M/S STAR DEVELOPERS THROUGH PARTNERSversusSTATE OF MAHARASHTRA THROUGH MINISTRY OF REVENUE AND ORS

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                      Shabnoor
                                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                         CIVIL APPELLATE JURISDICTION

                                       WRIT PETITION NO. 11127 OF 2018

                      M/S Star Developers Through Partners        … Petitioner
SHABNOOR
AYUB                             V/s.
PATHAN                State of Maharashtra Through
Digitally signed by
SHABNOOR AYUB
                      Ministry Of Revenue And Ors.                … Respondents
PATHAN
Date: 2026.08.28
12:08:09 +0530                                       WITH
                                      CIVIL APPLICATION NO. 2128 OF 2018
                                                      IN
                                       WRIT PETITION NO. 11127 OF 2018

                      Ms. Manjiri Parasnis, for the Petitioner.
                      Ms. Mamta S. Srivastava, AGP, for the State –
                      Respondent.


                                       CORAM                 : AMIT BORKAR, J.

                                       RESERVED ON           : AUGUST 24, 2026

                                       PRONOUNCED ON         : AUGUST 28, 2026

                      JUDGMENT:

                      1.    By the present Petition, the Petitioner challenges the
                      Judgment and Order dated 3 November 2017 passed by
                      Respondent No. 2 in Appeal No. 30 of 2016. The Petitioner
                      challenges the Judgment and Order dated 30 May 2016 passed by
                      Respondent No. 3 in Case No.JK/SJL/PS/MLP/S-9/PR/No.08_13 /
                      Instrument No.3986_13/1784/2016.




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2.    The facts giving rise to the present Petition are as follows.
The property in question consists of land bearing Survey Nos.
47/1, 47/2 and 47/3, having total area of 5,109.62 sq. metres. The
property is situated at Village Bavdhan (B.K.), Taluka Haveli,
District Pune. The said property is owned by Mr. Dnyaneshwari
Ashok Phadke. On 27 May 2005, a Development Agreement was
executed in favour of Mr. David Koli Pillai in respect of the said
property. Subsequently, on 29 April 2013, a Joint Venture
Agreement was entered into between the Petitioner and Mr. David
Koli Pillai. Under this Agreement, the parties agreed to develop a
residential and commercial project on the said property. They
agreed that the constructed tenements would be sold to
prospective purchasers. Under the terms of the Joint Venture
Agreement, the Petitioner was responsible for getting the building
plans sanctioned, obtaining the N.A. order and carrying out the
demarcation of the property. Clause 9 of the Joint Venture
Agreement provided for sharing of the revenue between the
parties. Under the said clause, Mr. David Koli Pillai was entitled to
42% of the revenue, while the Petitioner was entitled to 58%.
Clause 12(ii) of the Joint Venture Agreement set out the meaning
of the expression “gross sale proceeds”. Clause 22 of the Joint
Venture Agreement contained a tentative calculation of the stamp
duty payable on the Agreement. The calculation was made on the
basis of the market value or Ready Reckoner value prevailing at
that time, as prescribed by the Government of Maharashtra under
Section (Vibhag) 27.9 at page 153 of the Ready Reckoner, 2003.




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3.   At the relevant time, the value of the land was Rs.7,900/-
per sq. metre and the total area of the plot was 5,109.62 sq.
metres. On the basis of the applicable slabs, the value of the area
covered by the Agreement was calculated at Rs.3,25,16,400/-. In
accordance with Clause 5(g)(a), the Petitioner paid stamp duty of
Rs.16,26,000/-. Thereafter, on 16 July 2015, Respondent No. 3
issued a notice to the Petitioner demanding payment of alleged
deficit stamp duty of Rs.22,62,625/-.

4.   Thereafter, on 30 July 2015, Respondent No. 3 issued
another notice to the Petitioner in respect of the same matter. The
Petitioner submitted its reply to the said notice on 20 August 2015.
Thereafter, the Petitioner filed Writ Petition No. 5079 of 2016
before this Court. The said Writ Petition was decided on 4 May
2016, with a direction to the concerned authority to decide the
matter within a period of six weeks. Pursuant to the said direction,
Respondent No. 3 passed an order dated 7 May 2016 in Case No.
JK/SJL/PS/MLP/S-9/PR/No.08_13/Instrument No.3986_13/ 1784
/2016. By the said order, Respondent No. 3 determined the value
of the property at Rs.8,26,33,500/- by applying Clause 5(g)(a) of
Schedule I. Respondent No. 3 thereafter calculated the stamp duty
at the rate of 4% of the said value. The stamp duty so calculated
came to Rs.33,05,340/-. After giving credit for the stamp duty of
Rs.16,26,000/- paid by the Petitioner, Respondent No. 3
determined the deficit stamp duty at Rs.16,79,340/-. Penalty at the
rate of 2%, along with other applicable charges, was imposed.
Being dissatisfied with the said order, the Petitioner preferred
Appeal No. 30 of 2016 before Respondent No. 2. Respondent No. 2



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considered the said appeal and, by Judgment and Order dated 3
November 2017 passed in Appeal No. 30 of 2016, decided the
same. The Petitioner is aggrieved by the orders passed by
Respondent Nos. 2 and 3. The Petitioner has, therefore, filed the
present Petition challenging the said orders.

