CHAPTER VI

STAMP DUTY AND REGISTRATION FEES

ON VEHICLES

6.1 Results of Audit

Test check of the records of offices of District Registrars and Sub-Registrars

conducted during the year 2002-03, revealed short levy of stamp duty and
registration fee amounting to Rs 32.96 crore in 340 cases which broadly fall
under the following categories.
(Rupees in Crore)

Sl.No. Nature of irregularity No. of cases Amount

1 Misclassification of documents 24 0.18
2 Adoption of incorrect rate of Stamp duty 51 8.61
3 Under-valuation of properties 25 0.29
4 Incorrect exemption of duties 140 21.18
5 Short levy of Stamp Duty & Registration Fee 46 0.36
6 Loss of revenue due to incorrect adjustment of 16 1.01
Stamp duty
7 Deficit Stamp Duty and Registration Fee on 12 1.02
leases of tolls
8 Others irregularities 26 0.31
Total 340 32.96

During the year 2002-03, the Department accepted under-assessments etc., of

Rs 1.77 crore in 700 cases, of which 671 cases involving Rs 86.89 lakh were
pointed out during the year 2002-03 and the rest in earlier years Out of this,
an amount of Rs 21.48 lakh in 368 cases was realised.

A few illustrative cases involving Rs 11.11 crore and a review, Exemptions,

Remissions and Concessions of Stamp Duty and Registration Fee,
involving Rs 23.10 crore are mentioned in the following paragraphs.
Audit Report (Revenue Receipts) for the year ended 31 March 2003

6.2 Review: Exemptions, Remissions and Concessions of

Stamp Duty and Registration Fee

Highlights

Incorrect exemption of Rs 69.26 lakh was allowed under the Industrial

Policy 2000-2005.

[Paragraph 6.2.4]

Allowance of rebate in violation of conditions of purchase of land resulted

in loss of revenue of Rs 1.26 crore.

[Paragraph 6.2.5]

Exemption of duties on lease deeds by the joint venture company (L&T

Infocity Ltd) in favour of other I.T. industries without Government
orders resulted in loss of Rs 41.76 lakh.

[Paragraph 6.2.7]

Non-fulfillment of prescribed conditions stipulated in Government order

led to the loss of Rs 17.16 crore.

[Paragraph 6.2.11]

6.2.1 Introduction

Section 9 of the Indian Stamp Act, 1899 (Act), empowers the State
Government to remit/ reduce, stamp duty on any class of document.
Similarly, Section 78 of Registration Act, 1908, empowers the State
Government to fix the fee for various documents. Government may by an
amendment remit/ reduce fee in respect of any document. The transfer duty
leviable on the documents of sale, exchange, gift, lease in perpetuity and
mortgage with possession under the provisions of the Acts of Local Bodies
(Andhra Pradesh Panchayat Raj Act, 1994 and Andhra Pradesh Municipalities
Act, 1965) can also be reduced or remitted by the Government by way of an
order published in the Official Gazette. Under Section 9 of the Act, the State
Government issues notifications for various classes of instruments.

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 Chapter VI - Stamp Duty and Registration Fees

6.2.2. Organisational set-up

At Government level, Secretary, Revenue Department is the administrative

head, while at the Departmental level, the Commissioner and Inspector
General of Registration and Stamps is the administrative head. He is assisted
in the performance of duties by one Joint Inspector General and seven Deputy
Inspectors General in the state (one DIG for each zone). The registration
district is headed by District Registrar and each registration district is divided
into sub-districts headed by Sub-Registrar. There are 28 registration districts
and 387 sub-districts (sub-registry offices) in the state.

6.2.3 Audit objective

A test check of documents in eight district Registries and 16 Sub-Registries

was done with a view:

 to determine the extent of compliance with the terms and

conditions of exemptions availed of by beneficiaries;

 to assess revenue loss on account of violation of terms and

conditions of exemptions;

 to ascertain whether a suitable mechanism is in place for

coordination between authorities concerned and for control
purposes.

