewal clause. In a case where the licence is not exceeding one year and there is a provision of renewal clause it is respectfully submitted that the Article 36 A (a) (i) will not apply. In fact whole Article 36A will not apply. Similarly, if licence is exceeding for a period of one year but it is not more than three years and if there is a provision for renewal then 36A (a) (ii) also does not apply. In fact 36A will not apply.

 
Then the question arises what happens to Leave & Licence Agreements wherein they are for less than period of one year or more than one year or less then three years or if there is a provision of renewal clause , Article 36A of Schedule – I of Bombay Stamp Act will not apply. The Article which will apply to such Leave & Licence Agreement is an Article 5 (h) of Schedule – I ) of the Bombay Stamp Act, which reads as under:-

” Agreement or its records or memorandum of Agreement ( H), if not, otherwise provided for. Stamp Duty on such Agreement is Rs.20/-.

4) It is, therefore, submitted that stamp duty payable in a case of Agreement of Leave & Licence for a period not exceeding one year but there is renewal clause or Leave & Licence Agreement for a period exceeding one year but not more than three years but with renewal clause then such Leave & Licence Agreement will be required to be stamped with only Rs.20/- and not Rs.2000/- or Rs.10,000/- as wrongly contended by the Stamp Authorities and the Sub-Registrar. Therefore, it is in the interest of parties if they want to pay Rs.20/- as licence fee in a case of licence less than three years should have a clause of renewal.

Note : All the answers are given on assumption that the properties are situate within Greater Mumbai, because the stamp duty payable on the instrumental for immovable properties situate at different places is different.

Stamp duty on Agreement for Transfer of Share Flat :
Q.1. Is it necessary to pay the stamp duty exceeding Rs. 20/- on an Agreement for Transfer of shares in a co-operative society which gives to the Transferee the right to use and occupy a flat in a co-operative society ? If yes at what rate ?
Ans. The stamp duty payable on an Agreement for transfer of shares in a co-operative society, which gives to the transferee a right to use, occupy and enjoy a flat in a co-operative society exceeds Rs. 200/-. In the case of non-residential premises it is at the flat rate of 10% of the true market value. However, in the case of residential premises, the stamp duty payable on the agreement is as per Article 25 of the Bombay Stamp Act as under :-
“Article 25. Conveyance (not being a transfer charged or exempted under Article 59) –
On the true market value of the property which is the subject matter of the Conveyance –
(1) if relating to residential premises consisting of building or unit.
by, or in favour of, a co-operative housing society registered or deemed to have been registered, under the Maharashtra Co-operative Societies Act, 1960; or
to which the provisions of the Maharashtra Ownership Flats (Regulation of Promotion of Construction, Sale, Management and Transfer) Act, 1963, or the provisions of the Maharashtra Apartment Ownership Act, 1970 apply; or
by such society in favour of its member or incoming member whether in consequence of purchase of its shares or not; or
by a member of such society in favour of another member and incoming member whether in consequence of transfer of its shares to another member or not; and the value of which –
does not exceed rupees 1,00,000. — NIL
exceeds rupees 1,00,000 but does not exceed rupees 2,50,000 — 0.5 per cent of the value
exceeds rupees 2,50,000 but does not exceed rupees 5,00,000 – 1,250rupees plus 3 per cent of the value of above rupees 2,50,000
exceeds rupees 5,00,000 but does not exceed rupees 10,00,000 — 8,750 rupees plus 6 per cent of the value above rupees 5,00,000
exceeds rupees 10,00,000. 38,750 rupees plus 8 per cent of the value above rupees 10,00,000.
(2) if relating to land for construction of residential premises and falling under the descriptions in items (a), (c), or (d) of sub-clause section (1). – The same duty as is applicable under sub-clause (1).

Liability to pay Stamp Duty :
Q.2. Who is liable to pay the stamp duty in respect of the transfer of shares and flat in a co-operative society ?
Ans. The stamp duty in respect of transfer of shares and a flat in a co-operative society could be decided as regards payment by an agreement between the parties. Either one of them can agree to pay or they may agree to share in such proportion as they may agree amongst themselves. In the absence of such contract, under section 30(b) of the Bombay Stamp Act the same is payable by the transferee i.e. the purchaser.