5.    Ms. Parasnis, learned Advocate appearing for the Petitioner,
submitted that the provisions of Section 32A(5) have not been
considered by the Respondent Authorities. According to her, the
said provision has a direct bearing on the manner in which the
value of the instrument and the stamp duty payable thereon are
required to be determined. The learned Advocate submitted that
the Respondent Authorities have wrongly calculated the stamp
duty by applying Article 5(g)(a) of Schedule I. According to her,
the Authorities have made a slab-wise calculation. The learned
Advocate submitted that Article 47 relating to “Partnership – Joint
Venture” was introduced by an amendment which came into effect
from 24 April 2015. Therefore, according to the Petitioner, the
expression “Joint Venture” was specifically brought into the Stamp
Act only from the said date.

6.    It was submitted that, prior to the said amendment, an
instrument of the nature of the Joint Venture Agreement in the
present case was never treated as an instrument falling under
Article 5(g)(a). The learned Advocate submitted that under Article
25, the valuation is required to be made in the manner applicable
to a Conveyance. Therefore, the proper provision applicable to the
transaction had to be examined before determining the value for
the purpose of stamp duty. It was submitted that Article 5(h)(b)



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provides that an instrument which is not otherwise provided for in
Schedule I is chargeable with stamp duty of Rs.100/-. According to
the learned Advocate, Respondent Nos. 2 and 3 were therefore
required to give proper and clear reasons for treating the
instrument in question as one falling under Article 5(g)(a). In the
absence of such reasons, the impugned determination could not be
sustained.

7.   The learned Advocate thereafter dealt with the manner in
which the Respondent Authorities had calculated the land cost and
the revenue sharing under the Joint Venture Agreement. According
to the Petitioner, the impugned Orders have calculated the land
cost and revenue sharing by applying the following formula:

     “5109.62 × 0.42 × 45,300 × 0.85 = Rs.8,26,33,285/-”

8.   The learned Advocate submitted that this calculation was
then used for determining the deficit stamp duty, after giving
credit for the amount of Rs.16,26,000/- paid by the Petitioner. It
was submitted that the entire calculation made under Article 5(g)
(a) is erroneous and has no proper basis in the terms of the Joint
Venture Agreement. According to the learned Advocate, the Joint
Venture Agreement is essentially an agreement for sharing profit
and revenue between the parties. The agreed ratio of sharing was
42% for Mr. David Koli Pillai and 58% for the Petitioner. The
learned Advocate submitted that the transaction cannot be treated
as a Development Agreement.

9.   According to her, both parties were to act as developers in
respect of the proposed project and neither party could be treated



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merely as a developer acting on behalf of the other. In support of
this submission, reliance was placed on Paragraph No. 16(ii) at
Page No. 11 of the Joint Venture Agreement, which specifically
provides:

      “All the brochures and other publicity materials shall show
      the names of both the parties as co-ventures thereof.”

10.   On the basis of this clause, the learned Advocate submitted
that the document could not be treated as a “Development
Agreement”. According to her, the true nature of the transaction
had to be determined from the complete terms of the Joint Venture
Agreement and not merely from the fact that the property was
proposed to be developed.

11.   The learned Advocate submitted that the consideration value
determined in the impugned Order has no proper basis. According
to her, the amount determined by the Respondent Authorities is
baseless, without authority, hypothetical and illogical. She
submitted that “Consideration” cannot be determined on the basis
of an imaginary or assumed value. It was submitted that the
revenue which may be received in future under the revenue-
sharing     arrangement   cannot       be   treated   as   the    present
consideration for the purpose of calculating stamp duty. According
to the Petitioner, the market value had to be determined on the
basis of the value of the land existing at the relevant time. The
future construction proposed to be carried out on the property
could not be added for determining the stamp duty payable on the
present instrument. The learned Advocate specifically challenged




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the manner in which the 42% share was calculated. According to
her, the Authorities first took the total land area of 5,109 sq.
metres, then hypothetically divided the land according to the
profit-sharing ratio and thereafter multiplied the resulting area by
the new flat purchase rate of Rs.45,300/- per sq. metre. According
to the Petitioner, this method of calculation has no basis in the
Joint Venture Agreement and is completely incorrect. It was
submitted that there was no material before the Respondent
Authorities to presume that 42% of the flats proposed to be
constructed would actually be sold in the market as the share of
the Petitioner. The revenue-sharing ratio between the parties could
not, according to the Petitioner, be automatically treated as the
proportion of flats or constructed area belonging to either party.

12.   The learned Advocate then submitted that the Respondent
Authorities had failed to consider several factors which had a
direct effect on the actual market value of the property. According
to the Petitioner, the Ready Reckoner is only a reference for
arriving at a tentative market value of property in a particular
area. It is a guiding factor and cannot, by, be treated as conclusive
of the actual market value in every case. The learned Advocate
submitted that the property in question was landlocked and that
this circumstance had a direct effect on its value. It was submitted
that the property was under dispute. It was submitted that a suit
and appeal concerning the said property were pending at the
relevant time. According to the Petitioner, this pending litigation
was an important factor which ought to have been considered
while determining the actual market value of the property.