Irregularities noticed are mentioned in the subsequent paragraphs.

A Incorrect exemptions granted under the Industrial Policy 2000-2005

6.2.4 Government announced in January 2001‡, 50 per cent exemption of

stamp duty, transfer duty and registration fee on sale deeds involving lands
meant for industrial use, under the Industrial Policy 2000-2005 with effect
from 1 April 2000. Accordingly, two government notifications were issued in
February 2001§ and June 2001**. The exemption of 50 per cent of duties was
available on sale of land meant for setting up, expansion or development of
industrial units, other than those declared ineligible in the above orders The
new industrialists had to commence their commercial production on or after
1 April 2000 but before 31 March 2005.

A test check of 66 documents in two district registries and seven sub-registries

revealed incorrect grant of exemption of Rs 69.26 lakh as detailed below:

‡
G.O.Ms.No.9, Industries & Commerce (I.P) Department, dated 5 January 2001
§
G.O.Ms.No.103, Revenue (Registration II) Department, dated 7 February 2001
**
G.O.Ms.No.243, Municipal Administration and Urban Development (TC 1)
Department, dated.2 June 2001 and G.O.Ms.No.187, Panchayat Raj and Rural
Development (PTS III) Department, dated 6 June 2001

67
Audit Report (Revenue Receipts) for the year ended 31 March 2003

(Rupees in lakh)
Sl. Name of Nature of irregularity Amount of
No. Registries exemption
1 District Registry, Exemption of Rs 38.56 lakh was 38.56
Medak and four incorrectly allowed on buildings/other
Sub-Registries, types of structures like tanks etc., in
Bheemunipatnam, respect of 43 sale deeds registered between
Kadiam, April 2001 and March 2002 valued at Rs
Kukatpally and 5.81 crore as these were not covered under
Medchal the exemption scheme.
On this being pointed out in audit, the Registries stated that the matter would be
examined. Further report is awaited (January 2004).
2 District Registry, Exemption of Rs 6.27 lakh was incorrectly 6.27
Medak and Sub- allowed in respect of seven sale deeds
Registry, Medchal registered between July 2001 and March
2002 for purchase of land etc., valued at Rs
1.21 crore by industries that had started
commercial production prior to 1 April
2000.
On this being pointed out in audit, the Registries stated that the matter would be
examined. Further report is awaited (January 2004).
3 District Registry, Exemption of Rs 1.61 lakh was allowed on 1.61
Medak and Sub- two sale deeds for purchase of lands valued
Registry, at Rs 64.73 lakh even though the
Narasapur documents were executed prior to the date
of issue of government orders i.e., June
2001.
On this being pointed out in audit, the Registries stated that the matter would be
examined. Further report is awaited (January 2004).
4 Sub-Registries, Exemption of Rs 9.05 lakh was incorrectly 9.05
Hayathnagar, allowed in respect of five sale deeds
Uppal and registered between June 2001 and October
Medchal 2001 on land valued at Rs 1.56 crore
purchased for setting up of a unit which did
not involve any manufacturing activity.

On this being pointed out in audit, the Sub-registries replied that the item was not in the
ineligible list. The reply is not tenable as no manufacturing process is involved in the
units.
5 District Registry, Exemption of Rs 8.65 lakh was incorrectly 8.65
Nellore and three allowed between May 2002 and March
Sub-registries at 2003 on seven sale deeds as the industrial
Medchal, activity for which exemption was granted
Narasapur and was not mentioned in the deeds.
Uppal
On this being pointed out in audit it was replied that the matter would be examined.
6 Sub-Registry, Exemption of Rs 1.48 lakh was allowed on 1.48
Narasapur purchase of land that was already under the
possession of the unit since 1998 and could
not be considered as a fresh sale/purchase.
On this being pointed out in audit, the Sub-registrar stated that the matter would be
examined.

