Stamp Authorities to pay interest on the excess stamp duty amount wrongfully taken by the when the excess amount was being returned – High Court
ABCAUS Case Law Citation:
ABCAUS 2611 (2018) (11) HC
Important Case Laws Cited/relied upon:
Ansal Housing and Construction Ltd. vs. State of U.P. 2014 (125) RD 642
Wig Brothers Builders and Engineers (P) Ltd. and another Vs. Union of India and others (2003) 6 AWC 5331
The petitioner was a private limited company. It purchased a house. When the sale deed was executed and registered, the petitioner paid the stamp duty.
Later, proceedings under Section 47A of the Indian Stamp Act, 1899 (the Act), were initiated and a demand of further stamp duty was made alongwith 1.5 per cent interest.
The petitioner deposited the demand but also filed an appeal against the demand order which came to be allowed.
The Appellate Court remanded the matter back to the Collector for a fresh adjudication who set aside the notice sent to the petitioner and found that there was no deficiency of stamp on the instrument executed originally in favour of the petitioner.
Thus the petitioner was to be refunded the excess amount which he had paid. Accordingly, the Assistant Commissioner (Stamp) directed for a refund of the amount paid by the petitioner.
However, since the petitioner had deposited the demand and the order for refund was made eight years later, the petitioner applied before the Collector and Assistant Commissioner (Stamp)for payment of interest.
When the interest was not paid to the petitioner, he approached the Hon’ble High Court by means of a writ petition and prayed that interest for approx none years be paid to him.
The petitioner submitted that if any amount is to be paid as deficiency in stamp duty, then interest at the rate of 1 and ½ per cent per mensum of deficient stamp duty was payable with effect from the date of execution of the instrument till the date of actual payment.
However the petitioner though acknowledged that provisions exists in the Act for interest on refund but in view of Section 47A (4A) of the Act, if deficiency was found due from the petitioner then till the actual date of payment, the petitioner was required to pay the interest at the rate of 1.5 per cent per mensum.
The Petitioner relied on the judgment of the High Court wherein it was observed that the State Government should have considered the matter to remove the discrimination in payment of interest when a demand is ultimately set aside or modified and in the meantime recovery has been made in full or in part
The Hon’ble High Court observed that Hon’ble Supreme Court had also held that such a situation is discriminatory in nature and causes great prejudice to the lacs and lacs of the assessees. The Hon’ble Supreme Court also observed that the Government, there being no express statutory provision for payment of interest on the refund of excess amount/ tax collected by the revenue; cannot shrug off its apparent obligation to reimburse the deductors lawful money with accrued interest for the period of undue retention of such monies. The State having received the money without right and having retained and used it, is bound to make the party good, just as an individual would be under the like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest.
It was observed that the High Court, itself had held in similar circumstances in stamp matter that payment of interest on the money retained by the State Government is necessary when the money is to be returned under the orders of the appellate or the revisional authority.
The Hon’ble High Court stated that the respondents authorities could not show that the said law laid down had been reversed or modified. In the said judgement, the Court had directed for payment of interest @ 8 per cent per annum from the date of deposit of money till the date of actual payment.
The Hon’ble High Court also issued a general mandmus to the State Government and all concerned authorities to pay within three months simple interest @ 8 per cent annum on all amounts of refund of stamp duty etc. under the Act to the concerned person, for the period from the date of deposit till the date of refund.
The Standing Counsel submitted that the petitioner had given an affidavit before the Additional Commissioner (Stamp) that if excess amount was returned to the petitioner then he would not take any interest from the Stamp Authorities. Therefore, the petitioner was not to get any interest amount on the amount which was returned to him.
In reply thereto, the petitioner filed an affidavit stating that the affidavit was filed by him as he was pressurized by the Stamp Authorities that if he gave an affidavit to the effect that he would not take interest then they would return to him the excess amount that was payable to the petitioner. It was also submitted that the petitioner who was all the time very nervous as to whether the excess amount which was taken from him would be returned to him or not, he had given the affidavit under pressure
Therefore, it was submitted that when the statute provides that interest had to be paid on any excess amount which the petitioner had to pay then the statute should be read in such a manner that the petitioner would also be paid interest on the amount which he had paid to the authorities, which he actually was not required to pay.
The Hon’ble High Court opined that when interest is to be paid by a person whose instrument has been found to be deficiently stamped from the date of the execution of the instrument till the actual date of payment then if it is found that wrongfully certain excess amount was taken by the Stamp Authorities then interest should be definitely paid to the assessee when the amount was being returned.
The Hon’ble High Court disbelieved that the petitioner must have given the affidavit of his own volition. The Court opined that he must have given the same when the money due to him under order was not being paid.
The Hon’ble High Court issued a writ of mandamus to the Authorities to pay back the petitioner the interest which would have accrued for the period under issue at the rate of Rs. 1.5 per cent which would be calculated on monthly basis within a period of one month.
A general direction was also issued to the Stamp Authorities that they should, upon finding that excess amount had to be returned, pay interest to the person from whom they had taken the amount wrongfully.
The writ petition was allowed.