Adityaraj Builders v . State of Maharashtra ( Bom)( HC) www.itatonline .org

Maharashtra Stamp Act, 1948, ,S. 41: Endorsement of instruments on which duty has been paid – Development agreement – Alternative accommodation – Re development – Reference to re-development and homes is to be read to include garages, galas, commercial and industrial use and every form of society re-development – No stamp duty on permanent accommodation agreement(PAAA) , if the development agreement is stamped – Findings are not limited to the facts of the present cases only . [ S. 34, 39, 40 ]

The petitioners raised a common question of law under the Maharashtra Stamp Act, 1958. All of them relate to Stamp Duty sought to be levied on what are called Permanent Alternate Accommodation Agreements (“PAAA”). The challenge was against two circulars issued by the Inspector General of Registration & Controller of Stamps, Maharashtra under the authority of the Chief Controlling Revenue Authority and the State Government of Maharashtra, dated 23.06.2015 & 30.03.2017.

The first circular directed that any PAAAs between the society members and the developer is different from the DA between the society and the developer. The second circular which came out as a clarificatory circular specifies compliance and the criteria for such compliance to the PAAAs with individual society members. The Stamp authorities contended that  on contentions of the payment of stamp duty in incidents where there is increase of additional area or square footage after redevelopment and question of members having to pay stamp duty on acquisition of additional built-up area or carpet area derived from fungible FSI.

The question before the High Court was ,  whether the demand by Stamp Authority that the individual PAAAs for members must be stamped on a value reckoned · at the cost of construction and a question of validity regarding the two circulars dated 23.06.2015 and 30.03.2017?

The Honourable Court held that the Impugned Circulars dated 23rd June 2015 and 30th March 2017 were held to be beyond jurisdictional remit of revenue authorities to dictate instruments of payment of stamp duty.

It was held as under : ·

(a)     A Development Agreement between a cooperative housing society and a developer for development of the society’s property (land, building, apartments, flats, garages, godowns, galas) requires to be stamped.

(b)    The Development Agreement need not be signed by individual members of the society. That is optional Even if individual members do not sign, the DA controls the re-development and the rights of society members.

(c) A Permanent Alternative Accommodation Agreement between a developer and an individual society member does not require to be signed on behalf of the society. That, too, is optional, with the society as a confirming party.

  1. d) Once the Development Agreement is stamped, the PAAA cannot be separately assessed to stamp beyond the Rs. 100 requirement of Section 4(1) if it relates to and only to rebuilt or reconstructed premises in lieu of the old premises used/occupied by the member, and even if the PAAA includes additional area available free to the member because it is not a purchase or a transfer but is in lieu of the member’s old premises. The stamp on the Development Agreement includes the reconstruction of every unit in the society building. Stamp cannot be levied twice.
  1. e) To the extent that the PAAA is limited to the rebuilt premises without the actual purchase for consideration of any additional area, the PAAA is an incidental document within the meaning of Section 4(1) of the Stamp Act.
  1. f) A PAAA between a developer and a society member is to be additionally stamped only to the extent that it provides for the purchase by the member for actual stated consideration and a purchase price of additional area over and above any area that is made available to the member in lieu of the earlier premises.
  1. g) The provision or stipulation for assessing stamp on the PAAA on the cost of construction of the new premises in lieu of the old premises cannot be sustained.

Court  held that ,  reference to re-development and homes is to be read to include garages, galas, commercial and industrial use and every form of society re-development.  The Court also held that these findings are not limited to the facts of the present cases before us.   ( WP Nos   4575 of 2022/ 4609 of 2022/ 4580 of 2022  dt  17 -2 -2023 )

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