Allahabad High Court: Legitimate Stamp Duty Refund Should Not Be Denied On Technical Grounds Of Limitation

The Allahabad High Court has reiterated that that a legitimate refund arising out of an accrued cause of action should not be denied on technical grounds of limitation.

The Court was considering a Writ-Petition seeking quashing of an order passed by the Respondents whereby the Petitioners' application for refund of stamp was rejected.

The division-bench of Justice Shekhar B. Saraf and Justice Vipin Chandra Dixit observed, "Upon perusal of the averments made, the documents annexed and after going through the ratio of Supreme Court in Harshit Harish Jain & Anr (supra), we are of the view that in the present case the impugned order rejecting the refund of the petitioners is passed on technical reasons only. From the facts, it is clear that the agreement between the parties has taken place prior to the amendment that has been carried in the stamp papers, and accordingly, following the ratio of the Supreme Court Judgment, it is crystal clear that the benefit of refund of the stamp duty would be applicable in the present case."

The Petitioners were represented by Advocate Rahul Sahai while the Respondent was represented by C.S.C.

Facts of the Case
The Petitioners had sough to enter into a tripartite agreement of sale-deed and sublease deed with respect to super structure of residential unit and land, respectively, with one unit of the New Okhla Industrial Development Authority. In this behalf, the total sale consideration was to be of Rs. 87,37,470/- and the stamp duty was assessed at Rs. 4,37,000/-. The Petitioners being desirous of entering into the said agreement purchased the requisite stamp. Thereafter, an agreement was drawn upon the said stamps, however, the same was not presented for registration and accordingly remained unused and unutilized. There was a restriction imposed on transfer and sale of flats by NOIDa in the project "Home 121" of which the property in question was a part. Consequently, the agreement did not fructify as the New Okhla Industrial Development Authority did not assent/join in the said transaction. The Petitioners were not aware as to the restriction on sale and transfer of flats in project " Home 121" till the time Noida Authority backed out from the agreement. The Petitioners were under a bonafide belief that the agreement would be executed soon and kept awaiting its execution and registration. Later, the Petitioners surrendered their allotment of the flat in November, 2023 as the builder expressed its inability to execute the agreement without the consent of NOIDA. Thereafter, the Petitioners approached the Respondent nos. 2 and 4 seeking refund of stamps worth Rs. 4,37,000/-. The matter was placed before the Respondent no. 3 who proceeded to pass the impugned order on the pretext that an amendment has been introduced being U.P. Stamp (5th Amendment) Rules, 2021, whereby the Rule 2018 has been substituted and a condition had been imposed which contemplates that stamp would not be renewed or returned after 8 years from its purchase and therefore, the claim of the Petitioners was time barred.

Counsel for the Petitioners submitted that the amended provision that took place in the year 2021 would not apply to the present case as the stamps were purchased in the year 2015 before the amendment. Reliance was placed on a judgment of Supreme Court in Harshit Harish Jain & Anr. vs. State of Maharashtra & Ors. wherein, a three Judges Bench had dealt with asimilar issue with regard to the Bombay Stamp Act, 1958. The Supreme Court relied on its judgement in M.P. Steel Corporation vs. Commissioner of Central Excise, 2015 to examine the applicability of amending the limitation period on an accrued cause of action and it was held that a legitimate refund should not be denied on technical grounds of limitation and has held that equitable balance is required to be kept in mind in fiscal or quasi judicial orders.

Reasoning By Court
The Court found that in the present case, the impugned order rejecting the refund of the Petitioners was passed on technical reasons only and the ratio of Supreme Court in Harshit Harish Jain & Anr (supra) will apply to it.

"The impugned order does not take into consideration the ratio of the Supreme Court judgement. Accordingly, the said order is quashed and set aside with the direction upon the authority concerned to once again examine the refund application of the Petitioners keeping in view the judgment of the Supreme Court cited above within a period of three months from date," the Court observed.

The Writ Petition was accordingly allowed.

Cause Title: Seema Padalia and Another vs. State of UP and 4 others (2025:AHC:35647-DB)

Appearances:

Petitioners- Advocate Rahul Sahai, Advocate Saumitra Anand

Respondents- C.S.C., Advocate Kaushalendra Nath Singh

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