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Chapter VI - Stamp Duty and Registration Fees

69
Audit Report (Revenue Receipts) for the year ended 31 March 2003

(Rupees in lakh)
Sl. Name of Nature of irregularity Amount of
No. Registries exemption
7 Sub-Registry, A company transferred its assets other than 3.64
Kukatpally land valued at Rs 58.29 lakh to another
company for a consideration which was
incorrect, since the exemption was
admissible only on purchase of lands.
On this being pointed out in audit, the sub-registrar stated that the matter would be
examined.

B Exemptions granted under Information Technology Policy

6.2.5 As per Government orders in May 1999, rebate ranging from 50 per
cent to 90 per cent in stamp duty, transfer duty and registration fee is
admissible on sale/lease of built-up spaces with I.T. infrastructure facilities in
favour of I.T. industries by I.T. parks notified by Government. This rebate
was also admissible on purchase of lands for ‘establishment of I.T. parks for
their own use’ in respect of those I.T. parks notified by Government. Thus,
the Government orders provided for rebate in the above duties only at one
stage i.e., at the time of purchase of land by a notified I.T. park for its own use
or at the stage of sale/lease of built-up spaces by such parks in favour of other
I.T. industries.

During the course of audit of the District Registry, Rangareddy district, it was
noticed that while registering, in June 2001, two sale deeds in favour of an
I.T. park, 90 per cent rebate in duties amounting to Rs 1.26 crore was allowed,
though the recitals in the deeds did not mention that the land under purchase
was for the purpose of establishing an I.T. park for its own use. Further, it
was revealed that the purchasers subsequently leased out some of its built-up
spaces to other I.T. industries on which rebate of duties under the above
Government orders was also allowed. Thus, there was a loss of revenue of Rs
1.26 crore as the incentive is admissible only at one stage and the land
purchased was not for the exclusive use of the purchaser.

On this being pointed out in April 2003, the Registry stated that the matter
would be examined.

6.2.6 During the audit of District Registry, Rangareddy, it was noticed that
stamp duty, transfer duty and registration fee of Rs 10.16 lakh was exempted
on a sale deed in July 2001in favour of an I.T. park though, the park was not
notified by the Government as an I.T. Park on the date of registration. It had
also commenced its commercial production prior to the date of issue of
orders for allowing such exemption. As such, the exemption granted was
incorrect and resulted in loss of revenue amounting to Rs 10.16 lakh.

When the above loss of revenue was pointed out in audit, the Registry stated


G.O.Ms.No.114 Finance & Planning (Plg I.T.&C) Department, dt.25 May 1999 read
with G.O.Ms.No.163, Finance & Planning (I.T&C) Department, dt.5 October 1999 as
amended in G.O.Ms.No.9, I.T.&C Department, dt.27 January 2001

G.O.Ms.No.114, Finance & Planning (Plg I.T.&C) Department, dt.25 May 1999

70
 Chapter VI - Stamp Duty and Registration Fees

that the matter would be examined.

