- 1 - IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF JANUARY, 2025 BEFORE THE HON'BLE MR. JUSTICE K. V. ARAVIND WRIT PETITION No.48165/2011 (GM-ST/RN) C/W WRIT PETITION No.48133/2011 (GM-ST/RN) IN WP No.48165/2011 BETWEEN: 1 . PRESTIGE ESTATES PROJECTS LIMITED., (FORMERLY PRESTIGE ESTATES PROJECTS PRIVATE LIMITED), THE FALCON HOUSE, NO.1, MAIN GUARD CROSS ROAD, BANGALORE - 560001. REPRESENTED BY ITS AUTHORISED SIGNATORY, MR. T. ARVIND PAI. 2 . UNITED BREWERIES (HOLDINGS) LIMITED, UB TOWER, NO.24, VITTAL MALLYA ROAD, BANGALORE 1. REPRESENTED BY ITS COMPANY SECRETARY, SRI KAUSHIK MAJUMDER. ...PETITIONERS (BY SRI UDAY HOLLA, SENIOR ADVOCATE FOR SRI M.S. RAJENDRA, ADVOCATE) R - 2 - AND: 1 . CHIEF CONTROLLING REVENUE AUTHORITY, & INSPECTOR GENERAL OF REGISTRATION & COMMISSIONER OF STAMPS, NO.720, SHIMSHA BHAVAN, NEAR SANGAM CIRCLE, 46TH CROSS ROAD, 8TH BLOCK, JAYANAGAR, BANGALORE. 2 . DISTRICT REGISTRAR/DEPUTY COMMISSIONER OF STAMPS, SHIVAJINAGAR REGISTRATION DISTRICT, SHIVAJINAGAR, BANGALORE. …RESPONDENTS (BY SRI KIRAN V. RON, AAG FOR R1) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 31.10.2011 VIDE ANNEXURE-L, PASSED BY THE CHIEF CONTROLLING REVENUE AUTHORITY AND THE INSPECTOR GENERAL OF REGISTRATION & COMMISSIONER OF STAMPS IN KARNATAKA, BANGALORE. IN WP No.48133/2011 BETWEEN: 1 . PRESTIGE ESTATES PROJECTS LIMITED., (FORMERLY PRESTIGE ESTATES PROJECTS PRIVATE LIMITED), THE FALCON HOUSE, No.1, MAIN GUARD CROSS ROAD, BANGALORE - 560001. REPRESENTED BY ITS AUTHORISED SIGNATORY, MR. T. ARVIND. - 3 - 2 . UNITED BREWERIES (HOLDINGS) LIMITED, UB TOWER, No.24, VITTAL MALLYA ROAD, BANGALORE 1. REPRESENTED BY ITS COMPANY SECRETARY, SRI KAUSHIK MAJUMDER. ...PETITIONERS (BY SRI UDAY HOLLA, SENIOR ADVOCATE FOR SRI M.S. RAJENDRA, ADVOCATE) AND: 1 . CHIEF CONTROLLING REVENUE AUTHORITY, & INSPECTOR GENERAL OF REGISTRATION & COMMISSIONER OF STAMPS, No.720, SHIMSHA BHAVAN, NEAR SANGAM CIRCLE, 46TH CROSS ROAD, 8TH BLOCK, JAYANAGAR, BANGALORE. 2 . DISTRICT REGISTRAR/DEPUTY COMMISSIONER OF STAMPS, SHIVAJINAGAR REGISTRATION DISTRICT, SHIVAJINAGAR, BANGALORE. …RESPONDENTS (BY SRI KIRAN V. RON, AAG FOR R1 & R2) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 17.8.2010 VIDE ANNEXURE-K, AND THE ORDER DATED 31.10.2011 VIDE ANNEXURE-M, PASSED BY THE CHIEF CONTROLLING REVENUE AUTHORITY & THE INSPECTOR GENERAL OF REGISTRATION & COMMISSIONER OF STAMPS, IN KARNATAKA, BANGALORE. THESE WRIT PETITIONS HAVING BEEN HEARD AND RESERVED FOR ORDERS, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT PRONOUNCED THE FOLLOWING: - 4 - CORAM: HON'BLE MR. JUSTICE K. V. ARAVIND C.A.V. ORDER Heard Sri Uday Holla, learned Senior Counsel for Sri M.S.Rajendra, learned counsel for the petitioners and Sri Kiran V. Ron, learned Additional Advocate General for respondent No.1 in Writ Petition No.48165/2011 and for respondent No.1 and 2 in Writ Petition No.48133/2011. 2. Writ Petition Nos.48165/2011 and 48133/2011 raise common issues involving the same set of facts. The common arguments are addressed by learned counsel for the parties. Hence, both petitions are disposed of by common judgment. 3. Writ petition No.48165/2011 is seeking to quash the order bearing No. Nil dated 31.10.2011 passed by respondent No.1. Writ petition No.48133 seeks to quash the order bearing No.SAP/01/2010-11 dated 17.08.2010 at Annexure-K and order bearing No.Nil dated 31.10.2011 at Annexure-M passed by respondent No.1. - 5 - 3.1 Brief facts leading to these petitions are that petitioner No.1 and petitioner No.2 entered into the Joint Development Agreement dated 25.04.2003 (for short 'JDA'). Petitioner No.2 – United Breweries (Holdings) Limited (for short 'UBHL') was the owner and petitioner No.1 is the Prestige Estates Projects Limited (for short 'Prestige/Developer'). The land subject matter of JDA was property bearing No.24, Vittal Mallya Road, Municipal Ward No.76, Bengaluru (for short 'schedule property'). 3.2 As per the terms of the JDA, UBHL is entitled to 55% of the built-up space and Prestige is entitled to 45% of the built-up space with proportionate undivided share in the land. UBHL executed power of attorney dated 25.04.2003 in favour of Prestige. The Stamp Duty on the JDA was paid as per Article 5(f) to the Schedule of the Karnataka Stamp Act, 1957 (for short 'the Act'). Stamp Duty on power of attorney was paid as per Article 41(ea) to the Schedule of the Act. Both UBHL and Prestige entered into a Sharing Agreement on 24.06.2003, wherein the specific built-up area was identified to their respective share, - 6 - which was modified by an Addendum dated 06.07.2007. Prestige obtained a sanctioned plan and modified plan on 19.08.2003 and 06.02.2006, respectively, as well as a building license from Bruhat Bengaluru Mahanagara Palike (for short 'BBMP'). As per the sanctioned plan, several buildings were to be constructed and the entire project was named as UB City. 4. The Prestige was the absolute owner of building to the extent of 45% along with right, title and interest in the land to the same extent. UBHL executed two registered sale deeds dated 28.02.2008 conveying 45% undivided share in the land in compliance with JDA. The said sale deeds were stamped for Stamp Duty of Rs.2,00,92,550/- and Rs.1,04,60,310/-. The Stamp Duty paid was found to be insufficient by the Sub-Registrar and referred to the District Registrar and Deputy Commissioner for stamps. The District Registrar passed two orders, both dated 30.04.2008, holding the petitioners liable to pay Stamp Duty of Rs.2,34,58,460/- and Rs.59,83,390/- respectively. The District Registrar held that the Market - 7 - Value of the land is higher than the value set out in the Sale deeds and made to be paid the higher Stamp Duty. In the same order, it is held that sale deeds conveyed only an undivided share of the land, not the built-up area. The Stamp Duty determined by the District Registrar was paid and is evident from the sale deeds. 