In a significant legal development, the Allahabad High Court has clarified that stamp duty cannot be imposed on documents until they are presented for registration. This ruling came in response to a petition involving the Sarvari Educational Society, where the court held that actions to recover stamp duty on unregistered documents are invalid.
The case involved a verbal gift deed (Hiba) of agricultural land in Bilana village, Amroha tehsil, by Aale Hasan to the Sarvari Educational Society. Later, Hasan’s son and society secretary, Nadeem Hasan, documented this verbal gift in writing. Despite the document not being registered, the Stamp Department sought to recover stamp duty and an equal amount as a penalty, totaling around 11.25 lakh rupees.
Justice Piyush Agrawal overturned the orders of the Stamp Department after reviewing various judicial decisions, emphasizing that the recovery of stamp duty is only applicable to registered documents. He directed that the amount deposited by the petitioner in response to the interim order be refunded within two months.
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The court reaffirmed that under Section 47A of the Indian Stamp Act, proceedings to collect stamp duty cannot commence unless a document is formally registered. This decision underscores the protection provided against arbitrary financial penalties on unregistered documents, marking a relief for individuals and entities dealing with property transfers in a non-formal manner.
