Mumbai, October 29, 2026: The Bombay High Court has ruled that stamp authorities cannot demand fresh stamp duty on a subsequent conveyance merely because a property's market value has increased, if stamp duty and penalty have already been paid on an earlier agreement treated as a deemed conveyance.
Justice Amit Borkar, on October 28, quashed an additional stamp duty demand of Rs 9.27 lakh against Thakkar Investment & Finance Company, holding that the subsequent conveyance only completed the original transaction and could not be treated as a fresh sale.
“Once the Agreement for Sale is treated as a deemed conveyance and the competent authority has accepted the stamp duty and penalty determined on it, the later conveyance cannot be treated as a fresh principal instrument only because the market value of the property has increased,” the court observed.
Dispute Over Subsequent Conveyance
The dispute arose from an Agreement for Sale executed on July 9, 1998, between the company and Hermes Mirage Co-operative Housing Society Limited for land in Pune district. The agreement recorded that vacant and peaceful possession had been handed over to the purchaser.
After the agreement was impounded to determine the stamp duty payable, the company paid Rs 80,150 in deficit stamp duty and a penalty of Rs 1.60 lakh on October 24, 2011.
The parties executed a conveyance deed for the same land on January 16, 2012. Referring to the earlier agreement, the deed recorded that the stamp duty and penalty had been paid. The company paid Rs 100 in stamp duty on the subsequent deed.
Authorities Raise Additional Duty Demand
An audit objection later questioned the duty calculation and adjustment of the amount already paid. The authorities assessed a deficit of Rs 9.27 lakh based on the property's market value under the 2011 Annual Statement of Rates. A demand notice was issued in March 2016, followed by another on October 12, 2017.
The court noted that Explanation I to Article 25 of the Maharashtra Stamp Act treats an agreement for sale as a deemed conveyance when possession is transferred or agreed to be transferred to the purchaser.
It also referred to Section 4, which provides that when multiple instruments are used to complete the same transaction, stamp duty at the prescribed conveyance rate is payable on the principal instrument, while the other instruments attract a duty of Rs 100 each.
Audit Objection Cannot Overturn Earlier Endorsement
Finding no change in the property, consideration or main terms of the transaction, the court held that the passage of time did not turn the subsequent deed into a fresh sale.
It further ruled that the audit objection alone could not overturn the earlier stamp-duty endorsement, particularly when no order setting it aside had been passed. “An audit objection cannot cancel the endorsement made by the Collector after receiving the duty and penalty,” Justice Borkar noted in a detailed order.
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The court quashed the October 12, 2017, demand notice and set aside the impugned orders to the extent that they treated the subsequent conveyance as a fresh principal instrument.
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