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13.   The   learned   Advocate    thereafter   raised   a    separate
submission concerning the powers of the Comptroller and Auditor
General of India, namely, the CAG. According to her, the powers of
the CAG are limited by the Constitution and are concerned with
the affairs and accounts of the Union and the States. On this basis,
the learned Advocate submitted that an important question arises
as to whether the CAG could examine or decide the correctness or
veracity of an order passed by an authority constituted under the
Maharashtra Stamp Act for determining the stamp duty payable on
an instrument. The learned Advocate submitted that the CAG
could not determine or alter the computation of stamp duty made
by the competent authority while exercising the statutory powers
vested in that authority under the Maharashtra Stamp Act.
According to the Petitioner, the statutory determination of stamp
duty could be made only in accordance with the provisions of the
Maharashtra Stamp Act by the authority empowered under that
Act, and the CAG could not assume those statutory powers.

14.   Ms. Raje, learned AGP appearing for the Respondents,
submitted that in the cases referred to earlier, the Collectors of
Stamps in the State of Maharashtra have been determining the
market value by considering the clause in the agreement under
which the owner is entitled to receive a particular percentage of
the revenue generated from the project. According to her, stamp
duty was required to be paid on the amount so determined. She
submitted that this method of determining stamp duty has been
followed for many years, at least since 1997. However, the
Inspector General of Registration and Controller of Stamps,



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Maharashtra State, Pune, noticed that in some cases this general
practice was not being followed. Therefore, it was considered
necessary to clarify the manner in which such instruments were to
be valued. This clarification was made in the ASR Guidelines of
2015. Ms. Raje therefore submitted that the Petitioner's main
contention that the 2015 Guidelines cannot be applied to the
Development Agreement executed by the Petitioner in 2013 is
incorrect. According to her, the Guidelines did not introduce a new
method of valuation, but only clarified the practice which had
been followed for a long period.

15.   It was submitted that the instrument involved in the present
Petition   is   a   Development        Agreement   concerning       land
admeasuring 5,109.62 sq. metres, bearing Survey Nos. 47/1, 47/2
and 47/3, situated at Bavdhan Budruk, Pune. The said Agreement
was executed on 29 April 2013. According to the learned AGP,
Clause 12(i) and Clause 12(ii) of the Agreement provide for
sharing of the revenue generated from the project between the
parties. Therefore, as per the practice followed by the stamp
authorities, the stamp duty ought to have been determined by
taking into consideration the said revenue-sharing clauses.

16.   The learned AGP submitted that the Petitioner did not
submit the said instrument to the Collector of Stamps for
adjudication of the proper stamp duty. It appears that, when the
instrument was submitted for registration, the fourth Respondent
determined the market value of the immovable property at
Rs.3,25,16,400/-. On that basis, the Petitioner paid stamp duty of
Rs.16,26,000/-. It was submitted that the market value of a



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property has to be determined with reference to the “subject
matter” of the instrument. According to the learned AGP, this
follows from the definition of market value under the Maharashtra
Stamp Act. Therefore, while registering an instrument of the
present nature, the market value has to be determined by
considering the consideration arising from the sale proceeds of the
project. According to the Respondents, however, in certain cases,
including the present case, the market value was initially
determined on the basis of the cost of construction, even though
the real subject matter of the instrument was the sharing of
revenue arising from the project.

17.   The learned AGP relied upon the judgment of this Court in
Kolte Patil Developers Ltd. v. Chief Controller (Revenue Authority)
and Inspector General of Registration and Controller of Stamp &
Ors., Writ Petition No.10675 of 2019, decided on 11 November
2024. Reliance was particularly placed on paragraphs 18 to 20 of
the said judgment.

18.   She submitted that the contention of the Petitioner that the
gross sale proceeds could not be determined on the date of
execution or registration of the Development Agreement was
considered. The contention was that the amount of revenue
sharing or gross sale proceeds depended upon the future market
value of the property and, therefore, such value could not be
known at the time of registration. The Respondents submitted that
this contention was not correct. According to them, stamp duty can
be calculated on the basis of the consideration which would be
received in future by applying the rates of flats prevailing on the



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date of execution of the instrument. While doing so, there was no
requirement to apply a deferment factor merely because the
consideration would actually be received in future. It was
submitted that, according to the normal principles of valuation, the
present value of an amount which is to be received in future can
be determined by considering the period over which the project is
expected to be completed and by applying an appropriate
deferment factor having regard to the prevailing interest rates. In
the present case, the Collector of Stamps applied a deferment
factor of 0.85. On that basis, the Collector determined the present
value of the consideration represented by the agreed percentage of
revenue. The calculation was made by taking the rates of flats
prevailing on the date of execution of the instrument and not any
future rates of flats, which could in fact be higher.