6.2.7 Government issued orders in March 1997  that the transfer of land
from Software Technology Park to Andhra Pradesh Industrial Infrastructure
Corporation (APIIC) and the subsequent transfer of land/built-up space by the
joint venture company in favour of I.T. industries would be exempted from
levy of stamp duty, transfer duty and registration fee provided that these
duties were paid at the stage of transfer of land from Andhra Pradesh
Industrial Infrastructure Corporation (APIIC) in favour of the joint venture
company. This aspect was also reiterated in the government orders dated
January 2001 wherein, it was stated that the above exemption of duties was
admissible in respect of sale of land or built up space in favour of I.T.
industries. The transfer of land by way of lease was not covered by the
government order for the purpose of availing exemption.
The District Registry, Rangareddy District, while registering lease deeds
executed by the above joint venture company (M/s.L&T Infocity Limited) in
favour of I.T. industries, for periods ranging from two to ten years between
December 1999 and March 2002, allowed exemption of stamp duty and
registration fee based on a clarification issued by the Commissioner and
Inspector General of Registration and Stamps, Hyderabad wherein it was
clarified that leases are transfers falling within the purview of the above
government orders dated March 1997. As the above Government orders are
providing exemption of duties on transfer of properties by way of sale deeds
as reiterated in Government Order dated January 2001, the clarification of the
Department to allow such exemption of duties on deeds other than sales, is not
in order. Thus, the exemption of duties allowed on four lease deeds resulted
in incorrect exemption of Rs 41.76 lakh.
On the incorrect exemption being pointed out in audit, the Registry stated in
April 2003 that the matter would be examined.
6.2.8 As per para 11(i)(ii) of Government orders issued in May 1999 rebate
of 70 per cent of duties is admissible on sale/lease of built-up spaces with I.T.
infrastructure facilities between 1 April 2000 and 31 March 2002 by an I.T.
Park notified by government in favour of I.T. Industries.
Sub-Registry, Secunderabad, allowed in April 2001 rebate of 70 per cent of
duties on 26 sale deeds involving sale of built-up spaces under the above
Government order. A scrutiny of the documents revealed that 11 of these
deeds were not executed in favour of I.T industries while remaining 15 deeds
were executed in favour of the I.T. industries with the properties at a semi-
finished stage. The park in which these were built was also not notified by the
Government as an I.T. Park. Therefore, rebate of Rs 10.53 lakh allowed on
these 26 documents was incorrect.


G.O.Ms.No.221, Revenue (Registration-II) Department, dated 21 March 1997 read with
G.O.Ms.No.168, Industries & Commerce (INF) Department, dated 16 July 1997

G.O.Ms.No.32, Revenue (Registration II) Department, dated 11 January 2001

Letter No.S1/16995/99, dated 27 August 1999 of Commissioner and Inspector General,
Registration and Stamps, to the Company Secretary, L&T Infocity Limited

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Audit Report (Revenue Receipts) for the year ended 31 March 2003

When the incorrect rebate in duties was pointed out in audit in

January 2002, the Registry stated that reply would be given in due course.

6.2.9 In accordance with the Government orders†† 100 per cent exemption of
stamp duty, registration fee and transfer duty on the purchase/lease of land
and buildings in favour of M/s Reliance Infocom Limited, Hyderabad, for
establishing I.T. facilities upto 31 March 2002 was granted. In continuation
of these orders, Government notified‡‡ a list of properties i.e., lands proposed
to be purchased by the company. Item No.9 of the list was a vacant site of
2020 sq.yards which was entitled to exemption accordingly.

A test check of the records in sub-registry at Dwarakanagar in

Visakhapatnam, revealed that while registering a sale deed in May 2001,
exemption was allowed on sale value of land of 2020 sq.yards and a structure
having a built up area of 15000 sq.feet. Since, the structure built up was not
exempted in the government order, the exemption of Rs 8.33 lakh granted was
incorrect and resulted in short levy of government revenue to that extent.

On this being pointed out, the Registry stated that the property in question was
the same as item No.9 of the government notification and exemption was
admissible on the land and buildings purchased by the vendee Company. The
contention of the Registry is not tenable as the above government notification
provided for exemption on 2020 sq. yards of land and no structures were
mentioned therein. As such exemption granted was incorrect.

C Other cases of irregular/improper exemptions

6.2.10 As per the Act, a deed of mortgage not involving handing over of
possession of the property by the mortgagor, is chargeable with stamp duty at
three per cent on the amount secured by such deed.

Government issued notification with regard to exemption of stamp duty on

mortgage deeds executed by employees of state and central governments in
favour of their governments to secure the repayment of house building
advances sanctioned to them by their governments.