4.1 The office of the Accountant General opined that the value fixed by the District Registrar is less than the Market Value of the sale of the Commercial flats and Stamp Duty is to be levied on the built-up area falling to the share of the Prestige. The respondent No.1 based on the audit objection initiated suo-motu proceedings under Section 53A of the Act. Show cause notices dated 21.09.2010 and 28.10.2010 were issued to review the orders dated 30.04.2008. The petitioners submitted reply to the show cause notice. As pleaded, no other issues were show caused to the petitioners. It is the case of the petitioners that respondent No.1 exceeding the show cause notice has decided the issues outside the show cause notice without opportunity to defend by suitable reply. - 8 - 5. Respondent No.1 in the impugned order held that in lieu of the transfer of 45% of the undivided share in the land, the UBHL had received 55% of the built-up area, which shall be the consideration towards the transfer of 45% of the undivided share in the land. Respondent No.1 further held that the Market Value determined at Rs.12,45,25,800/- by respondent No.2 is incorrect when the apparent value mentioned in the sale deed was at Rs.56 Crores. Consequently, respondent No.1 set aside the order dated 30.04.2008 passed by respondent No.2 and remitted for fresh consideration. Respondent No.1 further directed the examination of the stamp duty paid on the power of attorneys. Respondent No.1 directed the determination of the Market Value of 45% of the undivided share in the land and 55% of the built-up area. After determining the Market Value, directed levy of stamp duty either on 45% of the undivided share or 55% of the built- up area, whichever is higher. The exercise as directed is to be completed within 90 days from the date of receipt of that order. - 9 - 6. This order was subject matter of these petitions. This Court by order dated 23.12.2011 has granted stay of operation of the order dated 31.10.2011 and is in operation till date. Submissions of the petitioners: 7. Sri Uday Holla, learned Senior Counsel for the petitioners submits that the UBHL and Prestige entered into JDA to develop property bearing No.24, Vittal Mallya Road, Municipal Ward No.76, Bengaluru. As per the JDA, UBHL is entitled to 55% of the built-up area and Prestige to 45%. UBHL has executed two power of attorney in favour of the Prestige. The JDA is sufficiently stamped as per Article 5(f) to the Schedule to the Act. The Power of Attorneys are also subjected to stamp duty as per Article 41(ea) to Schedule to the Act. It is submitted that UBHL executed two registered sale deeds by conveying 45% of undivided share right, title and interest in the land on which the Prestige has constructed a building as per the terms of the JDA. It is submitted that the proportionate - 10 - undivided share in the land was the subject matter of the sale deed. The stamp duty is paid on the value of land. 7.1 The stamp duty was paid as per the parties' understanding. However, the District Registrar determined the stamp duty, which is paid. 7.2 The District Registrar has examined the JDA and has determined the Stamp Duty payable. The Deputy Commissioner has examined the issue regarding the Schedule B property undivided share in the land or Schedule C property 55% built-up area is to be subjected to Stamp Duty. The Deputy Commissioner, after analysing the various provisions and also the subject matter and extent of transfer under the sale deed, concluded that the subject matter of transfer was only Schedule B property (undivided share in the land) and Schedule C property (55% built-up area) is not the subject matter of transfer. 7.3 The Deputy Commissioner disputed the total valuation made by the petitioners and re-determined the - 11 - Market Value. The difference of stamp duty as determined by respondent No.2 was paid. 7.4 Respondent No.1 issued show cause notice under Section 53A of the Act on the Accountant General Report. The exercise of jurisdiction under Section 45A of the Act is without application of mind, however, a borrowed opinion of the Accountant General. The impugned order has exceeded the show cause notice. Hence, the impugned order is in violation of the principles of natural justice. In view of the new issues dealt with by respondent No.1 in the impugned order, which is not part of the show cause notice, the petitioners have been deprived of the defense. 7.5 Learned counsel by referring to Section 53A of the Act submits that suo-motu revision can be exercised only when the reviewing authority has a reason to believe that the order made is erroneous or not in accordance with the provisions of this Act or prejudicial to the interest of the revenue. The order of respondent No.2 under Section 45A of the Act was examined on the issue of liability to pay stamp duty on the value of the built-up area and held that - 12 - stamp duty is to be paid only on the undivided share in the land. While exercising the power of review under Section 53A of the Act, review is not permissible; merely another view is possible. As long as the view taken in the order under the review is one of the possible views, the exercise of jurisdiction under Section 53A of the Act is not permissible. The attempt made by respondent No.1 is merely on change of opinion which is not permitted under Section 53A of the Act. What was sold and conveyed under the sale deed dated 28.02.2008 was only an undivided share of the land and not the built-up area. The building on the undivided share is constructed by the Prestige on its cost and the same was not conveyed under the sale deed by UBHL. 7.6 Though the UBHL owned the undivided share in the land during construction, the ownership in the construction remained with the Prestige. Applying the concept of dual ownership, the built-up area was never subject matter of transfer by UBHL to Prestige. - 13 - 7.7 The Registering authority should determine the stamp duty on reading of the instrument presented for Registration and not beyond that. 7.8 The similar issue raised by respondent No.2 in SAP 3/2010-11 in case of Sri. B. Subramanya Rao and Others Vs. District Registrar and Another, the very authority has accepted that stamp duty is to be paid on the value of undivided share in the land. The decision in the present case is by respondent No.1 is selective. 