19.   The learned AGP submitted that the Petitioner was given
several opportunities to pay the deficit stamp duty and penalty by
issuing notices. However, despite those opportunities, the
Petitioner did not deposit the amount demanded. Therefore,
according to the Respondents, they were required to exercise the
powers available under Section 46 of the Maharashtra Stamp Act,
1958 for recovery of the deficit stamp duty and penalty. It was
therefore submitted that, having regard to the conduct of the
Petitioner and the failure to pay the deficit stamp duty despite the
notices issued, the action taken by the Respondents under Section
46 of the Act was legal and proper. The learned AGP accordingly
submitted that there was no reason to interfere with the impugned
Judgment and Orders dated 3 November 2017 and 7 May 2016



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and that the present Petition deserved to be rejected.

Reasons and Analysis:

20.   I have considered the Petition, the submissions made by Ms.
Parasnis, learned Advocate for the Petitioner, and Ms. Raje, learned
AGP for the Respondents. I have considered the impugned order
passed by the stamp authority, the two judgments and orders
relied upon by the parties and the relevant provisions of the
Maharashtra Stamp Act, 1958. The question is whether, according
to the law applicable on the date of the Agreement, such revenue
sharing could be treated as “consideration” for deciding the market
value and, on that basis, the stamp duty payable under Article 5(g-
a) of Schedule I.

21.   The Agreement in the present case was executed on 29 April
2013 in respect of land admeasuring 5,109.62 sq. metres bearing
Survey Nos. 47/1, 47/2 and 47/3 at Bavdhan Budruk, Pune. From
the material on record, it appears that the parties had agreed to
develop the property and thereafter share the revenue which
would be received from sale of the proposed flats and commercial
units. At the time of registration, stamp duty was paid by taking
the value at Rs.3,25,16,400/-. Subsequently, an audit objection
was raised and proceedings under Section 32A were started. In
those proceedings, the authority came to the conclusion that the
amount calculated on the basis of revenue sharing was higher. The
stamp authority recorded that the Sub-Registrar had initially taken
the consideration at Rs.32,516,400/- and had collected stamp duty
of Rs.16,26,000/- under Article 5(g-a). Thereafter, the authority




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took the view that the owner's 42% share in the sale proceeds was
required to be treated as consideration.

22.   At the beginning, it is necessary to see the provision under
which the stamp duty is being charged. Article 5(g-a)(i), as placed
before the Court, reads:

      “Article 5[(g-a)[(i)] [Clause (g-a) was inserted by
      Maharashtra 9 of 1997, and deemed to have been inserted,
      Section 14(2) (w.e.f. 7.2.1990).] if relating to giving
      authority or power to a promoter ora developer, by whatever
      name called, for construction on,development of or, sale or
      transfer (in any manner whatsoever)of, any immovable
      property.]”
23.   From the above provision, it is seen that Article 5(g-a) does
not become applicable only because the document is called a
“Development Agreement”. The Court has to see what the
document actually provides for. It has to be examined whether, in
substance, one party has given authority or power to a promoter or
developer for construction on, development of, or sale or transfer
of the immovable property. This is important because the Petitioner
says that the present document is a Joint Venture Agreement and
not a Development Agreement. The name given to the document
cannot decide its legal character. At the same time, the actual
rights and obligations created under the document cannot be
ignored by the Respondents. The distinction made by the Petitioner
between a Development Agreement and a Joint Venture
Agreement therefore needs to be examined. The Petitioner relies
upon Clause 9 of the Joint Venture Agreement, under which the
revenue was to be shared in the ratio of 42% and 58%. The



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Petitioner relies upon Paragraph 16(ii), which states:

      “All the brochures and other publicity materials shall show
      the names of both the parties as co-ventures thereof.”

24.   This clause does show that the parties described as co-
ventures in relation to the proposed project. This part of the
Petitioner's submission cannot be ignored. It shows that both
parties intended to remain associated with the project. It shows
that the arrangement was not described only as one where the
developer was working as a contractor for the owner. To this
limited extent, the submission of the Petitioner has substance.

25.   However, the matter cannot be decided only because the
expression “co-ventures” has been used in the Agreement. What is
more important is to see what rights were given under the
Agreement and what was to be received in return for those rights.
The material on record shows that the developer was required to
arrange the funds, carry out the development and construct the
proposed flats, units and commercial premises. The departmental
order records that the developer was to carry out the development
at his own cost and was responsible for arranging the funds
required for the project. It records that 42% of the sale proceeds
was to go to the owner and 58% to the developer. These facts are
important for deciding the real nature of the transaction. The
Petitioner may be correct to some extent that the Agreement has
features of a joint venture arrangement. But the presence of such
features does not answer whether the owner's agreed share in the
gross sale proceeds is consideration for the development rights. For




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that purpose, the actual substance of the transaction has to be
seen.

26.       The earlier judgment in Kolte Patil Developers Ltd. is
relevant on this issue. In that matter, the document was described
as a Development Agreement. The owners were to receive 38% of
the gross sale proceeds and the developer was to receive the
remaining 62%. The Court examined the terms of the Agreement
and found that development rights, including the right to construct
and sell the units, were given to the developer and that the return
to the owners was in the form of revenue sharing. The Court held
that “The monetary consideration is not crystallised in the
Agreement and takes the form of revenue sharing based on gross
sale proceeds to be received from sale of units.”

