The state can fix higher stamp duty on property transactions done through power of attorney vested in an outsider, as against such power executed through one’s blood relatives like father, mother and wife, the Supreme Court has ruled.
A bench of justices R M Lodha and H L Gokhale said such classification cannot be termed as unconstitutional as the government can adopt differential stamp duties to check evasion and sale transactions resorted through and for extraneous considerations.
The bench upheld an appeal filed by the Madhya Pradesh government challenging the state high court’s decision to quash Clause(d), Article 45 of Schedule 1-A of the Indian Stamp Act, 1899 which was brought in by the Indian Stamp (Madhya Pradesh Amendment) Act, 2002 Act) as unconstitutional being violative of Article 14 (equality clause) of the Constitution of India.
The said legislation had sought to impose a Rs 2 per stamp duty on the property’s market rate on any power of attorney executed through an outsider, instead of blood relatives like father, mother, wife, sons, daughters and brothers.
The idea according to the state was to prevent evasion of tax by sellers which was causing huge loss to the exchequer.
But on the basis of a petition filed by certain individuals, the high court quashed the provision as being violative of Article 14 of the Constitution.
“By creating two categories, namely, an agent who is a blood relation, i.e. father, mother, wife or husband, son or daughter, brother or sister and an agent other than the kith and kin, without consideration, the Legislature has sought to curb inappropriate mode of transfer of immovable properties,” Justice Lodha writing the judgement said.