††
G.O.Ms.No.127, Revenue (Registration and Mandals) Department, dt.19 February 2001 read
with G.O.Ms.NO.156, Municipal Administration and Urban Development (TC1) Department,
dt.24 April 2001; G.O.Ms.No.144, Panchayat Raj and Rural Development (PTS III) Department,
dt.25 April 2001 and G.O.Ms.No.164, Municipal Administration and Urban Development (TC1)
Department, dt.26 April 2001
‡‡
G.O.Ms.No.27, Information Technology and Communications Department, dt.28 April 2001

Notification No.13, dated 17 December 1938, issued under the Indian Stamp Act, 1899 -
(Item No.27)

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 Chapter VI - Stamp Duty and Registration Fees

Government also issued orders in May 1985  to exempt stamp duty and
registration fee on the mortgage deeds executed by small farmers  in favour
of the lending agencies like Primary Agricultural Co-operative Credit
Societies, Banks etc., which sanctioned and paid loans for agricultural and
allied purposes.

During the course of audit, it was noticed that exemption of duties was
allowed on mortgage deeds executed by the officials working in Bharat
Sanchar Nigam Limited (BSNL) even though they were not government
officials as clarified by the Inspector General of Registration and Stamps and
there was no proof in the documents that the Government of India had paid
the house building advance to them. The incorrect grant of exemption of
duties in 152 cases amounted to Rs 11.57 lakh. Similar incorrect exemption
of duties was allowed in respect of 14 documents of mortgages executed by
officials working in other autonomous bodies amounting to Rs 1.40 lakh.

Further, it was noticed from 31 mortgage deeds executed by farmers that the
incorrect exemption of stamp duty amounting to Rs 1.79 lakh allowed to the
Co-operative Societies while registering the documents as the mortgagors
were either not small farmers or the purpose of loan was not for agriculture or
allied purpose.

When the above incorrect exemption of duties was pointed out in audit, the
District Registrars and Sub-Registrars stated that the mortgages executed by
the officials were in favour of President of India/Governor of Andhra Pradesh,
as the case may be and hence allowed exemption. In respect of mortgages
registered by the co-operative societies it was stated that the matter would be
taken up with the concerned societies.

The contention of the Registries is not tenable as mere execution of the

mortgages in favour of the governments would not enable the officials to
claim exemption unless it was proved that they received advances from their
respective governments.

6.2.11 Government issued orders§§ for exemption of stamp duty, transfer duty
and registration fee on the transfer of assets by M/s.Essar Steel Limited in
favour of its subsidiary company viz., M/s.Hy-Grade Pellets Limited, subject
to the parent company holding a minimum of 90 per cent of shares or interest
as the case may be, in the subsidiary company inter-alia other conditions.


G.O.Ms.No.472, Revenue (U) Department, dated 10 May 1985

Small farmers are those holding wet land upto 5 acres or dry land upto 10 acres

Memo No.S1/21535/02, dated 8 October 2002 of the Inspector General of Registration and
Stamps, A.P., Hyderabad read with his Memo No.S1/21535/02, dated 10 October 2003

Agricultural Market Committee, S.C. Corporation, Prasara Bharathi, AYJNIHH, ICAR and
JNTU
§§
G.O.Ms.No.220, Revenue (Regn II) Department, dt.18 April 2000 read with G.O.Ms.No.355,
Revenue (Regn II) Department, dt.27 May 2000 and G.O.Ms.No.283, Municipal Administration
and Urban Development (TC 1) Department dt.10 May 2000

