Bombay High Court to resolve stamp duty issue

Bombay High Court to resolve stamp duty issue

Partner at DSK Legal to assist the court as amicus curiae

The Bombay High Court is set to decide on whether separate stamp duty is payable on the instruments executed during the redevelopment projects in Maharashtra. This pertains to the individual members on a permanent alternate accommodation agreement (PAAA).

A bench of Justice G S Patel and Justice Madhav Jamdar framed the issue during the hearing of three writ petitions filed by Adityaraj Builders challenging the validity of two circulars of 2015 and 2017 by the Inspector General of Registration and Controller of Stamps, Maharashtra.

The circulars related to the payment of stamp duty on documents executed after the redevelopment of a property of a registered housing society was complete.

It stated that if a development agreement happened between the society and the developer, the stamp duty was to be charged as per the provisions of the Maharashtra Stamp Act.

Additionally, if there were separate document-transferring units to the individual members, those would be treated as independent documents. Hence, the stamp duty for the area approved for the society was to be charged against the construction cost.

The petitioner, a builder, approached the court as it had an estimated stamp duty liability of Rs.27 lakh per petition on the PAAA and was required to submit at least 50 percent of the amount to the department.

On the undertaking of depositing the amount and paying the balance based on the outcome of the petitions, the court permitted the petitioner to proceed with the registration of PAAAs.

Since the verdict on the petitions would affect a large number of redevelopment projects across the state (especially in Mumbai), the bench has appointed advocate Samit Shukla, partner at law firm DSK Legal, to assist the court as amicus curiae.