Stamp Duty as per Market Value :
Q.3. On an Agreement for Transfer of share in a co-operative society the parties have paid the stamp duty as per the value stated in the agreement. However at the time stated in the agreement. However at the time of registration of such agreement the sub-registrar concerned insisted for the payment of the stamp duty as per the market value calculated on the basis of ready reckoned.
Whether the sub-registrar can do so ? If the stamp duty is not paid as demanded by the sub-registrar whether he can impound the agreement ? In such case what remedies are liable to the Transferor and the Transferee ?
Ans. The stamp duty on an agreement for transfer of shares in a co-operative society is payable on the true market value of the premises being transferred. The value stated in the agreement does not determine the stamp duty payable on the same. For the sake of convenience, the State Governmetn has introduced a Ready Reckoner as the market value of the properties in Greater Mumbai. Such Ready Reckoner is not a final word. The obligation of the party to pay stamp duty is provided under the Act on the amount of the true market value. If according to the party the market value is different than the market value calculated on the basis of the rate mentioned in the basis of the rate mentioned in the Ready Reckoner then the party cab refuse to pay additional stamp duty and the sub-registrar will be required to forward the document to the Collector under section 32 (a) of the Bombay Stamp Act for determining the correct market value and the stamp duty payable on the same. In case the party does not accept the decision of the Collector then the said party can go into appeal under section 32 (B) of the Act before the Dy. Inspector General of Registration and Dy. Controller of Stamps.

Stamp Duty on Transfer of Shop :
Q.4. At what rate the stamp duty is payable on the agreement for Transfer of a shop in a co-operative society ?
Ans. A shop is non-residential premises and therefore, the concessional rates prescribed under Article 25(d) for residential premises do not apply. The stamp duty payable is 10% of the true market value of a shop, in the case of an agreement for transfer of shop in a co-operative society.

Stamp Duty on Transfer of Garage :
Q.5. At what rate the stamp duty is payable on an Agreement for Transfer of a garage in a co-operative society ?
Ans. The stamp authorities consider a garage to be non-residential and therefore, as in the case of shop stamp duty is payable at the rate of 10% of the true market value of the garage.
Q.6. What is the responsibility of the managing committee and society when flat / shares are transferred in case the proper stamp duty is not paid.
Ans. There is no responsibility on the Managing Committee and the Society when the flats/ shares are transferred without payment of proper stamp duty or any amount. It may be, however, stated that sometime back the Registrar of Co-operative Societies had issued a circular directing the societies not to transfer shares / flats unless proper stamp duty is paid. It is submitted that the Managing Committee is neither empowered nor does it possess a skill to determine the proper stamp duty payable on such an agreement.

Society’s responsibility for payment of Stamp Duty :
Q.7. Whether society is responsible for payment of stamp duty on an Agreement for transfer of shares and flat in a co-operative society ?
Ans. The Society is not responsible for payment of stamp duty on an agreement for transfer of a flat and shares in a co-operative society. The responsibility to pay the stamp duty is only that of the transferor and / or transferee.
Stamp Duty on Allotment Letters Issued by Society
Q.8. A co-operative society has purchased a plot for construction of residential building
for its members out of the funds contributed by its members. When such society issues allotment letters to its members for allotting flats how much stamp duty is payable on such allotment letters ?
Ans. In the case where a co-operative society has purchased a plot for construction of residential building for its members out of the contribution by its members, the allotment letter to its members for allotment letter to its members for allotment letter to its members for allotment of a flat does not attract any stamp duty.