27.       The same reasoning applies to the present Agreement. The
fact that the consideration is not a fixed amount in rupees does not
mean that there is no consideration. Consideration can be agreed
in different forms. Here, the amount which the owner was to
receive was connected with the sale proceeds of the constructed
units. Therefore, merely because the exact amount was not known
on 29 April 2013, it cannot be said that there was no consideration
at all.

28.       The meaning of “market value” is required to be considered.
The order under challenge has reproduced Section 2(n), which
states:

          “'Market Value', in relation to any property which is the
          subject matter of an instrument, means the price which such




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      property would have fetched if sold in open market on the
      date of execution of such instrument or the consideration
      stated in the instrument, whichever is higher.”
29.   The same provision was considered in Kolte Patil Developers
Ltd.. The Court observed that Section 2(na) requires the authority
to compare the price which the property could have fetched in the
open market on the date of execution with the consideration stated
in the instrument. The higher amount has to be taken for stamp
duty. This provision is important because the Petitioner's main
submission is that only the value of the land or the Ready
Reckoner value of the land should have been considered. Such a
submission cannot be accepted. Article 5(g-a) connects the stamp
duty with the market value. Section 2(na) requires comparison
between the open-market value and the consideration stated in the
instrument. Therefore, when the instrument provides the basis on
which consideration is to be received, that consideration has to be
examined by the authority.

30.   The Petitioner has submitted that revenue sharing is a future
amount and therefore cannot be treated as present consideration
because the future sale price of the flats was not known. This
submission cannot be accepte. The exact amount which may be
received may be uncertain. But the method by which that amount
was to be calculated had been agreed between the parties. The
parties had fixed a percentage of the sale proceeds as the basis of
the consideration. Therefore, the future receipt cannot be treated
as imaginary. The actual receipt may take place later. The
contractual basis for that receipt was present on the date of the




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Agreement.

31.   The earlier judgment considered this submission. It held that
“The consideration is not payable in praesenti but is deferred to
the time of sale of the units after they are completely constructed
on the subject property.” Even though the payment was to be
received later, the Court did not hold that it ceased to be
consideration. The Court held that revenue sharing of the gross
sale proceeds, though payable later, constituted consideration for
transfer of development rights.

32.   The Petitioner has challenged the calculation made by the
authority as hypothetical. According to the Petitioner, the authority
assumed future sale of flats and applied the rate of constructed
tenements. If the authority had merely assumed an arbitrary future
amount without any connection with the Agreement or the
statutory provisions, the objection could have had some force.
However, the record shows that the authority considered the
available area, the relevant ASR rates for land and residential flats,
the agreed 42% share and thereafter applied the deferment factor
of 0.85. The departmental order records the calculation as follows:

      “Consideration value of the property = 5,109.62 × 0.42 ×
      45,300 × 0.85 = Rs. 82,633,285.60/-.”

33.   The authority thereafter took the consideration value at
Rs.82,633,500/-. It may be that the amount arrived at through this
calculation will not be the actual amount which is received after
the flats are sold. But that is not the test under the Stamp Act. The
authority has to determine the market value for stamp duty as on



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the date of execution of the instrument. The determination cannot
be kept pending until the project is completed and the actual sale
prices become known. Therefore, merely because the future sale
proceeds were uncertain, the valuation cannot for that reason be
held invalid. The deferment factor is relevant to the Petitioner's
submission that the consideration was to be received in future.
According to the Respondents, the present value of the future
consideration was worked out by taking the prevailing rate and
applying the deferment factor. The earlier judgment accepted this
method. It held that where consideration is in the form of revenue
sharing, it has to be calculated as on the date of execution by
considering the available FSI and the applicable ASR of the land
and constructed tenements.

34.   The submission regarding the absence of a specific guideline
in 2013 requires consideration. The parties had submitted before
the authority that the Ready Reckoner for 2013 did not contain
any specific provision for valuation of such instruments on
revenue-sharing basis and that detailed instructions came only
later in 2015. This submission cannot be rejected without
examining it. The Agreement was executed on 29 April 2013. A
later guideline cannot become the source of a stamp duty liability
for an earlier document. Stamp duty is a fiscal levy. Therefore, the
authority must find the legal basis for the demand in the Act and
the Rules. The demand cannot be sustained merely by saying that
a particular method was stated in the 2015 Guidelines. However,
this submission does not assist the Petitioner because the statutory
provision was in existence when the Agreement was executed. The



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earlier judgment has specifically held that “The absence of
valuation guidelines in the year 2013 as regards the revenue
sharing for determining market value is irrelevant as Section 2
(na) mandates the authority to compute the market value based
on the rate of property as per the ASR or the consideration stated
in the instrument whichever is higher.”

35.   Therefore, the 2015 Guidelines cannot create a new liability
in respect of a document executed in 2013. They may, however,
explain or provide a method for calculating the consideration
which was required to be considered under the Act. In the present
case, the Respondents have relied upon the later instruction for
valuation. The actual power to consider the revenue-sharing
amount, however, comes from Section 2(na) read with Article 5(g-
a), and not merely from the 2015 Guidelines.