73
Audit Report (Revenue Receipts) for the year ended 31 March 2003

M/s.Essar Steel Limited registered in October 2000 a sale deed in favour of

M/s.Hy-Grade Pellets Limited to effect transfer of its assets valued at Rs
127.09 crore. The Registry while registering the document allowed 100 per
cent exemption of duties of Rs 17.16 crore without ensuring the fulfilment of
the prescribed conditions for such exemption. As such the exemption granted
resulted in incorrect exemption of duties of Rs 17.16 crore.
On this being pointed out in audit, the Registry stated in May 2002 that the
Industries Department was responsible to watch and ensure the fulfilment of
the conditions.
The reply of the Registry was not tenable as the above Government orders did
not nominate/authorise any other department/agency to watch and ensure the
fulfilment of the prescribed conditions before or after the registration of the
above document. Further, the Balance Sheets of both the companies
revealed that the vendor company had not held 90 per cent of shares in the
vendee company and also the vendee company ceased to be its subsidiary
company. Hence non-fulfilment of conditions for exemption resulted in loss
of revenue amounting to Rs 17.16 crore as above.
6.2.12 Under the Act, a ‘Bond’ includes any instrument whereby a person
obliges himself to pay money to another, on condition that the obligation shall
be void if a specified act is performed or is not performed as the case may be
and also any instrument attested by a witness and not payable to order or
bearer whereby a person obliges himself to pay money to another.
The document referred to in para 6.2.12 also contained a distinct matter
relating to creation of an obligation on the part of the vendee to repay the
loans outstanding and other liabilities amounting to Rs 79.05 crore in the form
of charges/encumbrances on the scheduled properties and other assets of the
pellet plant. Thus, the document should be treated as containing this distinct
matter classifiable as a ‘Bond’ chargeable with stamp duty and registration fee
of Rs 2.76 crore, besides the above matter relating to transfer of assets, as the
purchaser had also executed the document attested by witnesses.
On the grant of exemption of duty as pointed out in audit, the Registry stated
that the liabilities automatically passed on to the vendee and exemption of
duties was thus admissible.
The contention of the Registry is not tenable as the Government order
provided for exemption of duties exclusively on transfer of assets between the
two companies and not on both assets and liabilities of the business of the
vendor as ordered by Government in a similar case wherein the exemption of
duties was allowed on transfer of both assets and liabilities between two
co-operative institutions.


Balance sheet of M/s.Hy-Grade Pellets Limited, Visakhapatnam for the year 2000-2001 and
Balance sheet of M/s.Essar Steel Limited, for the year 2000-2001

G.O.Ms.No.244, Revenue (Regn. II) Department, dated 1 April 1998 read with G.O.Ms.No.39,
Animal Husbandry & Fisheries (Dairy II) Department, dated 24 April 1997 in the case between
M/s.A.P. Dairy Development Cooperative Federation, Hyderabad and Krishna District Milk
Producers Cooperative Union Limited, Vijayawada

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 Chapter VI - Stamp Duty and Registration Fees

6.2.13 Under the Act, stamp duty on instruments of conveyances is leviable at

5 per cent on the consideration set forth in the document or the market value
of the property whichever is higher. Moreover, under the provisions of Acts
of Local Bodies, conveyances on sale attract levy of transfer duty at five per
cent on the higher of the above two values.

In the District Registry, Ranga Reddy District, it was noticed that the District
Collector of Ranga Reddy District had registered in September 1999 a
document styled as "Deed of Transfer" transferring 10 Acres of land situated
in Madhapur Village 'free of cost' in favour of National Institute of Fashion
Technology which is an Autonomous Body of Central Government. The
Government orders for such transfer of property did not provide for
exemption of stamp duty, transfer duty and registration fee on a document
evidencing conveyance of above property. However, the District Registry,
had allowed exemption of above duties resulting in irregular exemption of the
same amounting to Rs 18.90 lakh.

On this being pointed out in audit, the District Registrar stated that the orders
of exemption of duties would be furnished. The reply is not tenable as no
orders were issued exempting the duties on the above deed.

6.2.14 As per the Acts of Local Bodies, transfer duty at five per cent on the
value of the document of sale is to be levied in addition to the stamp duty
chargeable on the document under the Act.

A test check of two district registriesand four sub-registries revealed that an

amount of Rs 17.30 lakh was required to be allocated to local bodies in
respect of 51 sale deeds registered between April 2001 and March 2002.

Against this, an amount of Rs 35.59 lakh was allocated resulting in excess

allocation of transfer duty amounting to Rs 18.29 lakh.