7.9 Respondent No.1 in proceedings bearing No.AP- 08/2005-06 in the case of Sri. A. Moyiddin Vs. District Registrar and Another has taken a stand that Audit party has no right to question the order passed by the District Registrar and the same can be corrected in the manner known to law. Whereas, contrary stand is canvassed in the present case. 7.10 The JDA and power of attorneys were sufficiently stamped in terms of Article 5(f) and 41(ea) of the - 14 - Schedule to the Stamp Act as existed during the execution of the said documents. 7.11 Sri Uday Holla, learned Senior Counsel for the petitioners relied on the following judgments; i) [AIR 1965 SC 1092] Board of Revenue, Uttar Pradesh vs. Rai Saheb Sidhnath Mehrotra for the proposition that, if two views are possible one favoring the subject must be chosen. ii) [AIR 1957 SC 657] A.V. Fernandez vs. State of Kerala for the proposition that, no tax can be imposed without such power being conferred by the statute. iii) [1989 SCC OnLine Mad 273] Pork View Enterprises vs. State Government of Tamil Nadu and [AIR 1961 SC 1570] Bishan Das and Others vs. State of Punjab and Others in support of the proposition that ownership of land and ownership of the structure could be with different persons provided there exits a legal relationship under a contract. iv) [ILR 1999 KAR 2630] Smt. Mohini Devi vs. The Sub-Registrar and [AIR 2004 KAR 308] L. & T. Komatsu Ltd., vs. Senior Sub-Registrar, Yelahanka and Others in support of the - 15 - contention that the instrument subjected to stamp duty should be read on the express recitals without any substitution. Submissions of the Respondents; 8. Sri. Kiran V. Ron, learned AAG appearing for respondents submitted that as per JDA, the UBHL was entitled to 55% of the built-up area and the Prestige was entitled to 45% of the undivided share in the land. Under the sale deeds, along with a 45% undivided share in the land, the corresponding built-up area is also conveyed. The consideration towards 45% of the land is the Market Value of 55% of the built-up area. The valuation made by the petitioners was disputed by respondent No.2 and referred to under-valuation. The stamp duty liability has been re-determined and accepted. This fact is evident from the incorrect stamp duty paid by the petitioners on the sale deeds. 8.1 The review exercise under Section 53A of the Act is justified and the ingredients of the said Section are attracted and completed. - 16 - 8.2 The competent authority examined the Audit objection raised by the Accountant General. Being prima facie satisfied, the matter was examined and proceedings have been initiated under Section 53A of the Act. The Audit objection was the source of information, which was independently examined on the application of mind, and thereafter, the impugned notice under Section 53A of the Act was issued. 8.3 The concept of dual ownership is not applicable and attracted to the facts of the present case. Respondent No.1 was directed to consider the value of 55% of the built-up area as consideration for the transfer of 45% of the undivided share. Hence, the ownership of 45% of the built-up area was never a subject matter of the review to apply the principles of dual ownership. 8.4 The direction by respondent No.1 in the impugned order is to independently determine the Market Value of 45% of the undivided share and 55% of the built-up area and to determine the stamp duty on the property, whichever is higher. The petitioners have an opportunity - 17 - before respondent No.2 in the remand proceedings to canvass the contention. 8.5 With the above submissions, learned AAG prays to dismiss the writ petition. 8.6 Learned Additional Advocate General has relied on the judgment in the case of Bangalore Grain Merchants Association vs. The District Registrar for Societies and Another [ILR 2001 KAR 766] to contend that the invocation of revisional power even of information with an external source from accountant general is sufficient for its justification and the judgment in the case of Gowri Enterprises vs. State of Karnataka and Others [1999 SCC OnLine KAR 122] ANALYSIS: 9. Having considered the submissions of learned counsels for the parties, the points that arise for consideration are; a. Whether the exercise of jurisdiction under Section 53A of the Act by the competent authority to - 18 - revise the order by respondent No.2 under Section 45A of the Act is justifiable ? b. Whether the conclusion reached by respondent No.1 that stamp duty is to be paid on the market value of 55% of built-up area towards transfer of 45% of the undivided share in the land is justifiable ? 9.1 The dispute requiring adjudication by this Court centers on the interpretation and application of the provisions contained within the Karnataka Stamp Act, 1957. Regarding Point No.1- 10. The sale deed dated 28.02.2008 was subjected to undervaluation, and a determination was made under Section 45A of the Karnataka Stamp Act. The resulting order dated 30.04.2008 was subsequently reviewed under Section 53A of the Act. The petitioners have challenged the jurisdiction of Respondent No.1 in invoking Section 53A of the Act, as well as the determination on its merits. Section 53A of the Act reads as under; - 19 - "53A. Revision of order passed by Deputy Commissioner or Authorised officers.- (1) The Chief Controlling Revenue Authority may except where the matter is pending before an appellate authority under this Act, suo-motu, within a period of five years from the date of the order passed under this Act by the Deputy Commissioner or such other officer authorised by the State Government in this behalf, call for and examine the records relating to such order or proceedings taken under this Act by the Deputy Commissioner or the authorised officer, and if after such examination it has reason to believe that the order so made or proceedings so taken is erroneous or are not in accordance with the provisions of this Act or prejudicial to the interest of the revenue, it may after giving the parties interested an opportunity of being heard, pass an order in writing confirming, modifying or setting aside such order and direct the Deputy Commissioner or the authorised officer, as the case may be to collect the difference of duty, if any payable in accordance with the provisions of section 46: Provided that in appropriate cases, the Chief Controlling Revenue Authority may order stay of operation of the order under revision, pending hearing of the case. (2) The Chief Controlling Revenue Authority