36.   The Petitioner has submitted that future construction could
not be considered because, on the date of the Agreement, the flats
had not yet been constructed. This submission cannot be accepte.
The purpose of the Agreement was development of the land and
construction and sale of units. Therefore, the development
potential of the property is connected with the rights granted
under the Agreement. If the development potential is ignored, the
value of the development rights would not reflect the transaction
entered into by the parties. The earlier judgment held that “the
development potential of the subject property on the date of
execution of the instrument would form the basis of the valuation
of the consideration.”




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37.   The Petitioner has submitted that the Respondent Authorities
have treated 42% of the total area as though 42% of the land was
transferred. If the calculation is understood as an actual division of
the land, this submission may appear to have some force. But the
material on record does not show that the authority treated 42%
as a physical portion of the land. The figure of 42% was taken
because, under the Agreement, that was the percentage of the
gross sale proceeds payable to the owner. The calculation was
therefore intended to value that agreed share as consideration. It
has to be understood in this manner.

38.   The departmental calculation shows this approach. It records
that “42% share to owner = Total area × 42%” and thereafter
calculates the consideration with reference to the ASR rate for
residential flats. The deferment factor was then applied and the
consideration was determined at Rs.82,633,285.60/-.

39.   The Petitioner has submitted that the Ready Reckoner is only
a guiding factor and that various circumstances reducing the value
of the property were not considered. It is submitted that the
property was landlocked and that litigation concerning the
property was pending. These circumstances may have some
relevance while determining the open-market value. However,
there is no sufficient material before the Court to show that the
Respondent Authorities ignored any proved circumstance which
would necessarily change the statutory valuation., the demand in
the present case is not based only on the Ready Reckoner value of
the land. It is based on the consideration contained in the
Agreement, which according to the Respondents was higher.



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40.   The statutory scheme requires this comparison. Section
2(na) does not say that the ASR value is always the final value. It
requires higher of the open-market price and the consideration
stated in the instrument to be taken as the market value.
Therefore, once the authority finds a valid consideration clause
and calculates its value according to the statutory method, the
existence of certain disadvantages relating to the property does not
remove that consideration from the calculation.

41.   The submission regarding the powers of the Accountant
General and the CAG requires separate consideration. The
Petitioner submits that the audit authority cannot determine stamp
duty because the Maharashtra Stamp Act gives the power to
determine market value and stamp duty to the competent stamp
authority. To this limited extent, the submission is correct. An audit
objection is not an order determining stamp duty. The final
determination has to be made by the authority empowered under
the Act. But this does not mean that an audit objection cannot
bring possible undervaluation to the notice of the competent
authority. The record shows that the audit objection led to
examination of the document and thereafter the matter was dealt
with under Section 32A. Notices were issued. Written and oral
submissions were considered. Thereafter, the authority passed the
order under Section 32A. Thus, the final determination was made
by the statutory stamp authority. The audit objection was only the
information through which the matter came to the notice of that
authority.




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42.   Section 32A(5), on which the Petitioner has particularly
relied, therefore becomes relevant. It provides:

      “(5) The Collector of the District may, suo motu or on receipt
      of information from any source, within ten years from the
      date of registration of any instrument referred to in sub-
      section (1), (not being the instrument upon which an
      endorsement has been made under section 32 or the
      instrument or the instruments in respect to which the proper
      duty has been determined by him under sub-section (4) or
      an instrument executed before the 4th July 1980), call for
      the true copy or an abstract of the instrument from the
      registering officer and examine it for the purpose of
      satisfying himself as to the correctness of the market value of
      the immovable property which is the subject matter of such
      instrument and the duty payable thereon; and if, after such
      examination, he has reason to believe that the market value
      of such property has not been truly and fully set forth in the
      instrument he shall proceed as provided in sub-section (4).”

43.   The language of Section 32A(5) permits the Collector to act
“on receipt of information from any source”. Therefore, merely
because the proceedings were started after an audit objection, it
cannot be said that Section 32A(5) was wrongly invoked. What
has to be seen is whether, after receiving such information, the
Collector independently examined the correctness of the market
value and the stamp duty. The material on record shows that such
examination was made. Notices were issued. The parties submitted
their replies. Oral submissions were made. The authority



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considered the nature of the document, the revenue-sharing
clause, the relevant ASR rates, the residential rate and the
deferment factor and thereafter recorded its calculation. Therefore,
it cannot be said that the requirement of examination under
Section 32A(5) was ignored.

44.   The Petitioner has submitted that Respondent Nos. 2 and 3
were required to give proper reasons for applying Article 5(g-a). In
the present case, reasons are found in the order. The authority
considered the document to be a Joint Development Agreement,
referred to the development activities to be carried out by the
developer, considered the 42% share of the owner in the sale
proceeds and thereafter applied Article 5(g-a). The correctness of
that conclusion may be disputed. But it cannot be said that Article
5(g-a) was applied without giving any reason.

