The Supreme Court of India, comprising a Bench of Justice Dipankar Datta and Justice Sheel Nagu, has expressed serious doubt regarding the correctness of the legal position that proceedings under Section 47-A of the Indian Stamp Act, 1899 require proof of “fraudulent intention” or “wilful undervaluation” to evade duty. Observing that reading such requirements into the statute amounts to judicial legislation and converts a market value assessment into a quasi-criminal inquiry, the Bench referred the questions of law to a larger Bench to be constituted by the Chief Justice of India.
Background of the Case
The dispute arose from a transaction where the appellant, Bharat Petroleum Corporation Limited (BPCL), purchased a parcel of land from the Government of India for a fixed sale consideration paid through cheques in 2014. Possession of the land was handed over to BPCL on January 21, 2014, and a deed of transfer was subsequently executed on June 24, 2016, by the Government of India, represented by the Deputy/Assistant Salt Commissioner.
Upon presentation of the deed for registration, BPCL paid stamp duty and registration charges on the full sale consideration reflected in the instrument, calculated at ₹168.30 per square foot. However, the registering authority did not release the document and instead made a reference under Section 47-A of the Indian Stamp Act, 1899 to the District Revenue Officer (Stamps). Consequently, a show cause notice dated August 22, 2016, was issued to BPCL demanding deficit stamp duty based on an administrative guideline value of ₹500 per square foot.
BPCL challenged the reference and show cause notice before the High Court of Judicature at Madras. On September 8, 2022, a Single Judge allowed BPCL’s writ petition and quashed the show cause notice, relying on the three-Judge Bench ruling of the Supreme Court in V.N. Devadoss v. Chief Revenue Control Officer-cum-Inspector of Stamps. The Single Judge held that Section 47-A can be invoked only where the authority has reason to believe that the property was deliberately undervalued with a fraudulent intent to evade stamp duty.
On an intra-court appeal filed by the revenue authorities, a Division Bench of the High Court reversed the Single Judge’s decision on September 4, 2025. The Division Bench held that a writ petition against a show cause notice was not maintainable when an efficacious statutory mechanism and appellate remedies were available under the Stamp Act. Aggrieved by this reversal, BPCL approached the Supreme Court.
Arguments of the Parties
Before the Supreme Court, Additional Solicitor General N. Venkataraman, appearing for BPCL, argued that the condition precedent of “reason to believe” was absent, rendering the notice without jurisdiction. Relying on V.N. Devadoss, he contended that fraudulent intent is essential to initiate Section 47-A proceedings and that the Single Judge had correctly applied binding precedent. He further submitted that since the transferor was the President of India, no mens rea or fraudulent intention could legitimately emanate from the transaction.
Conversely, Senior Counsel Haripriya Padmanabhan, appearing for the state authorities, relied on Special Director v. Mohd. Ghulam Ghouse, Union of India v. Kunisetty Satyanarayana, and Union of India v. VICCO Laboratories to contend that writ courts should not interdict statutory proceedings at the show cause stage. She argued that the District Revenue Officer possessed statutory jurisdiction and that neither lack of jurisdiction nor mala fides was established to justify judicial interference at the threshold.
Court’s Analysis
Addressing BPCL’s submission regarding the President of India being the transferor, the Court clarified that executive contracts expressed in the name of the President under constitutional provisions do not imply personal execution by the President. The Court held that the mere constitutional nomenclature does not preclude statutory inquiry into whether market value was truly set forth.
Turning to the statutory text, the Bench observed that Section 47-A(1) merely requires the registering officer to have “reason to believe that the market value of the property or the consideration… has not been truly set forth in the instrument.” The Court pointed out:
“However, the expressions ‘wilful undervaluation’ and/or ‘fraudulent intention’ is/are conspicuously absent in the plain phraseology of sub-section (1) of the said provision. On its own terms, Section 47-A does not require the registering authority to issue notice having ‘reason to believe’ of a culpable mindset being the motive behind the transaction; it merely requires reason to believe that the market value of the property has not been truly set forth in the instrument presented before him for consideration.”
The Bench cautioned that reading an additional requirement of culpable intent into the provision “would be tantamount to judicial legislation under a provision, de hors the precincts of the plain text of the statute. The language is plain and the symmetry is straightforward, which should not be distorted in its purpose, through legal lexicalism.”
The Court also noted that while a subsequent three-Judge Bench in Registrar of Assurances v. ASL Vyapar (P) Ltd. noticed V.N. Devadoss, it did not delve into the detailed statutory scheme. Citing the coordinate Bench decisions in Ramesh Chand Bansal v. District Magistrate/Collector and Shanti Bhushan v. State of U.P., the Bench underscored that the Stamp Act is a taxing statute requiring strict literal construction without room for equitable or extraneous considerations.
To illustrate the flaw in the V.N. Devadoss doctrine, the Bench examined two hypothetical scenarios: an honest sale of an encumbered property below circle rates and a fraudulent sale involving hidden cash transactions. The Court observed:
“The test propounded in V.N. Devadoss (supra) fails to do justice in either situation. In a genuine sale of encumbered property, it exposes an honest purchaser to a roving enquiry for no fault of his; in a case of a clandestine cash consideration, it disables the registering authority from even initiating an enquiry for want of material which, by its very nature, lies within the exclusive knowledge of the parties. In the former, it is too harsh; in the latter, too lax.”
The Bench further remarked that importing a culpable mindset “converts a market value enquiry into a quasi-criminal enquiry.”
Decision and Reference to Larger Bench
Recognizing that V.N. Devadoss was rendered by a three-Judge Bench, the two-Judge Bench observed that judicial discipline prevented it from overruling the precedent directly. Consequently, the Court referred the following questions of law for consideration by a larger Bench:
- Whether V.N. Devadoss, followed in ASL Vyapar (P) Ltd., correctly interprets and declares that the basis for exercise of power under Section 47-A of the Stamp Act is wilful undervaluation with fraudulent intention to evade stamp duty, or whether the power can be exercised irrespective of culpable mindset by determining the true value without being bound by the apparent tenor of the instrument?
- Whether the decisions in Ramesh Chand Bansal and Shanti Bhushan do not lay down the correct law?
The Bench directed the registry to place the papers before the Chief Justice of India for the constitution of an appropriate Bench, observing that the validity of the Single Judge’s quashing order will depend entirely on whether V.N. Devadoss is affirmed or overruled.
Case Title: Bharat Petroleum Corporation Limited v. The District Revenue Officer (Stamps) & Anr.
Case No.: Civil Appeal No. ___ of 2026 (Arising out of SLP (C) No. 37096 of 2025)
Bench: Justice Dipankar Datta and Justice Sheel Nagu
Date: September 07, 2026
