B. Amit Sthalekar, J.Heard Sri Navin Sinha, learned Senior Counsel assisted by Sri Raghav Nayar, learned counsel for the petitioner and Sri Sanjay Goswami, learned Additional Chief Standing Counsel for the State-Respondents.

2. The petitioner in the writ petition is seeking quashing of the orders dated 24.01.2008 and 07.08.2012 arising out of proceedings under the Indian Stamp Act, 1899 (hereinafter referred to as the Act, 1899) for computing deficiency of stamp duty.

3. Briefly stated the facts of the case are that the petitioner purchased the land in question measuring 2.4280 hectares situated in Village Shahpur Bamhaita, Pargana Dasna, District Ghaziabad through registered sale deed dated 07.07.2005 for a sum of Rs. 1,30,68,000/-. On this amount he paid stamp duty of Rs. 13,07,000/-. On an allegation that there was deficiency of stamp duty proceedings under Section 47-A of the Act, 1899 were initiated against the petitioner. The document was presented for registration before the Sub Registrar on 07.07.2005 itself and was registered accordingly. Subsequently, A.D.M. (Finance and Revenue) on an assumption that there was deficiency of stamp duty submitted an inspection note dated 21.07.2007 on which a notice was issued to the petitioner by the Additional Collector (Finance and Revenue) Ghaziabad dated 28.06.2007. The petitioner filed his objection and thereafter the Collector (Stamps) by his order dated 24.01.2008 held that the land in question has the potential to be used for residential purposes and was liable to tax at rates applicable to a residential land and accordingly determined its market value at Rs. 2,42,80,000/- on which stamp duty was calculated at Rs. 24,28,000/- and since the petitioner had already paid Rs. 13,07,000/- towards stamp duty the deficiency of stamp duty was determined at Rs. 11,21,000/-. The revisional authority has also confirmed the order of the Collector (Stamps) by his order dated 07.08.2012 dismissing the petitioners appeal.

4. The submission of Sri Navin Sinha, learned Senior Counsel is that the inspection note only mentions that the land in question is situated in Village Shahpur Bamhaita, Pargana Dasna, District Ghaziabad and in that area development of Hi-Tech City and Integrated City are proposed and therefore, the agricultural land has the potential of future use for residential purposes. It has also been mentioned in the inspection note that the residential rates are much higher than what is stated in the rate fixed for that area and that the market value of the land in question therefore is much more than what has been stated in the deed. The submission is that the respondents themselves admitted that the land in question is agricultural land and that stamp duty has been paid at rates applicable to residential land but on pure hypothetical notions it has been presumed that the market value of the land is higher than the residential rates applicable in the area. He also submits that the inspection note mentions that the development of Hi-Tech City and Integrated City is proposed; when it was proposed and by whom it was proposed and whether the map to that effect has been prepared or not nothing has been mentioned in the report.

5. Likewise, he submits that the notice under Section 47-A (2) of the Act, 1899 which has been issued on 28.06.2007 only states that the petitioner has not paid stamp duty as per the provisions of the Act, 1899. What is the deficiency of stamp duty; which provision of the Act, 1899 has not been complied with or faulted has not been stated. He, therefore, submits that how could the petitioner be expected to give any appropriate reply to such a show cause notice which on the face of it is vague; which does not even disclose the amount of deficiency of stamp duty; which does not even disclose the methodology or the rate on which the deficiency of stamp duty has been calculated. He further submits that in the impugned order also it is not disputed that the land in question was agricultural land and that the stamp duty has been paid by the petitioner at circle rate as applicable to residential land but in a most arbitrary manner assuming that the value of the land was more than the circle rate deficiency of stamp duty has been computed by applying a rate of Rs. 2,000/- per sq.m. to determine its market value and stamp duty payable thereon. He submits that in the impugned order it has not been disclosed as to how the Collector (Stamps) arrived at this figure of Rs. 2,000/- per sq.m. as the value of the land applicable for residential land.