45.   The reliance placed by the Petitioner on Article 5(h)(b),
under which an instrument not otherwise provided for in Schedule
I is chargeable with stamp duty of Rs.100/-, therefore cannot be
accepted merely because the Petitioner calls the document a Joint
Venture Agreement. The real question is whether the substance of
the instrument falls under an existing entry. If it does, the
residuary provision cannot be used merely because another
description has been given to the document. The amendment to
Article 47 relating to “Partnership – Joint Venture” and the
insertion of the words “Joint Venture” with effect from 24 April
2015 requires consideration. The fact that these words were added
later shows that the legislature subsequently made a specific
provision regarding such arrangements. But this fact does not



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mean that every Joint Venture Agreement executed before 24 April
2015    was   outside    Article    5(g-a).   Different   commercial
arrangements may contain some common features. Therefore, the
actual rights and obligations created by the Agreement have to be
examined.

46.    The Petitioner's argument is that future revenue sharing
cannot be calculated because the actual sale may take place at
different prices and the project may not be completed. This
concerns uncertainty in valuation. The earlier judgment considered
this issue and held that consideration has to be calculated as on
the date of the instrument by taking the development potential
and ASR applicable at that time. The Court noticed that the Act
contains provisions dealing with certain situations where the
intended transaction does not proceed. Therefore, these future
uncertainties by do not make the valuation method invalid.

47.    The argument regarding double stamp duty cannot be
accepted. The Petitioner submits that stamp duty will again be
paid when the flats are subsequently sold. The same argument was
considered in the earlier judgment. The Court held that the
subsequent sale of the constructed units is a transfer and is
separately chargeable. Stamp duty on the Development Agreement
is connected with the development rights and the consideration for
those rights. The subsequent sale of the constructed unit is another
taxable instrument. Therefore, it cannot be treated as double
stamp duty on the same transaction.




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48.   The submission that the Respondents have effectively taxed
future profits cannot be accepted. The amount is being considered
as consideration for determining market value and stamp duty. It is
not a tax on income or profits. The earlier judgment held that
merely because the consideration is payable later by way of
revenue sharing, it does not become “profit” which cannot be
considered under Section 2(na). The purpose of the calculation is
only to determine the stamp duty payable on the instrument. It is
not an assessment of income-tax.

49.   The Petitioner has relied upon the settled principle that the
Stamp Act is a fiscal statute and has to be strictly interpreted.
There is no dispute about this principle. The Supreme Court
judgment referred to in Kolte Patil Developers Ltd. states:

      “20. At this stage, we may note that the Stamp Act is a taxing
      statute.   In   interpreting    such   a   statute,     equitable
      considerations cannot be applied. A taxing statute has to be
      interpreted in accordance with what is clearly expressed
      therein. While interpreting such a statute and determining
      the liability to pay tax, the provisions are required to be
      construed strictly. In other words, the rule of literal
      construction must be applied while interpreting a taxing
      statute. It must be interpreted in terms of the natural
      construction of the words used. There is no scope to imply
      anything which is not expressly provided.”

50.   Even after applying this strict rule of interpretation, the
Petitioner's case does not succeed. The liability in the present case




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is not being created by implication. Article 5(g-a) expressly covers
an agreement giving authority or power to a promoter or
developer for construction, development, sale or transfer of
immovable property. Section 2(na) provides that the higher of the
market price and the consideration stated in the instrument is to
be treated as the market value. The consideration in the present
case is found in the revenue-sharing arrangement. Therefore, the
demand is based upon the statutory provisions.

51.   The judgment in Kolte Patil Developers Ltd. relied upon by
the Respondents is therefore relevant. In that case, the owners
were entitled to a percentage of the gross sale proceeds as
consideration for development rights. The Court held that such
revenue sharing constituted consideration under Section 2(na). It
held that the absence of a specific guideline in 2013 did not
remove the statutory requirement to calculate the consideration.
That decision cannot be applied mechanically to every document
merely because it is described as a Joint Venture Agreement. But
where the substance of the Agreement is grant of development
rights against a percentage of gross sale proceeds, the reasoning
applies.

52.   There is one distinction which is necessary to be kept in
mind. If the present Agreement was genuinely only a partnership
or joint venture arrangement where the parties joined together for
carrying on business, without any grant of development rights to
one party and without any consideration for such grant, Article
5(g-a) may not apply merely because the expressions “Joint
Venture” or “co-venture” are used. But the material available in the



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present case does not establish such a position. The developer is
required to develop the property and the owner is to receive a
specified percentage of the sale proceeds. The consideration is
therefore connected with the development rights. It cannot be
treated merely as ordinary sharing of business profits.

53.      The record shows that the authority did not finally take the
initial figure of Rs.97,215,630/-. After applying the deferment
factor     of   0.85,    the    consideration      was    determined         at
Rs.82,633,500/-.        Stamp   duty     at   4%    was    calculated        at
Rs.33,05,340/-. After giving credit for Rs.16,26,000/- paid, the
deficit came to Rs.16,79,340/-. The final order directed payment
of penalty under Section 39. The Court has considered the
Petitioner's objections regarding the calculation, the residential
ASR rate, the 42% ratio, the deferment factor and the various
uncertainties connected with the project. These are material
submissions and cannot be ignored. However, they do not show
that the Respondent Authorities had no jurisdiction or that the
method adopted was outside the Maharashtra Stamp Act. At the
most, these submissions question the manner in which the
valuation was made. The authority has disclosed the basis of its
calculation. That basis is connected with the revenue-sharing
clause and the development potential of the property on the date
of execution.

