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STAMP
DUTY IN RESPECT OF VARIOUS DOCUMENTS RELATING TO PREMISES IN A
CO-OPERATIVE SOCIETY
By Bankim P.Khona , Solicitor
Note
: All the answers are given on assumption that the properties are
situated 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 ?
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 ?
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 ?
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 ?
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 ?
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 ?
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 ?
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 ?
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 ?
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
?
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) ?
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 ?
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 ?
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 –
(d) (1) if relating to residential premises
consisting of building or unit.
(A) 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
(B) 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
(C) by such society in favour of its member
or incoming member whether in consequence of purchase of its
shares or not; or
(D) 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 –
(i) does not exceed rupees 1,00,000. -- NIL
(ii) exceeds rupees 1,00,000 but does not
exceed rupees 2,50,000 -- 0.5 per cent of the value
(iii) 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
(iv) 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
(v) 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.