Non-payment of proper Stamp Duty on previous Agreement :
Q.9. By an Agreement dated 1st March 1991 prepared on Rs 10/- stamp paper Mr. A. a member of a co-operative society in Bombay transferred his five shares and a flat to Mr. B for the consideration of Rs. 8,00,000/-. The said agreement dated 1st March, 1991 is not registered. The conveyance of the building and the land in favour of the society has yet not been executed by the builder and the owner of the land. The society admitted Mr. B as member and transferred the five shares and the flat to the name of Mr. B. By another Agreement dated 1st February, 1996 Mr. B transferred his said five shares and the said flat to Mr. C for the consideration of Rs. 13,50,000/-. The stamp duty amounting to Rs. 66,750/- has been paid on the said Agreement dated 1st February, 1996. The said Agreement dated 1st February, 1996 is duly registered with the sub-registrar concerned. Whether the said Agreement dated 1st March, 1991 is properly stamped ? If not who is responsible for payment of stamp duty on it ? Whether Mr. C can be called upon by the stamp authorities to pay the deficit stamp duty including the penalty if any on the said Agreement dated 1st March, 1991 ? In this case whether at the time of execution of the conveyance of the building and the land in favour of the society Mr. C will be required to pay and additional stamp duty in respect of his flat inspite of the fact that his Agreement dated 1st February, 1996 is duly registered.
Ans. The Agreement dated 1st March, 1991 which is prepared on Rs. 10/- stamp paper is not properly stamped. The agreement was required to be stamped with the amount at the rate prescribed under Article 25(d) of Schedule I to the Bombay Stamp act. On the amount of Rs. 8 lakhs being the true market value, on 1st March, 1991 for the said agreement the stamp duty payable was Rs. 33,000/-. The responsibility to pay the stamp duty was that of the transferor and / or transferee. I.e. MR. A. and / or MR. B as per their agreement with regard to the payment of stamp duty and in absence of such an agreement the responsibility was that of Mr. B, the transferee, Mr. C. who has agreed top purchase the said shares and the premises is not liable to pay any stamp duty and in absence of such an agreement the responsibility was that of Mr. B, the transferee, Mr. C. who has agreed to purchase the said shares and the premises is not liable to pay any stamp duty and / or penalty on the said agreement dates 1st March 1991. The authorities cannot recover the same from Mr. C. In the case of convyance of property where stamp dutyis paid and agreement is registered no additiopnal stamp duty will have to be paid for the said flat.

Stamp Duty on Exchange of Flat :
Q.10. Whether any stamp duty is payable when flats are inter-transfers within the members of these society ? Can society allows such inter-transfers without execution of proper agreement to transfer and patyment of stmap duty ?
Ans. Inter se transfer of flats among the members of the society is an exchange and the stamp duty shall be paid as per Article 32 of Schedule I to the Bombay Stamp Act. The Stamp duty payable on the exchange and the stamp duty shall be paid as per Article 32 of Schedule I to the Bombay Stamp Act. The stamp duty payable on the exchange is as per conveyance i.e. payable under Article 25(d) of Schedule I to the Bombay stamp Act. It is necessary to execute a Deed of Exchange for transfer of flats among the members. The Deed of Exchange will be required to be stamped at the concessional rate under Article 25(d) of Schedule I to the Bombay Stamp Act.

Q.11. In view of the decision of the Bombay high Court in the case of Usha Arvind Dongre vs. Suresh Raghunuth Kotwal whether it is necessary to pay stamp duty on transfer of shares in a co-operative society ? Please also consider the judgement of the Bombay high Court in the case of Hanuman Vitamin Foods Pvt. Ltd. (AIR 1990 Bombay 204).
Ans. The judgement of the Bombay High Court in Usha Arvind Dongre vs. Suresh R. Kotwal (1991 CT). 507) was in the matter was discussed therein and decided under the provisions of section 17(1) (d) of the Indian Registration Act. The issue of stamp duty was not involved and, therefore, the provisions of the Bombay Stamp Act were not gone into in the said judgement. The said judgement was delivered by a single Judge of the Bombay High Court, whereas the judgement in the case of Hanuman Vitamin Foods Pvt. Ltd. (A.I.R. 1990 204) was specifically on the issue involving the stamp duty payable on the agreement in the case of sale of shares of the Co-operative Society and the flat. According to the said decision, the stamp duty is payable on such agreement for sale of shares wherein a right to use and occupy the flat and premises is attached to the ownership of shares. The said decision was of a Division Bench and therefore, in view of the decision in the case of Hanuman Vitamin Foods Pvt. Ltd. The stamp duty is payable on the transfer of shares in a co-operative society.

Stamp Duty on Conveyance :
Q.12. At what rate the stamp duty is payable on a conveyance of a building and the land in favour of a co-operative society by the builder and the owner of the land ? Whether the members of the society who have paid stamp duty on their respective agreement for purchase of flats are not required to pay any additional stamp duty or whether such members gets adjustment of the amount of stamp duty paid by them on their respective agreement and are required to pay the balance stamp duty based on the market value of their respective flat on the date of execution of conveyance ?
Ans. The stamp duty payable on a conveyance of a building and the land thereunder in favour of a co-operative society by the builder and / or the owner of the land shall be paid on the true market value of each unit viz., flat, shop etc. All non-0residential units will attract stamp duty at 10% of the true market value and the documents in respect of each residential unit viz., flat, flat etc., (other than shop) will be required to be, stamped at the concessional rate as provided under Article 25 (d) of Schedule I to the Bombay Stamp Act. However, for the purpose of calculating the market value the date of the agreemetn will be concsiderd and not the date of conveyance; and that the stmp duty will be at the rate prevalent at the date of the conveyance and not the date of the agrement of the flat purcahsed.