54.      The challenge based upon retrospective application of the
2015 Guidelines cannot succeed. This conclusion is not based only
upon the Respondents' submission that the same practice was
followed since 1997. It is not necessary to decide whether an



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administrative practice could have the force of law. Administrative
practice cannot replace the statute. The demand can stand only
because Article 5(g-a), Section 2(na) and Section 32A provide the
statutory basis. The 2015 instructions may have supplied or
explained the method of calculation. They cannot create a new
stamp duty liability for the year 2013. But the absence of a later
detailed guideline does not prevent the authority from applying
the statutory test which was available.

55.   On considering the entire material, I therefore find that the
Petitioner's   submission   that    the   2015   Guidelines     cannot
retrospectively create a fresh stamp duty liability for the 2013
Agreement is correct as a general proposition. But this does not
mean that the Petitioner's document was free from the liability
arising under the Act. The liability comes from the Act and not
from the 2015 Guidelines. The submission that the revenue-
sharing amount is not consideration cannot be accepted. The 42%
share of the gross sale proceeds was the contractual return
connected with the development rights and could be considered
for determining market value under Section 2(na). The submission
that future construction is irrelevant cannot be accepted because
the development potential forms part of the transaction. The
argument regarding double stamp duty cannot be accepted
because the subsequent sale of the constructed units is a separate
transfer. The submission regarding the CAG is correct only to the
limited extent that the audit authority cannot finally determine the
stamp duty. The final determination in the present case was made
by the competent stamp authority under Section 32A.



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56.   The Petitioner's reliance on the description of the document
as a Joint Venture Agreement and on Paragraph 16(ii) does not
change the legal position under Article 5(g-a). The expression “co-
ventures” is relevant for understanding the intention of the parties.
But it cannot decide the legal character of the rights actually
created by the Agreement. The material on record shows
development rights coupled with an agreed 42% share in the gross
sale proceeds to the owner. In the facts of the present case, that
amount is consideration in the statutory sense. The reliance upon
Article 5(h)(b) cannot be accepted merely because there was no
separate “Joint Venture” entry applicable to the document on the
date of execution. Article 5(g-a) was in existence and, on the
findings recorded above, applies to the substance of the
transaction. The residuary provision cannot be used to avoid a
specific entry merely because the document has been given a
different name.

57.   On the overall consideration of the matter, I therefore find
that the Respondent Authorities were entitled to examine the
Agreement under Section 32A. They were entitled to consider the
owner's agreed percentage of the gross sale proceeds as
consideration and to determine the market value by applying
Section 2(na). The consideration of Rs.82,633,500/- was arrived at
after applying the deferment factor of 0.85 to the calculation based
on the 42% revenue share and the applicable ASR rate. The stamp
duty of Rs.33,05,340/- was thereafter determined. After giving
credit for Rs.16,26,000/- paid, the deficit stamps duty was
determined at Rs.16,79,340/-. The earlier judgment in Kolte Patil



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Developers Ltd. reaches the same basic conclusion regarding
revenue-sharing arrangements connected with development rights.
The Court held that where the owners were entitled to a
percentage of gross sale proceeds as consideration for transfer of
development rights, “the consideration for purpose of Section 2
(na) of Stamp Act is the Owner’s share of the gross sale proceeds”.
This reasoning is consistent with the statutory provisions and with
the material available in the present case.

58.   For all these reasons, I find that the impugned determination
cannot be set aside merely because the document was described as
a Joint Venture Agreement or because the detailed valuation
instruction was incorporated in the ASR Guidelines in 2015.

59.   The challenge to the impugned orders therefore fails on
merits. The Petitioner has not been able to establish that the
Respondent Authorities acted contrary to the Maharashtra Stamp
Act, 1958 by considering the revenue-sharing amount for
determining the market value under Section 2(na) and Article 5(g-
a). The deficit stamp duty, after giving credit for the amount paid,
is therefore sustainable. The consequential penalty would follow,
subject to the requirements of law relating to its levy and
calculation.

60.   In view of the foregoing discussion and for the reasons
recorded hereinabove, the following order is passed:

      i.       The Petition is dismissed.

      ii.      The impugned Judgment and Order dated 3 November
      2017 passed by Respondent No. 2 in Appeal No. 30 of 2016



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      is upheld.

      iii.   The impugned order passed by Respondent No. 3
      under Section 32A of the Maharashtra Stamp Act, 1958,
      determining the deficit stamp duty on the basis of the
      revenue-sharing consideration, is also upheld.

      iv.    Rule is discharged.

      v.     There shall be no order as to costs.

61.   In view of the dismissal of the Writ Petition, all pending
interlocutory application(s), if any, stand disposed of as
having become infructuous.


                                              (AMIT BORKAR, J.)




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