Pending Stamp Duty and Penalty Cannot Be Paid by Postdated Cheques: Supreme Court

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In the case of M/S Real Estate LLP v. The Collector of Stamps & Anr. A Full Bench of the court held that there is no procedure to submit the outstanding penalty amount through issuing of postdated cheques.

Brief Facts of the Case

The Collector of Stamps issued a notice stating a deficiency in the stamp duty on a deed executed by H.C Dhanda Trust on a property. It held the deed to be a Gift Deed and determined a deficiency of stamp duty to the extent of Rs.1,28,09,700/-. It thereby imposed a penalty of ten times as Rs.12,80,97,000/-.

Later, the Appellant purchased the above-stated property from the Trust. The Appellant was thereafter granted permission to construct on the property. It submitted six post-dated cheques against the amount of penalty. The High Court also dismissed the permission to allow for construction in the property.

The High Court noted held that the appellant being the next purchaser, he is liable to pay the penalty amount. It submitted six post-dated cheques against the amount of penalty. Further, it disproved the said payment through post-dated cheques.

Hence the present appeal was filed.

Appellant’s Arguments

The appellant after purchasing the property has deposited the amount of deficit stamp duty. no stamp duty is outstanding.

The building permission was granted to the appellant after being satisfied with all the requirements being met. Hence, the action taken for cancelling the building permission was unjustified.

Respondent’s Arguments

There is no procedure nor provision for accepting the amount of penalty by postdated cheques.

Also, the amount of penalty is outstanding against the property. Hence, the order of the Municipal Corporation to cancel the building permission earlier granted is correct.

Court’s Observations

The Bench observed that the stamp duty, as well as the penalty, is pending. It also confirmed the decision of the High Court that that facility to deposit the penalty by postdated cheques cannot be approved.

The Bench also stated that the Appellant is free to apply for building permission which is to be considered by the Municipal Corporation.

Court’s Decision

The Court ruled that the Appellant, being a next purchaser of the property, is liable to pay the pending stamp duty and penalty before obtaining permission to construct on the said property.


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