may for the purpose of sub-section (1), require the concerned person to produce before it, the instrument and examine such instrument to determine whether any duty is chargeable or the duty is short levied or improperly levied on account of any wilful mis-statement or suppression of facts made or of contravention of any of the provisions of this Act or rules made there under by such person with intent to evade payment of duty." - 20 - 11. Before examining the facts of the case, it is essential to analyze the scope of Section 53A of the Karnataka Stamp Act. Section 53A empowers the Chief Controlling Revenue Authority, within a period of five years from the date of an order passed by the Deputy Commissioner or any other authorized officer, to examine the records related to such order or proceedings taken under the Act. Upon such examination, if the Authority has reason to believe that the order is erroneous, not in accordance with the provisions of the Act, or prejudicial to the interests of the revenue, it may, after providing an opportunity of hearing to the affected parties, either modify or set aside the order. Furthermore, the Authority can direct the Deputy Commissioner to collect any difference in stamp duty arising from such modification or revision. 11.1 Section 53A mandates the satisfaction of specific conditions or the existence of certain ingredients for its lawful invocation. To comprehensively analyze the scope of Section 53A, its essential components must be - 21 - delineated. The following prerequisites must be satisfied for invoking Section 53A: (A) The Chief Controlling Revenue Authority must, suo-motu, call for and examine the records pertaining to the orders or proceedings passed by the Deputy Commissioner or other authorized officer. (B) Upon such examination, the reviewing authority must have reason to believe that: (a) The order is erroneous, or (b) The order is not in compliance with the provisions of the Act, or (c) The order is prejudicial to the interests of the revenue. 11.2 The invocation of Section 53A is contingent upon the fulfillment of these statutory conditions. 11.3 The fulfillment of the aforementioned conditions must be clearly stated in the notice issued under Section 53A. The existence or compliance with these conditions - 22 - should be explicitly mentioned in the show-cause notice, as the invocation of jurisdiction begins with the issuance of such notice. The show-cause notice, found in the records at Annexures-H and J, merely refers to the direction of the Accountant General to provide certain clarifications. Upon reviewing the order dated 30.04.2008, it was noted that the provisions of the Karnataka Stamp Act were not adhered to, resulting in a loss of revenue. Consequently, proceedings under Section 53A were initiated. 11.4 Section 53A mandates opportunity of hearing. The record would not indicate the issues addressed by the respondent No.1 other than mentioned in the show-cause notice were made available to the petitioners for rebuttal. In the absence of such opportunity, the show-cause notice would be merely an empty formality. That apart, if the grounds on which proceedings are initiated is not made available for defense, the opportunity of hearing cannot be held to be complied. - 23 - 11.5 The examination of the show-cause notice with reference to Section 53A for its compliance, the following aspects can be noticed. 12. Firstly, the proceedings under Section 53A were not initiated suo-motu by the review authority upon examination of the records. Instead, the exercise under Section 53A was undertaken at the instance of the Accountant General, which cannot be considered suo-motu. The exercise of jurisdiction under Section 53A, based on objections raised by the Accountant General, can only be viewed as relying on a borrowed opinion rather than an independent application of mind by the authority. 12.1 The second condition that must be met is the existence of reason to believe that the order is erroneous, not in accordance with the provisions of the Act, or prejudicial to the interests of the revenue. While the show- cause notice mentions that the order under Section 45A is not in accordance with the provisions of the Act, it fails to provide any reasoning or explanation as to why or how the order is inconsistent with the Act. The notice does not - 24 - clarify how the order is erroneous or prejudicial to the revenue's interest. In fact, the show-cause notice is conspicuously silent regarding these aspects. 13. Upon examining the show-cause notice in light of the provisions of Section 53A, it is evident that the exercise of jurisdiction under Section 53A does not fulfill the conditions or ingredients prescribed therein. Consequently, the proceedings initiated under Section 53A cannot be considered in compliance with the statutory requirements. 14. Another aspect that requires consideration by this Court is the binding nature of the opinion expressed by the Accountant General. It is well-established that the audit objections raised by the accountant general do not have binding force and cannot serve as the sole basis for invoking Section 53A, a point that does not require extensive discussion. It is a settled legal principle that suo-moto revision cannot be exercised solely based on audit objections. However, the objections may be used as a source of information, provided the authority - 25 - independently applies its mind before invoking Section 53A. 15. A careful examination of the show-cause notice reveals that it merely cites the audit objections raised by the accountant general, without any evidence of independent consideration or application of mind by the authority before invoking Section 53A. Therefore, it can be concluded that the exercise of jurisdiction under Section 53A was founded on borrowed information at the instance of the accountant general and, as such, is not sustainable in law. 16. It is a settled principle of law that once the liability to tax or stamp duty has attained finality, such finality can only be altered in exceptional circumstances, and these circumstances require strict compliance with the prescribed conditions. The jurisdiction of review cannot be exercised for the purpose of a fresh inquiry or re-adjudication, merely because an alternative view might be possible from the one taken in the original order. - 26 - 16.1 The exercise of jurisdiction under Section 53A is not sustainable for an additional reason. In the order passed under Section 45A, the District Registrar has framed specific issues, which are as follows: "4. In view of the rival contentions of both the parties, the following issues arise for consideration:- 1) What is the subject matter involved in the Instrument, i.e., whether the subject matter is schedule 'B' property only, or it consists of Schedule "C" property also? 2) Whether the market value of the subject matter is properly assessed, if not? 3) What is the correct market value, and stamp duty payable on the subject matter?" 