BENGALURU: The govt cannot issue show-cause notices to recover stamp duty — either not levied or under-levied – five years after the registration of the document, Karnataka high court ruled in a recent judgement. The court, however, said there could be an exception from the five-year limit in cases of short payment on account of fraud, collusion or wilful misstatement.
Under Section 46A of Karnataka Stamp Act, 1957, proceedings by way of show-cause notice cannot be initiated after 10 years, Justice Suraj Govindaraj said in his order, allowing a petition filed by BC Prasad and his son Guru Prasad, residents of Whitefield.
In 1995, BR Srinivas Murthy and others, owners of about 9 acres of land in Yelahanka area, appointed the petitioners as their attorneys, and a GPA document was registered. On Dec 30, 2010, the deputy commissioner of stamps, Gandhinagar registration district, sent a notice saying there is a shortfall in the stamp duty of Rs 98,500 vis-a-vis the GPA document registered in 1995.
The petitioners challenged the notice before the Karnataka Appellate Tribunal, Bengaluru, and the same was dismissed on Feb 28, 2017. The duo then approached the high court.
Their main argument was the notice was issued to the power of attorney and not to the person who executed same. “The stamp duty, if any, would be liable to be paid by persons who executed the power of attorney,” they added. They further claimed that under Section 46A, any such action has to be taken within five years, and in their case, the notice was issued 15 years and one month after the registration of the document.
The govt advocate defended the action and added the period of five years has been substituted by a period of 10 years in Section 46A, and therefore, the notice issued is proper and correct. After perusing the materials on record, Justice Suraj Govindaraj pointed out that the period of 15 years is “hopelessly barred” under Section 46A of the Act.
“In the present case, there is no allegation of fraud, collusion, or wilful misstatement. What has been stated is that the adequate stamp duty has not been paid on the GPA,” the judge noted and added that the extended 10-year period is also not applicable to the petitioners’ case, while quashing the KAT order.