Stamp Duty on Sale of Balance F.S.I. :
Q. 13. Whether direction of Commissioner not to register the society unless the stmp duty paid by all the memebrs be challenged ? Is it not against the provisions of Maharashtra Co-operation Societies Act ?
Ans. It is difficult to correctly opine or reply to this query. But in my humble opinion it is an obligation and duty of every citizen to pay requisite stamp duty on the agreement to purchase a flat and therefore the agreement which is not properly stamped cannot be taken into consideration the direction given by the Commissioner not to register such Society unless all person have paid stamp duty on their respective agreement may not be invalid. The direction given by the Commissioner asking all the intending members to comply with the provisions of the Bombay Stamp Act and pay stamp duty could not be considered against the provisions of the Maharashtra Co-operative Societies Act. 1960.

National Co-op. Hsg. Fed. Conference moots exemption of stamp duty and registration fee
By A.T. Bureau
The 19th Conference of the Chief Executive of apex Co-operative Housing Federation, organised by the National Co-operative Housing Federation of India on 20th May 2000, at Kochi, urged the State governments to (I) exempt housing co-operative from payment of stamp duty and registration fee (ii) contributed liberally towards the share capital of their respective apex. Federations so as to strengthen their financial base thereby enabling them to raise their borrowing power and (iii) allot 30% of the acquired land for housing purpose to housing co-operatives.
The following are some of the recommendations made by the conference.
* The LIC, NHB and HUDCO should be allocated more funds to housing co-operatives in order to enable them to meet the targets smooth under the two million housing programme
* The National Housing Bank should reduce its rate of interest from 12.0% to 11%.
* The NHB should contribute towards share capital of apex Federations to raise refinance upto 12 times of their net owned funds.
HUDCO should provide loans to apex federations on the basis of security of floating charge. It should not charge processing fee and front end fee from apex federations. It should reduce interest rate by 1% on block loans to apex Federations.
* The State Governments, which have so far, not constituted special committees on housing co-operatives in their respective States, should be requested to do so immediately. The conference was presided over by Shri S.N. Sharma, Chairman NCHF, who is a Minister in the Madhya Pradesh Ministry.
In his speech, Shri Sharma said that in line with the National Agenda, a two million housing programme has been launched since 1998-1999 under which, the Union government has fixed a target for co-operative sector to build one million houses each year predominantly for weaker sections and low income groups in the country. He informed the conference that during the year 1998-99 housing co-operatives completed the construction of about 17,000 units in urban areas with the loan assistance received from the apex federations. He proudly mentioned that the progress made by co-operatives during 1998-99 was well appreciated by the Government of India.
* Shri Sharma advocated for the Policy Support to housing co-operatives as envisaged in the National Housing and Habitant Policy in order to achieve the targets for house construction smoothly and efficiently besides adequate flow of funds from LIC, NHB and HUDCO allocation of 30% of land acquired for housing purpose by State Government exemption from payment of stamp duty and registration fee, proper legal frame work and liberal contribution in the share capital of apex Federations by State Governments.
Shri Sharma also said that the separate model law on Housing co-operatives, prepared in association with NCHF, was still under the consideration of the government of India. Efforts were being made to set it finalised early so as to provide proper legal frame work to housing co-operatives for their smooth functioning. He pointed out that funds raised by apex Federations from funding agencies had become expensive to members of housing cooperatives compared to the prevalent interest rate on housing finance offered by other agencies. In this connection, he referred to the interest rates offered by the LIC and NHB, which were still on higher side.
Registration fee & stamp duty payers association’s stand only Leave & Licence
By A.T. Bureau
As per Section 55 of The Maharashtra Rent Control Act, 1999 Registration of Leave and Licence Agreement has been made compulsory with effect form 31/03/2000. The Registration Fee and Stamp Duty Payers association along with various property related associations had filed their objection for the stamp duty on refundable deposits as well as levy of Stamp Duty on Leave and Licence Agreement Representatives of the Association had met the Honourable Chief Minister Shri Vilasrao Deshmukh, the Honorable Revenue Minister Shri Ashok Shaven as well as the Senior Officers at Mantralaya. The difficulties being faced by the stamp duty payers were brought to the 2000/2120/CR/592/M-I has been issued stating that a token registration fee of Rs. 1,000/- would be levied on Leave and Licence Agreement if the property is situated in Municipal Corporation limits and of Rs. 500/- if the property is situated in the other areas irrespective of the deposits, type of the premises or size of the premises. According to the verbal information receive from the authorities Leave and Licence Agreement has to be stamped on Rs. 20/-. However no mention is made about levy of stamp duty in the abovesaid Notification. This could give power to the authorities to interpret the documents as that of Lease. It is the belief of the Association that Professionals would advise their clients to draft agreements of Leave and Licence with renewal clauses rather than drafting lease agreements so that the tax payers can save money on payment of stamp duty. The Government could loose crores of rupees because of drafting error. This is on our opinion is a legal loopholes which will have to be plugged by the authorities.
The above Notification dated 8/6/2000 proposes to levy Registration Fee of Rs. 1,000/- or Rs. 500/- depending on the place where the property is situated from the date of publication of the Gazette. The Maharashtra Rent Control Act, 2000 has come into effect from 31st March, 2000 and all those persons who have executed the documents between 31/3/2000 & 8/6/2000 could unnecessarily be penalized. This definitely had not been intention of the Government.
With the registration of Leave and Licence being made compulsory it would not be surprising that the cash stripped Municipal Corporations would collect information about Leave and Licence Agreements and start issuing notices for levy of higher property tax to the owners of property which have been given on Leave and Licence. The Licensor has to pay not only excess property tax, but also society non-occupancy charges as well as income tax on the income.