16.2 These issues were addressed, with the conclusion that the subject matter of the sale deed pertains solely to the undivided share in the land, and the built-up area was not part of the transaction. Furthermore, it was determined that the stamp duty is applicable only on the undivided share in the land. - 27 - 17. The conclusion reached by the District Registrar represents one of the possible views on the issue, which the revision authority is disputing. However, mere disagreement with the view taken is insufficient to invoke Section 53A, unless it is shown that the view is erroneous, contrary to the provisions of the Act, or prejudicial to the interests of the revenue. No such ground is made out by the revision authority. As such, the proceedings under Section 53A are without jurisdiction and cannot be sustained. 18. The Hon'ble Supreme Court in Board of Revenue, Uttar Pradesh vs. Rai Saheb Sidhnath Mehrotra [AIR 1965 SC 1092] has held that; "We need hardly say that the Stamp Act is a taxing statute and must be construed strictly, and if two meanings are equally possible, the meaning is favour of the subject must be given effect to". 19. Another aspect for examination is the conclusion reached by the revision authority. The revision authority, in its determination, held that stamp duty on the transfer of 45% of the land should be calculated based on the - 28 - market value of 55% of the built-up area. While this view may seem reasonable from a commonsense perspective, in the absence of any statutory provision imposing liability in the manner suggested by the revision authority, it cannot be justified or accepted. This issue will be addressed in detail while considering Point No. 2. Regarding Point No.2- 20. Before proceeding to consider the various contentions urged by the respective counsels, it is relevant to examine legislative history imposing stamp duty of the nature in the present case. 20.1 It is necessary to examine the legislative history of the provisions imposing stamp duty and the extent of imposition. The relevant provisions would be Article 5(f) of the Act, 1957. The Article 5 has undergone amendment on multiple occasions. The relevant Article as existed at different times is tabulated below for convenience; • Section 5 (f) of the Karnataka Stamp Act, 1957 & Rules, 1958 (2006 Revised Edition); - 29 - 5(f) If relating to giving authority or power to a promoter or developer by whatever name called, for construction or, development of, or sale or transfer (in any manner whatsoever) of any immovable property, [situated in Karnataka State] Same duty as in sub- clause (e) of this article] • Section 5 (f) of the Karnataka Stamp Act, 1957 (2010- Nineteenth Edition); 5(f) If relating to construction or development or sale of an immovable property, including a multi-unit house or building or unit of apartment or flat or portion of a multi-storied building by a person having a stipulation that after construction or development, such property shall be held jointly or severally by that person and the owner or lessee, as the case may be, of such property, or that it shall be sold jointly or severally by them or that a part of it shall be held jointly or severally by them and the remaining part thereof shall be sold jointly or severally by them. One rupee for everyone hundred rupees or part thereof on the market value of the property which is the subject- matter of such agreement or on the consideration for such agreement, whichever is higher, subject to a maximum of rupees one lakh fifty thousand: • Section 5 (f) of the Karnataka Stamp Act, 1957 (Thirty- Fourth Edition); 5(f) If relating to construction or development of immovable property, including a multi unit or multi storied house or building or apartment or flat, or portion of it, executed by and between owner or lessee, as the case may be, and developer, having a stipulation, whether express or implied, that, in consideration of the owner or lessee Two Rupees for every one hundred rupees or part thereof, on the Market Value of such undivided share or portion of land or immovable property, consideration and advanced, if any; or - 30 - conveying or transferring or disposing off, in any way, the undivided share or portion of land or immovable property; the developer agrees to convey or transfer or dispose off, in any way, the proportionate or agreed share or portion of the constructed or developed building or immovable property to the owner or lessee, as the case may be. • Section 5 (f) of the Karnataka Stamp Act, 1957, (2012- Twenty-Third Edition); 5(f) If relating to construction or development of an immovable property, including a multi-unit house or building or unit of apartment or flat or portion of a multi-storied building by a developer or builder or promoter or by whatever name called having a stipulation that. for such construction or development, the property shall be held jointly by the developer or builder or promoter or by whatever name called and the owner or lessee, as the case may be, of such property, or that it shall be sold jointly by them or that a part of it shall be held jointly by them and the remaining part thereof shall be sold jointly by them. One Rupee for every one hundred rupees or part thereof... on the market value of the property which is the subject matter of development in the agreement or on consideration, whichever is higher, subject to a maximum of rupees fifteen lakhs. • Section 5 (f) of the Karnataka Stamp Act, 1957 and Rules, 1958 (Revised Edition 2008); [5(f) If