Reduced rate of Stamp Duty allowable to Lease Deed on which Rent is fixed and Premium is not paid or Delivered: Rajasthan HC [Read Order]

In a significant case, the Rajasthan High Court held that the reduced rate of stamp duty is allowable to lease deeds on which rent is fixed and premium is not paid or delivered.

The State submitted that the controversy involved in these matters is squarely covered by the judgment rendered in The State of Rajasthan & Anr. Vs. Indus Tower Ltd. & Anr.) and other connected matters.

The respondent Indus Tower Ltd. Limited argued that even if security charges/security deposits are stipulated under the terms of the lease, notification dated 05.03.2003 would be applicable because the rent is fixed and the premium is not paid or delivered, would amount to amend notification dated 05.03.2003 by adding a further clause as- “whether or not security charges/security deposits are advanced”.

Such interpretation is not only against the strict construction of the notification, but it also violates the principle of literal construction. The addition or substitution of words or phrases in the notification issued in the exercise of powers under Section 9 of the Act of 1899, which is a taxing statute, is not warranted at all.

It was concluded that notification dated 05.03.2003 applies only to the class of leases as specified in Clause (a) of Article 33 of the Schedule appended to the Act of 1998 and once the terms of the lease stipulate security deposit, the lease becomes classifiable under clause (c) of Article 33 of the Schedule appended to the Act of 1998 and such leases are taken out of the purview and applicability of notification dated 05.03.2003.

It was observed that the respondent Indus Tower Limited was not entitled to the benefit of notification dated 05.03.2003 and the claim of reduced rate of stamp duty in respect of lease deeds executed in its favour, is not tenable in law.

A single-judge bench comprising Dr Justice Nupur Bhati allowed the appeals filed by the State and set aside the order passed by the Single Judge and the order passed by the Tax Board.

The Court held that the respondent-Indus Tower Limited would be liable to pay stamp duty as per the provisions of the law, which were in force on the date of execution of lease deeds without claiming the benefit of the notification dated 05.03.2003.

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