The Association appreciate the steps taken by the Revenue Authorities of charging less amount as Registration Fees as well as willingness to accept the practical suggestions being made by the various property related associations with regards to Leave and Licence Agreement. However a written clarification from the Revenue Department stating that the stamp duty of Rs. 20/- only will be levied on Leave and Licence Agreement will be of immense help in clarifying the above said issue.
The Registration Fee and Stamp Duty Payers Association is thankful to the media for expressing the views of the members of the public particularly the Real Estate Community as regards levy of Stamp duty on Leave and Licence Agreement.
PAYMENT OF STAMP DUTY
By A.T. Bureau
The Registration Fee and Stamp Duty Payers Association has brought to the notice of the Honourable Minister for Revenue as well as the Inspector General of Registration that as of date franking facilities are available to the residents of the Mumbai at Town Hall, Shaheed Bhagat Singh Road, Near Reserve Bank of India, Mumbai – 400023 and at MMRDA Building, Bandra Kurla Complex, Bandra (East), Mumbai – 400051. It has been the suggestion of the Association that franking facilities should be available at the central Suburbs also. In this connection, the Association has also pointed out that as of date, franking facilities are available at the Central Suburbs also. In this connection, the Association has also pointed out that as of date, franking facilities are available at only two places i.e. Mumbai City and in Western Suburb. No facility for payment of Stamp Duty within a few kilometers distance is available to the lakhs of residents between Dadar to Mulund and Wadala to Mankhurd. As a result of the same, huge amount of cash to be carried out by the members residing in the Central Suburbs.
The Association has been given to understand that having regards to the practical difficulties faced by the residents of the Central Suburbs, the authorities are considering installation of franking machine at Ground floor at the Chembur office in the month of April 2000. The address of the Sub Registrars Office is Ground floor, New Administrative Building, Phase II, Ramkrishna Chemburkar Marg, Near Chembur Fine Arts Hall, Chembur (East), Mumbai – 400071. When the franking facilities would start at Chembur, it would be a big relief to the Stamp Duty Payers at Central Suburbs.
The Association also requests the authorities to accept the cash at all the office upto a sum of Rs. 50,000/-. At present only cash upto Rs 25,000/- is accepted by the authorities. The Association also requests the authorities that they should deliver the franked documents on the same day to the parties so that they should deliver the franked documents on the same day to the parties so that the mental related transactions, the parties executed the documents only after the proper stamp duty has been paid on the documents.
The Association had through its press release in 1999 requested the authorities that the map of various places in Maharashtra as well as the market value of various localities of Maharashtra should be available to the common man through the medium of internet. The Association is given to understand that the website with the market value of property will be available on the Internet very shortly.
The Association further states that on account of the recent amendments to the Rent Act all transactions relating to rental premises will have to be compulsorily registered. This will increase the pressure of work at the Sub Registrars for the city of Mumbai. It is not surprising to find that because of heavy work load a lot of pressure is there on the Sub-Registrars. At times, one has to spend more than five hours just to register a document. Also the precious time of the Tax payers is wasted in complying with the bureaucratic formalities. The stamp duty rates for transfer of tenancy as per Article 5 (g-d) of the Bombay Stamp Act 1958 are the same for all the areas of the city of Mumbai which is Rs. 1,000 per sq.metre for commercial premises and Rs. 100/- per sq.metre for residential premises. There is a wide-up gap in the prevailing prices at Nariman Point, Peddar Road, Govandi & Charkop. Yet from the stamp duty point of view on transfer of tenancy the stamp duty liability is the same. The Association herewith requests the newly appointed Inspector General of Registration Shri Bhoge to reduce the hardships of the common man and take pragmatic steps to simplify the Bombay Stamp Act 1958 and appoint more staff at the Sub Registrars Office to reduce the hardships of the tax payers.
Stamp Duty on Leave & License Agreement
By Bankimchandra Khona, Solicitor
Under Section 55 of The Maharashtra Rent Control Act, 1999, now even an Agreement for Leave & Licence needs to be registered. Therefore, the question of payment of stamp duty on Leave and Licence Agreement arises. There is no specific provision made for payment of stamp duty on Leave & Licence Agreement under Schedule I of the Bombay Stamp Act, 1958. Hence the stamp duty of Rs.20/- becomes payable under Article 5(h) of Schedule I of Bombay Stamp Act.
 2. It has been stated that Stamp Authority / Registration Authority proposes to levy stamp duty by treating a Leave & Licence Agreement as a Lease and to levy stamp duty as per Article 36 of Schedule I of the Bombay Stamp Act. Article 36 of Schedule I of Bombay Stamp Act is with regard to the stamp duty payable on a lease. There is no mention therein whatsoever about a Leave & Licence Agreement.
3. Can Stamp and Registration Authorities equate Leave & Licence with a Lease ? Can the Authorities, therefore, insist on levying stamp duty on a Leave & Licence Agreement not Rs.20/- but as per Article 36 depending upon the period of the Licence ? There will be a vast difference in payment of stamp duty as per Article 36 of Schedule I of the Bombay Stamp Act and as per Article 5 (h).
4. It is respectfully submitted that the Leave & Licence and Lease / Tenancy Agreement are two entirely different kinds of document which have different legal implications and effect.
5. The Lease is defined u/s. 105 of the Transfer of Property Act, which reads as under :-
“105. Lease defined.- A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
6. A Licence is defined u/s. 52 of the Indian Easements Act, 1882. The said Section 52 reads as under :
“Where one person grants to another, or to a definite number of other persons, right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right be unlawful and such right does not amount to an easement or an interest in property, the right is called Licence”.
 