6. Learned Senior Counsel also submitted that the sale deed was executed on 07.07.2005 whereas the inspection note itself is dated 21.07.2007, i.e. more than two years after the sale deed and therefore, such an inspection which was conducted more than two years after the execution of the sale deed cannot be said to make an accurate presentation of the status of the land or the area in which it is situated. He further submits that the inspection note also does not disclose when the proposal for development of Hi-Tech City and Integrated City in the area was proposed and if it was proposed after the date of the sale deed it would be quite immaterial for purposes of determination of stamp duty with reference to the status of the land as on the date of the instrument.

7. Sri Sanjay Goswami, learned Additional Chief Standing Counsel for the respondents, on the other hand, submits that the notice dated 28.06.2007 itself mentions that the development of Hi-Tech City and Integrated City are proposed in the area and this proposal is made much prior to the actual execution of works for purposes of City development although actual implementation may take place later on subject to orders which may be passed by the Municipal Corporation or the Nagar Palika as the case may be. However, he also could not dispute rather he admitted that the impugned order does not disclose as to how the figure of Rs. 2,000/- per sq.m. has been arrived at by the Collector (Stamps) for determining the market value of the property.

8. The learned Additional Chief Standing Counsel further referred to para 3 of the counter affidavit wherein all that has been stated is that the Village Shahpur Bamhaita, Pargana Dasna, District Ghaziabad was declared a Hi-Tech City in the master plan of Ghaziabad and it is stated that various builders were operating in the area and purchasing bulk of properties for non-agricultural use as such the application of agricultural rate ignoring the potential nature of the property causing loss to the Government revenue cannot be accepted.

9. It is not denied by the respondents that the sale deed was executed on 07.05.2005 whereas the inspection note was submitted on 21.07.2007 i.e. after more than two years. When was the Village Shahpur Bamhaita, Pargana Dasna, declared Integrated Hi-Tech City in the master plan of Ghaziabad has also not been disclosed. Therefore, in my opinion, the inspection note which is prepared two years after the date of the instrument can hardly be the foundation of a stamp suit brought by the respondents against the petitioner for determining deficiency of stamp duty. It is equally interesting that even though in the counter affidavit it is stated that various builders were operating in the area and purchasing bulk properties for non-agricultural use, not a single transaction of such nature has been disclosed in the counter affidavit. The stamp authority also does not refer to any exemplar to arrive at a conclusion that the land in question is residential land and its rate for determination of market value should at least be not less than what is disclosed in the exemplar.

10. The notice which has been issued to the petitioner mentions the potential of the agricultural land to be much more than the minimum of the rates applicable to the residential land but what is the rate prevalent in the area could only have been examined by the Collector (Stamps) by referring or quoting exemplars, which might have been an indicator of the rates applicable to residential land in the area. The notice is completely silent in this regard. This silence is absolutely fatal to the proceedings for determination of stamp duty. If it is not disclosed to the petitioner as to what was the deficiency of stamp duty and rate at which it was calculated, how could the petitioner be expected to submit a reply to the notice and therefore, a vague notice is of absolutely no value in the proceedings for determination of stamp duty.

11. A Division Bench of this Court in 2015 (9) ADJ 503 [LQ/AllHC/2015/2230] , Smt. Vijaya Jain v. State of U.P. and Others has held in paragraphs 20 and 23 which read as under:

"20. Having extracted the relevant statutory provisions above, the following principles emerge therefrom. Subsection (1) (a) of Section 47-A of theempowers the registering officer to call upon the person who has presented an instrument for registration to pay deficit stamp duty. This power is exercisable by the registering officer immediately after presentation of an instrument and before accepting it for registration and taking any action under Section 52 of the. This power is liable to be exercised in a situation where the market value of the property as set forth in the instrument is less than even the minimum value fixed by the Collector in accordance with the rules made under the. In distinction to the above, the power under sub-section (3) of Section 47- A is exercised by the Collector either suo motu or on a reference from any Court or from the Commissioner of Stamps or an Additional Commissioner of Stamps, Deputy Commissioner of Stamps, an Assistant Commissioner of Stamps or any officer authorized in that behalf by the State Government. This power confers jurisdiction and authority on the Collector to call for and examine any instrument for the purpose of satisfying himself as to the correctness of the market value of the property which forms the subject matter of the instrument and if upon such examination, he has reason to believe that the market value of such property has not been truly set forth in such instrument, he may proceed to determine the market value of such property and the duty payable thereon. The first distinguishing feature of sub section (3) is that it is available to be exercised even after the instrument has been registered. Secondly the Collector proceeds under sub section (3) upon finding that the "market value" of the property has not been truly set forth in the instrument as distinct from the "minimum value fixed by the Collector in accordance with the rules made under the" which is the benchmark for initiation of action under sub section (1).

