Union Bank Of INDIA vs. Collerctor Of Stamps / Sdm & Anr

Held

The Court held that the petitioner's contention that GST on lease rentals is required to be included for the calculation of stamp duty is accepted, and the petitioner is ready to pay the deficient stamp duty of ₹3,24,161/-. Regarding the penalty, the Court acknowledged the recent introduction of GST and the potential for confusion, finding the petitioner's belief that duty was only payable on lease rentals and not GST to be credible. While acknowledging that ignorance of law is no excuse, the Court found the imposition of a penalty three times the deficient duty to be disproportionate to the facts. The Court reasoned that it would serve the ends of justice to reduce the penalty to an amount equal to the deficient stamp duty. Therefore, the Court directed the petitioner to deposit the deficient stamp duty of ₹3,24,161/- along with a penalty of an equivalent amount, i.e., ₹3,24,161/-, within one week. The Court did not expressly leave any issue undecided.

Facts

The petitioner, Union Bank of India, challenged an order dated 05.03.2019 by the Collector of Stamps, directing payment of ₹3,24,161/- in deficient stamp duty and a penalty of ₹9,72,483/-. The dispute arose from a lease deed dated 07.02.2019 for a property in Connaught Place, New Delhi. The petitioner paid stamp duty of ₹18,06,675/- on the lease rental. The Collector alleged stamp duty was deficient because Goods and Services Tax (GST) payable on lease rentals was not included in the calculation. The petitioner had filed an appeal under Section 56 of the Indian Stamp Act, 1899, but it could not be adjudicated as the appellate authority's powers were not yet delegated. The petitioner filed this writ petition due to the lack of an alternate remedy.

Key Issues

1. Whether the Goods and Services Tax (GST) payable on lease rentals is to be included as part of the lease rental for the purpose of calculating stamp duty under the Indian Stamp Act, 1899? 2. Whether the penalty imposed under the Indian Stamp Act, 1899, for deficient stamp duty is warranted in the facts and circumstances of the case, particularly when the petitioner claims bonafide belief and lack of intention to evade duty? Petitioner's arguments: The petitioner contended that they were unaware that GST was to be included for stamp duty calculation and that there was no intention to evade duty. They accepted that GST should be included and were willing to pay the deficient stamp duty. The primary issue for the petitioner was the imposition of a penalty equivalent to three times the deficient duty. Revenue's arguments: The respondent (Collector of Stamps) argued that the petitioner, being a bank, ought to have correctly computed the stamp duty. They further submitted that the petitioner should be relegated to their appellate remedy under Section 56 of the Act and that under Section 45 of the Act, the full penalty must be paid, with a possibility of refund if the appeal succeeds. The respondent did not explicitly argue on the inclusion of GST, but their action implied it.