Lease and Licence are defined under two different statutes.
 
7. The essential distinction between a Lease and a Licence is that in a Lease, there is transfer of interest in the property while in the case of licence, there is no such transfer although the Licensee acquires only a personal right to occupy the property. This principle has been confirmed by number of High Courts and Supreme Court judgements (AIR 1968 S.C. 175 (178), AIR 1989 S.C. 1816 (1990), Second Law Report 381, etc.).
8. U/s. 56 of the Easements Act, a Licence is personal and the Licence cannot be transferred by the Licensee, whereas Lease, except in the case where Bombay Rent Act is applicable, is transferable. Under Section 108(B)(j) of the Transfer of Property Act, the Lessee is not only entitled to transfer his leasehold right but can also mortgage or sub-lease the whole or any part of his interest in the property, whereas the Licensee cannot transfer or mortgage or grant sub-license to any person. The Licensee cannot sue a stranger in his own name, whereas the Lessee is entitled to sue a stranger on his own name. The License is revocable by the Licensor under Section 60 of the Easements unless it falls within two exceptions mentioned in that Section, the Lease is not by the Lessor. The licence comes to an end when the Licensor makes an assignment of his interest in the property, whereas a lease continue to be valid and binding on the Assignee of the Lessor when the Lessor assigns and transfers his interest in the property which is called a transfer of “reversionary right”.
 
9. Now U/s. 7 of Maharashtra Rent Control Act, 1999, the licence and tenancy are separately defined. The licence is defined under the Rent Act u/s. 7(5), and the tenancy is defined u/s. 7(15) of the said Act.
10. The basic test to distinguish a Lease from Licence is the intention of the parties.
 