23. From the provisions extracted above, it is apparent that the Collector proceeds under sub section (3) of Section 47- A read with rule 7 when he has reason to believe that the market value of the property comprised in the instrument has not been truly set forth and that in the opinion of the Collector, circumstances exist warranting him to undertake the enquiry contemplated under rule 7. What we however find from the notice dated 09 September 2013 is that the Collector has proceeded to record, albeit prima facie, that the instrument in question has been insufficiently stamped to the extent of Rs. 8,89,000/-. The notice apart from referring to a note dated 20 May 2013, received from the Assistant Inspector General of Registration neither carries nor discloses any basis upon which the Collector came to the prima facie conclusion that the appellant was liable to pay Rs. 8,89,000/ as deficit stamp duty. In our opinion a notice of this nature must necessarily disclose to the person concerned the basis and the reasons upon which the Collector has come to form an opinion that the market value of the property has not been truly set forth. In the absence of a disclosure of even rudimentary details on the basis of which the Collector came to form this opinion, the person concerned has no inkling of the case that he has to meet. A notice in order to be legally valid and be in compliance with the principles of natural justice must necessarily disclose, though not in great detail, the case and the basis on which action is proposed to be taken against the person concerned. Not only this and as is evident from a bare reading of rule 7, at the stage of issuance of notice, the Collector has to proceed on the basis of material which may tend to indicate that the market value of the property has not been truly and faithfully disclosed in the instrument. The stage of computation of market value comes only after the provisions of sub rules (2) (3) and (4) of rule 7 come into play. At the stage of issuance of notices, the Collector calls upon the person concerned to show cause "as to why the market value of the property.... be not determined by him".

12. There is another aspect of the matter, which ought not to go unmentioned, namely, the notice under Section 47-A (2) of the Act, 1899 refers to the potential value of the land as being more than the rates prescribed by the Collector for residential land. It is not denied by the authorities that the land in question was agricultural land but the authorities have proceeded for determining the stamp duty on a presumption that the said land has a potential of future user for residential purposes because the Village Shahpur Bamhaita, Pargana Dasna, District Ghaziabad has been declared as Hi-tech City and Integrated City. The Supreme Court and this Court have time and again held that the potential user of the property cannot be the determining factor for computing its market value or the consequent stamp duty payable thereon.

13. In (2012) 5 SCC 566 [LQ/SC/2012/87] , State of U.P. v. Ambrish Tandon and others, the Supreme Court has held that merely because the property is being used for commercial purposes at the later point of time may not be a relevant criterian for assessing the value for the purpose of the nature of user is relatable to the date of purchase and it is relevant for the purpose of calculation of stamp duty.

14. The judgment of the Supreme Court in the case of Ambrish Tandon (supra) has been followed by the Full Bench of this Court reported in 2015 (3) ADJ 136 (Smt. Pushpa Sareen v. State of U.P.) wherein the Full Bench has also held that the nature of the user is relatable to the date of purchase which is relevant for the purposes of computing the stamp duty. Where however the potential of the land can be assessed on the date of execution of the instrument itself by referring to exemplar or comparable sale instances that is clearly a circumstances which is relevant and germane to determine the true market value. Paragraph 27 of the said judgement reads as under:

