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Stamp
Duty
Articles
Adjudication
of Proper Stamp Duty
By
M.K. Gokhale, Deputy Supt. Of Stamps (Retd.)
Section 31 of the
Bombay Stamp Act, 1958 provides about the adjudication of proper Stamp
Duty. The applicant under this section has to submit an instrument
executed or unexecuted and previously stamped or not for the purpose of
opinion to the collector of stamps and for this purpose, the applicant has
to pay a fee of Rs. 50/-. On receipt of the application of adjudication
and the instrument, the collector has to form his opinion as regards its
chargeablity and then express his opinion to the applicant. Sub Section
(4) of Section 32 of the Act proves that when the instrument is brought to
the collector for adjudication within one month from the date of its
execution, the person liable to pay stamp duty within 60 days form the
date of service of the notice of demand in respect of the stamp duty
adjudicated by the collector. If the applicant failed to pay the said
stamp duty within the stipulated period of 60 days, the person is liable
to pay a penalty at the rate of two percent per month or part thereof,
from the date of execution of such instrument.
It is therefore necessary to pay stamp duty within 60 days from the date
of the demand notice served by the collector to avoid levy of penalty.
In view of the penal provision in sub-section (4) of section 32 of the
Act, the applicant should take care to submit the unexcelled document for
adjudication under section 31 of the Bombay Stamp Act, 1958. In case of
unexecuted instrument the collector has no power to levy penalty and if
the applicant does not agree with the determination of Stamp Duty, he can
withdraw his document from adjudication.
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. |