relating to giving authority or power to a developer by whatever name called, for construction or, development of, or sale or transfer (in any manner whatsoever) any immovable property, where the market value property (1) Does not exceed Rupees one crore (2) Exceeds one crores and does not exceed two crores 10,000/- 20,000/- - 31 - (3) Exceeds two crores and does not exceed five crores (4) Exceeds five crores and does not exceed ten crores (5) Exceeds Ten crores 50,000/- 1,00,000/- 1,50,000/-] 21. The subject transactions between the petitioners arise from a Joint Development Agreement (JDA) concerning the development of immovable property. Under the terms of the agreement, petitioner No.1 has undertaken the development of the property owned by petitioner No.2, with the parties agreeing to share the undivided interest in the land and the built-up area. As per the JDA, petitioner No.1 is entitled to 45% of the built- up area, while petitioner No.2 is entitled to 55%. Additionally, petitioner No.2 has agreed to transfer the right, title, and interest in the land corresponding to 45% of the built-up area to petitioner No.1, with such interest remaining as an undivided share. 22. Pursuant to the terms of the Joint Development Agreement (JDA), a sale deed dated 28.02.2008 was executed, whereby petitioner No.2 conveyed a proportionate undivided share in the land to petitioner - 32 - No.1. The determination of the stamp duty payable on this transfer constitutes the subject matter of the dispute in the present writ petition. 23. The Joint Development Agreement (JDA) stipulates that the built-up area shall be shared in a ratio of 55% to UBHL and 45% to Prestige. Construction, as per the JDA, has been completed. The sale deed dated 28.02.2008 was executed in compliance with the JDA, conveying 45% of the undivided share in the land. The nature of the transfer is covered under Article 5(f) of the Act. It was only in 2011, with effect from 01.03.2014, that stamp duty was levied on the market value of the undivided share or the market value of the developed building corresponding to the share. Prior to this amendment, stamp duty on the joint development agreement was 1% of the market value of the property subject to development. At the time when the JDA and the agreement in question were executed, the stamp duty payable on the JDA was Rs.1,000/-. 24. In light of the above provisions, two key aspects require consideration by this Court. Firstly, whether the - 33 - sale deed of 2008 can be subjected to stamp duty as per the 2014 amendment. Secondly, whether the transfer of 45% undivided share in the land can be subjected to stamp duty based on the market value of the 55% built-up area. 25. The sale deed in question pertains to the year 2008, and therefore, the stamp duty applicable at the time of its execution should apply. Under Article 5(f) as it stood then, the stamp duty was Rs.1,000/- on the entire document. The 2014 amendment, however, subjected the Joint Development Agreement (JDA) to stamp duty at 2% of the market value of the undivided share or the market value of the constructed portion of the building, whichever is higher. Although the respondent-authorities have not referred to the 2014 amendment, they are attempting to impose stamp duty based on this amendment on documents registered in the year 2008. Article 265 mandates that no levy can be imposed without the authority of law. Consequently, any attempt to levy stamp - 34 - duty on the 2008 sale deed in accordance with the 2014 amendment is impermissible. 26. It is a settled principle of law that the charging section must be clear and unambiguous. In the event of any ambiguity in the charging section, the benefit should be given in favor of the taxpayer. This principle has been held by the Hon'ble Supreme Court in Commissioner of Customs (Import), Mumbai vs. Dilip Kumar and Company and Others [(2018) 9 SCC 1]. Relevant are; 21. The well-settled principle is that when the words in a statute are clear, plain and unambiguous and only one meaning can be inferred, the courts are bound to give effect to the said meaning irrespective of consequences. If the words in the statute are plain and unambiguous, it becomes necessary to expound those words in their natural and ordinary sense. The words used declare the intention of the legislature. 22. In Kanai Lal Sur v. Paramnidhi Sadhukhan [Kanai Lal Sur v. Paramnidhi Sadhukhan, AIR 1957 SC 907] , it was held that if the words used are capable of one construction only then it would not be open to the courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the Act. 23. In applying rule of plain meaning any hardship and inconvenience cannot be the - 35 - basis to alter the meaning to the language employed by the legislation. This is especially so in fiscal statutes and penal statutes. Nevertheless, if the plain language results in absurdity, the court is entitled to determine the meaning of the word in the context in which it is used keeping in view the legislative purpose.[Commr.v Mathapathi Basavannewwa, (1995) 6 SCC 355] Not only that, if the plain construction leads to anomaly and absurdity, the court having regard to the hardship and consequences that flow from such a provision can even explain the true intention of the legislation. Having observed general principles applicable to statutory interpretation, it is now time to consider rules of interpretation with respect to taxation. 24. In construing penal statutes and taxation statutes, the Court has to apply strict rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocents might become victims of discretionary decision-making. Insofar as taxation statutes are concerned, Article 265 of the Constitution “265. Taxes not to be imposed save by authority of law.—No tax shall be levied or collected except by authority of law.” prohibits the State from extracting tax from the citizens without authority of law. It is axiomatic that taxation statute has to be interpreted strictly because the State cannot at their whims and fancies burden the citizens without authority of law. In other words, when the competent Legislature mandates taxing certain persons/certain objects in certain circumstances, it cannot be expanded/interpreted to include those, which were not intended by the legislature. 