In a recent ruling, the Bombay High Court addressed a significant issue regarding the refund of withheld stamp duty for being time barred. The petitioner sought a refund of ₹78,65,000, which had been paid as stamp duty on a development agreement that was subsequently cancelled. The dispute arose when the refund application was rejected by the authorities on the grounds of being filed beyond the six-month limitation period set under Section 48(1) of the Maharashtra Stamp Act, 1958.
The court considered that the petitioner had also paid a substantial stamp duty of ₹1 crore on a subsequent conveyance deed for the same property. The petitioner argued that the state had collected stamp duty twice for essentially the same transaction, and not granting a refund would amount to unjust enrichment by the state.
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Referring to a precedent set by the Supreme Court, the petitioner argued that while the limitation period might bar the remedy, it should not negate the right to the refund. The court invoked Section 5 of the Limitation Act, allowing for condonation of delay under extraordinary circumstances, acknowledging that the petitioner was ill-advised and had a justifiable reason for the delay.
The division bench of Justice K R Shriram and Justice Jitendra Jain observed that, “ there is no dispute that Petitioner is entitled to apply for the refund under consideration, but the only ground of the denial of the refund is the delay on the part of Petitioner in making the refund application.”
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It was noted that, “The merits have not been discussed in the impugned order. In our view, the present petition is to be treated as an application under Section 5 of the Limitation Act which provides that any application may be admitted after the prescribed period if the applicant satisfies the Court that he had sufficient cause for not making the application within the period specified. In the instant case, Petitioner has averred in the petition that as he was ill-advised, there was a delay in making the application for refund.”
In result, the Bombay High Court quashed the impugned order rejecting the refund and directed the authorities to reconsider the application on merits, granting the refund if warranted.
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The decision reaffirmed that technicalities should not obstruct justice, especially when it involves a significant financial burden on the petitioner and potential unjust enrichment for the state.
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