11. Explanation B of Section 24 the said Rent Act, states that an Agreement of Licence in writing shall be conclusive evidence of the facts stated therein. In view of Explanation (B) to Section 24, once it has been mentioned in an Agreement that same is Leave & Licence Agreement, then it is a conclusive evidence of the fact that it is a Licence and not a Lease and that intention of the parties is to have a licence and not a lease. In view of the said provision, now it is not open for anybody much less Stamp Authority to contend when Agreement is of Leave & Licence that the same is Lease. In case of licence for residential premises, Owner/Licensor is entitled and has to proceed u/s. 24 of the said Act, whereas in tenancy agreement for recovery of possession, the Lessor is entitled to initiate ejectment proceedings under Chapter IV of the Rent Act and under Section 33 of the said Act has to file a suit in the Court of Small Causes at Mumbai .Therefore, there are two different provisions under the Rent Act in respect of the recovery of possession by the Licensor and by the Landlord/Lessor. There are other various provisions under the Rent Act where distinction is made between the Agreement of Tenancy and the License.
12. In case of recovery of possession by the Lessor or Landlord to which provisions of said Maharashtra Rent Control Act applies, will have to file a suit for ejectment in Small
Causes Court only. Whereas in case of licence of a residential premises, the proceedings are to be taken u/s. 24 before the Competent Authority.
13. In view of Explanation B to Section 24 of the Rent Act, once the document states that it is a licence granted by the Licensor to the Licensee, it is conclusive proof that it is a licence and that it was the intention of the parties that it has to be Licence and not Lease. Such document will be covered by the Easements Act, the Licensee will not be entitled to transfer, mortgage, grant sub-licence. The licence, on the death of Licensee, will come to an end. It is submitted that in such circumstances, the licence being personal permission, it is not open for Stamp Authorities to say that even though Agreement is of Leave & Licence but it could be construed as a Lease. it is respectfully submitted that Stamp Authority in view of specific provision of Explanation 24 of Rent Act cannot treat a Licence as Lease on the ground that document is not licence but in fact it is lease.
14. The interest and right of a lessee or tenant are heritable under the Transfer of Property Act as also under the Bombay Rent Act. But the right to use premises is not heritable in case of Leave & Licence. On the death of a Licensee, his heirs will not inherit a right as a Licensee to use the premises. Therefore, considering the definition of the Lease and Licence, both are different under all relevant Acts. Both Agreements have different meanings, legal effects and consequences. It is abundantly clear that lease and/or tenancy agreement is distinct from Leave & Licence Agreement. One cannot treat a Leave & Licence Agreement as a Lease and claim stamp duty as per Article 36 of Schedule I of Bombay Stamp Act.
Stamp Duty on tenancy Agreement and
Leave & Licence Agreement
By Bankimchandra P.Khona
From 1st April, 2000 a Tenancy Agreement and a Leave & licence Agreement under section 55 of the new Rent Act are required to be in writing and registered.
Question will arise as to payment of stamp duty on such Tenancy Agreement and Leave and licence agreement First we will consider the provisions of Tenancy Agreement.
Agreement of monthly tenancy will be required to be stamped under Article 36A(I) of Schedule 1 of the Bombay Stamp Act. The stamp duty leviable shall be same as is leviable on conveyance under clauses a, b, c or d as the case may be of Article 25 for the whole amount of rent payable or the amount of average annual rent, whichever is lower. It is possible to interpret Article 36A(1) of Schedule 1 of Bombay Stamp Act in two different manner. In case of monthly tenancy, is it amount of average annual rent or is it only monthly rent required to be ascertained and on such average annual rent or monthly rent stamp duty will be payable as per the applicability of clause a,b,c,d or e of the said Article 25 of Schedule 1 of Bombay Stamp Act ? The words used in the said Article is for the whole amount of rent payable or amount of average annual rent whichever is lower. It is submitted that the monthly tenancy is for a month and continue till it is terminated. Therefore, the period of tenancy is only a month and stamp duty should be calculated on a monthly rent and not on average annual rent. In case of Mumbai, for (a) the non-residential premises and (b) the residential premises which are not part of a co-oeprative housing society building or to which Maharashtra Apartment Ownership Act, 1970 does not apply Stamp Duty is 10%. However, in case of residential premises of a building belonging to a co-operative housing society or the premises to which Maharashtra Apartment Ownership Act, 1970 applies Stamp Duty shall not be 10 per cent but as per the schedule of Stamp Duty which is lower and wherein the maximum rate is 8 per cent. In short, Article 36 of Schedule I of the Bombay Stamp Act will cover the payment of Stamp duty on monthly tenancy agreement.