25. At the outset, we must clarify the position of “plain meaning rule or clear and unambiguous rule” with respect to tax law. “The plain meaning rule” suggests that when - 36 - the language in the statute is plain and unambiguous, the court has to read and understand the plain language as such, and there is no scope for any interpretation. This salutary maxim flows from the phrase “cum inverbis nulla ambiguitas est, non debet admitti voluntatis quaestio”. Following such maxim, the courts sometimes have made strict interpretation subordinate to the plain meaning rule [Mangalore Chemicals and Fertilisers Ltd. v. CCT, 1992 Supp (1) SCC 21] , though strict interpretation is used in the precise sense. To say that strict interpretation involves plain reading of the statute and to say that one has to utilise strict interpretation in the event of ambiguity is self-contradictory. 29. We are not suggesting that literal rule dehors the strict interpretation nor one should ignore to ascertain the interplay between “strict interpretation” and “literal interpretation”. We may reiterate at the cost of repetition that strict interpretation of a statute certainly involves literal or plain meaning test. The other tools of interpretation, namely, contextual or purposive interpretation cannot be applied nor any resort be made to look to other supporting material, especially in taxation statutes. Indeed, it is well settled that in a taxation statute, there is no room for any intendment; that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification. Equity has no place in interpretation of a tax statute. Strictly one has to look to the language used; there is no room for searching intendment nor drawing any presumption. Furthermore, nothing has to be read into nor should anything be implied other than essential inferences while considering a taxation statute. - 37 - 27. In the case A.V. Fernandez vs. State of Kerala [AIR 1957 SC 657] it is held; 29. It is no doubt true that in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter. We must of necessity, therefore, have regard to the actual provisions of the Act and the rules made thereunder before we can come to the conclusion that the appellant was liable to assessment as contended by the Sales Tax Authorities. 28. It is a well-established principle that when interpreting fiscal statute, any levy is presumed to be prospective unless a clear provision is made for its retrospective application. A bare perusal of the 2014 amendment does not indicate any intent for retrospective application. In this regard, it must be held that the 2014 amendment, effective from 01.03.2014, applies only to contracts, agreements, or JDAs entered into after that - 38 - date. Accordingly, the 2014 amendment is not applicable to the transfer that took place in the year 2008. 29. It is useful to refer to the Constitutional Bench Judgment of the Hon'ble Supreme Court in Commissioner of Income Tax (Central)-I, New Delhi vs. Vatika Township Private Limited [(2015) 1 SCC 1] while dealing with the scope of retrospective legislation has held as under; "28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit : law looks forward not backward. As was observed in Phillips v. Eyre [(1870) LR 6 QB 1] , a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law." - 39 - 30. Having considered the scope of the charging provision, it is clear that the law governing the year of the transaction must be applied. Therefore, Article 5(f) as it was applicable in 2008 should be applied to the present case. As per the provisions in force in the year 2008, the maximum stamp duty on the JDA was Rs.1,000/-. 31. Upon a careful examination of the legislative history and the scope of the stamp duty levy on agreements governed by Article 5(f), this Court finds it difficult to uphold the conclusion reached by Respondent No. 1, which seeks to impose stamp duty on the transfer of the undivided share based on the market value of the built-up area attributable to UBHL's share. Such an imposition is not supported by any legal authority. As has been observed, in the absence of an express statutory provision authorizing such a levy, the same cannot be sustained. The conclusion of respondent No.1 is not guarded by any applicable statutory provision that imposes such liability. - 40 - 32. In the exercise of judicial review, the approach taken by respondent No.1 may appear to be logical and reasonable, it cannot be upheld if it conflicts with the statutory provisions governing the issue. It is well- established that judicial review is concerned with the legality, rationality, and procedural propriety of decisions. Even though commonsense reasoning might support the respondent’s stance, the statute must be interpreted strictly as per its language and legislative intent. The 2014 amendment has rectified the approach taken by respondent No.1. In the absence of a statutory provision to justify the levy, the decision cannot stand. Consequently, the impugned order passed by respondent No.1 is found to be legally unsustainable and is hereby set aside. 33. A perusal of the sale deed reveals that the schedule- B property refers to the undivided share allotted to Prestige, which is part of the schedule-A property. The schedule-C property consists of the built-up area constructed by Prestige using its own funds. The schedule- - 41 - B property is proportionate to the schedule-C property. The transfer, as outlined in the sale deed, pertains to the schedule-B property; however, it is contended that such transfer was made to enable the enjoyment of the schedule-C property by Prestige. The respondent- authorities do not dispute that schedule-C property was constructed by Prestige using its own funds. In this case, the concept of dual ownership applies. Until the transfer, schedule-B property was owned by UBHL, while schedule- C property was owned by Prestige under the Joint Development Agreement (JDA). 