In this Article, we analyze the judgment of the Hon’ble Bombay High Court (“Court“) dated 31st January 2024 in Axayraj Buildwell Private Limited v. State of Maharashtra and Collector of Stamps, Andheri, Mumbai1 (“Judgment“) in a writ petition that challenged proceedings initiated by the Collector under the Maharashtra Stamp Act, 1958 (“Act“) in respect of payment of deficit stamp duty on a development agreement.


  1. Axayraj Buildwell Private Limited (“the Developer“) entered into a Development Agreement in September 2005 (“Agreement“) with a co-operative housing society to carry out the redevelopment of the society’s building.
  2. The said Agreement was registered in October 2005 after payment of stamp duty of about Rs. 8.5 lakhs on the basis of the market value of the property being considered as Rs. 8.5 crore. The consideration under the Agreement was Rs.5 Crore and therefore stamp duty was computed on the basis of the higher value of Rs. 8.5 crore.
  3. In pursuance of the Agreement, the Developer completed the redevelopment of society’s building by constructing a new building and sold flats/shops/offices comprising the sale component.
  4. On 26th October 2015, the Developer received a notice dated 3rd September 2015 issued by the Sub-Registrar of Assurances (“2015 Notice“) for initiation of proceedings under Section 33A of the Maharashtra Stamp Act, 1958 (“Act“).
  5. The 2015 Notice stated the Inspector General of Registration and Controller of Stamps, Pune, State of Maharashtra (“IGR“) had carried out an audit of the Agreement, computing the correct market value under the same to be about Rs.30.97 Crore and stated that a deficit stamp duty of about Rs.22.50 Lakh was payable. The Developer was therefore called upon to deposit the Agreement for recovery of deficit stamp duty.
  6. After a reply from the Developer and a subsequent notice, ultimately, the Collector of Stamps passed an Order dated 31st May 2021 (“Impugned Order“) rejecting the contentions of the Developer about there being a bar after a lapse period of ten years stating that there is no period of limitation under Section 33A of the Act and directed the Developer to pay the deficit stamp duty along with penalty at the rate of 2% from the date of registration of the Agreement and raised a demand notice.


Aside from certain factual grounds, the main issue before the Court was whether the 2015 Notice issued under Section 33A of the Act, could be issued beyond the period of 10 years from the date of registration of a document.


The Court on deeper scrutiny of the Act observed that there are 2 (two) separate proceedings prescribed under the Act to deal with improperly stamped documents i.e. (i) under Section 32A of the Act, which deals with a situation where the market value has not truly been set forth in the instrument and (ii) under Section 33A read with Sections 37 and 39 of the Act, which deals with a situation where the market value remains undisputed however, the proper stamp duty has not truly been affixed to the instrument. It is pertinent to note that the proceedings under Section 32A of the Act are subject to a limitation period of 10 years whereas the proceedings under Section 33A read with Section 37 and 39 are not barred by any limitation.

The Court further held that in the present case, the stamp authorities were disputing the market value ascribed to the property which proceedings ought to have been initiated under Section 32A of the Act, and not under Section 33A.

Rejecting the contention of the stamp authorities that proceedings under Section 33A cover all cases where the instrument has not been duly stamped, the Court observed that:

  1. If the Collector has the unbridled power of determining the correct market value of the property and to recover deficit stamp duty at an indefinite point of time under Section 33A read with Sections 37 and 39 then the entire purpose of prescribing the outer limit of 10 years under Section 32A (5) would be rendered futile.
  2. Thus, a different meaning must be ascribed to the power of the Collector to call for an instrument from the registering authority, determining the market value and demanding deficit stamp duty under Sections 32A (4) & (5) and the power of the registering authority to impound the document under Section 33A, to then have the same forwarded to the Collector under Section 37A and for recovery of deficit stamp duty under Section 39.
  3. The application of Section 32A is restricted to an instrument for transfer of immovable property whereas an application of Section 33A is not restricted to instrument involved in immovable property.
  4. In a case where the market value of the property is disputed and the Collector desires to redetermine the same, the procedure under Section 33A read with 37 and 39 cannot be adopted and such construction would save the outer limit of 10 years prescribed in Section 32A (5) from being rendered otiose.

The Court, in the present case, held the following in relation to the aforesaid issue:

  1. The dispute was about the true market value of the property. Hence, the proceedings initiated under Section 33A were erroneous and the Collector ought to have initiated the same under Section 32A (5).
  2. In the 2015 Notice, the Registrar initiated proceedings under Section 33A, however, did not call upon the Petitioner/Developer to show cause as to why the document should be impounded. The Registrar merely directed the Petitioner/Developer to deposit the original document for the purpose of recovery of deficit stamp duty. Further in the present case, it was indicated that the Registrar and the Collector made reference to Section 33A solely for the purpose of saving the outer limit of 10 years of Section 32A (5).
  3. If the error committed by the Collector in making reference to Section 33A was ignored, and if the proceedings were initiated under Sections 32A (4) & (5), the Agreement was registered on 7th October 2005 and therefore 6th October 2015 was the last day before which proceedings under Section 32A (5) could have been initiated. However, as the same was dispatched from the office of the Sub-Registrar on 21st October 2015 , it was clear that the 2015 Notice was on the outer limit of the period prescribed under Section 32A (5) and barred by limitation.
  4. Thus, the Court set aside the Impugned Order, the 2015 Notice and the demand notice.

By this Judgement, the Court has clarified that the proceedings initiated for deficit stamp duty on the basis of incorrect market value of property must be made within 10 years of registration of the instrument. Thus the market value of immovable property on the basis of which stamp duty has been computed, attains finality and cannot be reopened by stamp authorities after a period of 10 (ten) years.


1. 2024 SCC OnLine Bom 425

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