"27.The fact that the land was put to a particular use, say for instance a commercial purpose at a later point in time, may not be a relevant criterion for deciding the value for the purpose of stamp duty, as held by the Supreme Court in State of U.P. and others v. Ambrish Tandon and another, 2012 (5) SCC 566 [LQ/SC/2012/87] . This is because the nature of the user is relatable to the date of purchase which is relevant for the purpose of computing the stamp duty. Where, however, the potential of the land can be assessed on the date of the execution of the instrument itself, that is clearly a circumstance which is relevant and germane to the determination of the true market value. At the same time, the exercise before the Collector has to be based on adequate material and cannot be a matter of hypothesis or surmise. The Collector must have material on the record to the effect that there has been a change of use or other contemporaneous sale deeds in respect of the adjacent areas that would have a bearing on the market value of the property which is under consideration. The Collector, therefore, would be within jurisdiction in referring to exemplars or comparable sale instances which have a bearing on the true market value of the property which is required to be assessed. If the sale instances are comparable, they would also reflect the potentiality of the land which would be taken into consideration in a price agreed upon between a vendor and a purchaser."

15. A Division Bench of this Court in 2016 (2) ADJ 533 (DB) Sumati Nath Jain v. State of U.P. and another has held in paragraphs 18 and 19 as under:

"18. We may note that on the date of execution of the instrument the land was admittedly recorded as agricultural. In fact the Khasra of the property remained unchanged throughout and continued to represent the land as recorded for agricultural purposes. The respondents were in our opinion wholly unjustified in initiating proceedings based on an unsubstantiated assumption that the property in future was likely to be put to non-agricultural use.

19. The perceived or presumed use to which a buyer may put the property in the future can never be the basis for adjudging its value or determining the stamp duty payable. The Act, we may note is a fiscal statute. The taxable event with which it concerns itself is the execution of an instrument which is chargeable to duty. The levy under the statute gets attracted the moment an instrument is executed. These propositions clearly flow from a plain reading of the definition of the words "chargeable", "executed" and "instrument" as carried in the. In the case of an instrument which creates rights in respect of property and upon which duty is payable on the market value of the property comprised therein, since the tax liability gets fastened immediately upon execution it must necessarily be quantified on the date of execution. The levy of tax or its quantum cannot be left to depend upon hypothetical or imponderable facets or factors. The value of the property comprised in an instrument has to be adjudged bearing in mind its character and potentiality as on the date of execution of the instrument. For all the aforesaid reasons we fail to find the existence of the essential jurisdictional facts which may have warranted the invocation of the powers conferred by section 47A (3). We are therefore of the firm opinion that the initiation of proceedings as well as the impugned order based upon a presumed future use of the property for residential purposes was wholly without jurisdiction and clearly unsustainable. Dealing with this aspect of the matter and after noticing the consistent line of precedent on the subject the Division Bench in Smt Vijaya Jain observed: -

"This Court on more than one occasion has held that the market value of the land is not liable to be determined with reference to the use to which a buyer intends to put it in future. The market value of the property is to be determined with reference to its character on the date of execution of the instrument and its potentiality as on that date.

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The above principles of law enunciated in the aforementioned judgments have been consistently followed by this Court. We however find that the order of the Collector relies upon no evidence which would support imposition of residential rates on a property which was stated to be agricultural on the date of execution of the instrument."

16. The inspection note does not disclose the status of the land as to whether there was any construction thereon or whether any agricultural activity was being carried on. It only proceeds on an assumption that the potential value of the land is much more than the rate of residential land determined by the Collector and therefore there is deficiency of stamp duty.

17. In my opinion, the findings of the Stamp Authorities are based on mere conjectures and surmises not supported by any documentary evidence on record nor by exemplar to suggest as to how the rate of Rs. 2,000/- per sq.m. has been applied for determining the market value of the land. Therefore, on a conspectus of facts and the law laid down by the Supreme Court as well as the Full Bench and Division Bench of this Court, the impugned orders dated 24.01.2008 and 07.08.2012 cannot survive and are accordingly quashed.

18. The writ petition stands allowed.

19. Any amount which has been paid by the petitioner under the interim order of this Court shall be refunded to him within a period of two months from the date of receipt of the certified copy of this order.