34. The schedule-C property was never the subject matter of the sale, and therefore its value cannot be considered in determining the stamp duty, especially in the absence of any statutory provision to that effect. The respondent-authorities have not cited any legal provision that mandates the imposition of stamp duty on schedule-B property based on the market value of schedule-C property at the time of the transfer. - 42 - 35. In the case of Pork View Enterprises vs. State Government of Tamil Nadu [1989 SCC OnLine Mad 273] it is held; "97. Therefore, the conclusions arrived at are as follows: 1. The impugned provisions of the Stamp Act and the Registration Act are valid, though badly drafted. 2. When a sale deed with a clear intention that only a share in the land is conveyed, and that there is no transfer of interest between the parties in relation to the building, if any, found thereon; then the chargeability to stamp duty could be confined only to the market value of the share of the land and no other. Art. 23 alone will apply." 35.1 In Smt. Mohini Devi vs. The Sub-Registrar [ILR 1999 KAR 2630] it is held; "20. The principles as to how a document should be examined to determine the chargeability of stamp duty are now well settled. They are. (a): xxxxxxx (e): The contents of the instrument as it stand, and not any extraneous factors or in circumstances, should be considered to decide whether the document is duly stamped, except where the stamp duty for instrument is prescribed with reference to a factor dehors the instrument. - 43 - 35.2 In L. & T. Komatsu Ltd., vs. Senior Sub- Registrar, Yelahanka and Others [AIR 2004 KAR 308] it is held; "26. What is to be looked into in the instrument for the purpose of enquiry under Section 33 of the Act is as to whether the stamp duty payable on the instrument and on the valuation of the subject matter has been paid or not. If the instrument is accepted at its face value, the stamp duty paid even according to the respondents, is the correct stamp duty and it is an instrument which is duly stamped. But what the respondents have done is that the version of the instrument itself is disbelieved and the instrument is interpreted and understood as an instrument conveying properties of the value of Rs. 210,64,00,000/-. No doubt respondents have sought to place reliance on the recitals in the agreement dated 30-7-1997 for transfer, for such conclusion. But it is not open to the authorities acting under Section 33 of the Act to interpret a document or understand a document in such a manner as to discard the express recitals therein and substitute their own understanding of the recitals and arrive at a conclusion that the value mentioned is not the proper value of the property conveyed and as such it is not duly stamped. This is not the function of an officer exercising power or jurisdiction under Section 33 of the Act or under Section 39 of the Act. The power under Section 33 of the Act is not one for interpretation of a document, but one for inferring as to whether proper stamp duty on the nature of the transaction has been paid. May be a transaction in the nature of conveyance being wrongly described as a transaction in the nature of a mere lease or a mortgage and stamp duty paid on such an instrument becomes subject matter of Section 33 of the Act, but not on the understanding that the value of the subject - 44 - matter and the very subject matter has not been properly described. The clear intention under the instrument being one to convey the property comprising land, building and structures, stamp duty payable is only on the value of these properties and nothing more. The interpretation sought to be placed on the instrument for exercise of power under Section 33 of the Act was not one which is either tenable or acceptable on the face of the recitals in the instrument itself or and said to constitute a justifiable fact situation for exercise of power under Section 33 of the Act and for pursuing further action." 36. The judgment in the case of Bangalore Grain Merchants Association vs. The District Registrar for Societies and Another [ILR 2001 KAR 766] relied on by the respondents authorities does not apply to the facts of the present case. While it is not disputed that information can be obtained from external sources, the key requirement is that the concerned authority must take its own initiative and applying its mind to determine whether an inquiry should be initiated. The authority cannot act mechanically based on the directions or actions of another person or authority without independently assessing the necessity and appropriateness of conducting an inquiry. In the present case, when examined in light of this principle, it becomes evident that the information was - 45 - received through objections raised by the accountant general. The proceedings were initiated without any independent application of mind by the authority. Therefore, the principle established in the Full Bench judgment of this Court renders the impugned order unsustainable due to the failure of the authority to apply its mind independently. 37. So also the judgment in the case of Gowri Enterprises vs. State of Karnataka and Others [1999 SCC OnLine KAR 122] is not applicable to the present case. This Court held that the authority, while exercising jurisdiction under Section 53A of the Act, may consider evidence or material outside the instrument. However, in the present case, the authority has not referred to any such material, other than interpreting the market value of the property, which cannot be done without legal authority. Furthermore, no omissions are identified in the sale deed that would justify the examination of external evidence or material. Therefore, the reliance placed on these judgments by the respondents is misplaced. - 46 - 38. In view of the above reason, the finding of respondent No.1 that the market value of the undivided share in the land or market value of built-up area fallen to the share of UBHL, whichever is higher is to be considered for imposing stamp duty for transfer of 45% undivided share is without authority of law and unjustifiable. 39. In the light of the above, the following; ORDER (i) Both writ petitions are allowed. (ii) The impugned order dated 31.10.2011 passed by first respondent in both the petitions at Annexures-L and M respectively, are quashed. (iii) Consequently, the notice dated 17.08.2010 at Annexure-K challenged in Writ Petition No.48133/2011 is also quashed. (iv) No order as to cost. Sd/- (K. V. ARAVIND) JUDGE VBS/DDU