It may be pointed out that under Article 36, in addition to the Rent, if any fine or premium or money is advanced or to be advanced in addition to the rent fixed, then on such fine or premium or money advanced or to be advanced, additional duty is payable as per Article 25 of Schedule I of Bombay Stamp Act, i.e. 10 per cent in case of non-residential premises and residential premises which are not within the co-operative housing society buildings or the premises to which the provisions of Maharashtra Apartment Act does not apply and in case the premises of a building of a co-oeprative housing society or to which the Apartment Act, applies, the concessional rate as state hereinbefore shall apply.
Explanation I of Article 36 provides that rent paid in advance shall be deemed to be premium or money advanced within the meaning of said Article. Therefore, any rent paid in advance will be considered as premium or money advanced and on the same, stamp duty at aforesaid rates will be required to be paid.
Explanation II of said Article further provides that if the tenants agrees to pay recurring charges such as Government revenues, the landlords’ share of municipal rates or taxes which are required to be paid by the landlord, then such amount shall also be deemed to be part of rent and naturally such rate or taxes or shares will attract stamp duty at the aforesaid rates of 10 per cent or concessional rate of depending upon the nature of the premises.
Some times the question arises as to what happens to the interest-free security deposit. Will they be considered as fine or premium ?
Will any stamp duty be payable on the same ?
We are told that Stamp Authorities consider the income which the landlord will earn of the said security deposit as rent and such yearly income is being added to the rent and the stamp duty is claimed by the stamp authorities on such amount. In our respectful submission, there is no provision under the Stamp Act to recover any stamp duty on interest free security deposit which is required to be returned on the determination of tenancy or any income which would be earned out on the same or any assumed income. There is a provision for recovery of such stamp duty and therefore by any letter or order or circular or notification, stamp duty authorities cannot claim or recover any stamp duty. It is being said that there is internal letter or circular for recovery of such stamp duty. It is submitted that under no letter or writing or circular such recovery can be made as stamp duty unless the same squarely falls within any one or more Articles of Schedule I of Bombay Stamp Act. Therefore, in our opinion, no extra stamp duty could be levied for interest-free security deposit which is required to be returned at the determination of tenancy or before that. Such deposit is neither fine nor premium nor any amount advanced.
It is also being claimed or said that under the provisions of Article 5(g-d), stamp duty is payable on the are of the tenanted property. The said Article 5 (g-d) applies in a case where tenancy rights are being transferred by a tenant himself. The said Article 5(g-d) has no application when landlord creates tenancy in favour of a tenant. It is submitted that Article 5(g-d) has no application in case of new tenancy agreement between the landlord and tenant.
In short, stamp duty will be payable either at 10 per cent or at concessional rate only on the consideration of rent received or fine or premium paid or any money advanced or to be advanced or payment of share of the landlord to Government Revenue, cess, municipal rates or taxes.
Now we will consider payment of stamp duty on Leave & Licence Agreement
Leave & Licence Agreement and the Tenancy Agreement are both different types of Agreement. The tenancy agreements are governed by the Transfer of Property Act and the Maharashtra Rent Control Act. The Maharashtra Rent Control Act. The Leave and Licence Agreement are governed by the Easement Act and Maharashtra Rent Control Act. The Maharashtra Rent Control Act also distinguishes between Leave and Licence Agreement are governed by the Easement Act and Maharashtra Rent Control Act. The Maharashtra Rent Control Act also distinguishes between Leave & Licence Agreement and Tenancy Agreement and therefore both of them are not same.
We are told that Stamp Authorities apply Article 36 of Schedule I of Bombay Stamp Act and claim of stamp duty on Leave & Licence Agreements. In our humble opinion, Article 36 of Schedule I of Bombay Stamp Act cannot and does not apply to Leave and Licence Agreement. Leave and Licence Agreement falls within Article 5(h) of Schedule I. As there is no such specific provision of Leave & Licence Agreement under Schedule I, Article 5(h) will apply and only stamp duty of Rs. 20/- is required to be paid. No stamp duty could be recovered under Article 36 of Schedule I of Bombay Stamp Act. Such a demand is not legally valid. Leave & Licence Agreement will attract Stamp duty of Rs. 20/- only irrespective of period of Licence, Licence fee, Security Deposit, advance payment of compensation or Licence fee or payment of share of Taxes and cess payable by the Licensor.