Bombay High court to examine whether separate stamp duty payable on agreements during society redevelopment

The Bombay High Court is set to decide the issue of whether separate stamp duty is payable on the instruments executed during redevelopment projects in Maharashtra with individual members, like on permanent alternate accommodation agreement (PAAA) [Adityaraj Builders v. State of Maharashtra and Ors.]..A Bench of Justices GS Patel and Madhav Jamdar framed the issue during the hearing of three writ petitions filed by Adityaraj Builders challenging the validity of two circulars dated June 23, 2015 and March 30, 2017 by the Inspector General of Registration and Controller of Stamps, Maharashtra State. .The circulars pertained to the payment of stamp duty on documents executed after the redevelopment of a property of a registered housing society is complete. The circulars clarified about the stamp duty to be charged while giving premises in the new building for redevelopment project.It stated that if a development agreement has been entered into between the society and the developer, the stamp duty is to be charged as per provisions of the Maharashtra Stamp Act. Additionally, if there is a separate document transferring units to the individual members, those will be treated as independent documents and hence the stamp duty for the area approved for the society is to be charged against the construction cost in the project. .What it essentially means is that the development agreement has been made only between the housing society and developers, the individual member is not a party to such development agreement, hence the provision of Section 4 will not be applicable to the transfer document in his favour and the stamp duty will be charged while payment of construction cost.In cases where the following criterion are being complied with:if a tripartite development agreement has been made between the original owner, member and developer;if a condition of making separate transfer document of a new flat in favour of each member is incorporated in the original development agreement;if there is limited objective of transferring the built-up area in the transfer document in favour of the said member as per the terms and conditions of the original development agreement; andif the housing society is consenting party in the transfer of document in favour of such individual member then the transfer of document in favour of individual member shall be treated as incidental document of original development agreement. .The petitioner builder approached the Court as they had an estimated stamp duty liability of ₹27 lakh per petition on the PAAA and were required to submit at least 50 per cent of the amount with the department. On the undertaking of depositing 50 per cent of the amount and to pay the balance based on the outcome of the petitions, the Court permitted the petitioner to proceed with the registration of PAAAs. .Since the verdict in these petitions was going to affect a large number of redevelopment projects across the State especially in Mumbai, as it pertained to stamp duty correctly payable on instruments in such projects, the Bench appointed advocate Samit Shukla, partner at law firm DSK Legal, to assist the Court as Amicus Curiae.Considering the fact that issue is likely to have a significant impact, the Court listed this matter with urgent priority for February 3, 2022, for final disposal..[Read order]