When the above excess allocation of transfer duty was pointed out in audit,
the Inspector General of Registration and Stamps, A.P., Hyderabad, accepted
the objection and stated that the concerned District Registrars were directed to
adjust the transfer duty to Local bodies.

6.2.15 Recommendations

Based on the above observations, Government may consider taking steps to:

 ensure proper coordination between the Administrative

Departments granting exemption and Registration Department
implementing the orders governing them;

 Put in place a control mechanism to ensure that conditions

stipulated for grant of exemption are compiled with.

Document styled as "Deed of Transfer" with document number 5936 of 1999

G.O.Ms.No.606, Revenue (Assn.III) Department, dated 16 November 1996

Medak at Sangareddy and Rangareddy

Hyderabad (Kukatpally and Uppal), Medchal, Samalkot

75
Audit Report (Revenue Receipts) for the year ended 31 March 2003

The above matter was referred to the Department and to the Government in
May 2003. No response was received from them (January 2004).

6.3 Short levy of Stamp duty due to incorrect adoption of rate

According to Section 5 of Indian Stamp Act, 1899, any instrument comprising
or relating to several distinct matters, shall be chargeable with the aggregate
amount of stamp duties with which separate instrument each comprising or
relating to one of such matters would be chargeable under the Act. Under
Article 42(g) of schedule 1-A to the Act, Power of Attorney when given for
construction on development of, or sale or transfer of any immovable
property, stamp duty is leviable at five percent on the market value of the
property for which the attorney is given power to sell. Further, under Section
2(10) of the Act, security or earnest money deposits paid by developers to
land owners are to be treated as amounts paid as advance for transfer of
property and are chargeable to duty at five per cent.

6.3.1 During the course of audit of seven District Registries and 37

Sub-Registries it was noticed that stamp duty of Rs 9.75 crore was charged
on 2937 documents styled 'Agreement of sale cum General Power of Attorney'
given for construction or sale of immovable property registered during the
years 2000-01 and 2001-02 instead of Rs 17.61 crore due to application of
incorrect rates resulting in short levy of stamp duty of Rs 7.86 crore.

On this being pointed out in audit, it was stated that stamp duty was levied
according to the clarification*** issued by the Commissioner and Inspector
General of Registration and Stamps wherein it was stated that stamp duty of
Rs 50 only is chargeable. The reply is not tenable as the clarification was not
in consonance with the provisions of the Act.

The above matter was referred to the Department in April 2003 and to the
Government in May 2003. No response was received from them
(January 2004).


Eluru, Hyderabad, Karimnagar, Medak, Nalgonda, Nizamabad and Warnagal

Bhongir, Chevella, Gajwel, Ghatkesar, Gurajala, Hyderabad(Azampura, Banjara Hills,
Charminar, Chikkadapally, Doodhbowli, Golconda, Hayathnagar, Pedda Amberpet,
Rajendranagar, Sanjeeva Reddy Nagar, Saroornagar), Ibrahimpatnam (Krishna Dist.),
Ibrahimpatnam (Rangareddy Dist.), Jedcherla, Kalwakurthy, Kamareddy, Kankipadu, Kodad,
Medchal, Patamata, Peddapally, Rajanagaram, Sadasivapet, Sabbavaram, Secunderabad
(Malkajgiri, Maredpally) Shamirpet, Shamshabad, Siddipet, Suryapet, Tadepalligudem and
Tanuku
***
MV1/18289/95 dated 1 July 1995

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 Chapter VI - Stamp Duty and Registration Fees

6.3.2 During the course of audit of two District Registries and five
Sub-Registries it was also noticed that 42 documents styled "Development
agreement-cum-General Power of Attorney" for construction of multi storied
complexes registered during 2000-2001 and 2001-2002 contained several
distinct matters However, stamp duty was not levied in terms of these
provisions resulting in short levy of stamp duty of Rs 75.11 lakh. A few
illustrative cases are given below:
(Rupees in lakh)
Name of the Document No Description of Value Stamp Duty
Sub-Registrar Date of Regn. distinct matters of the
deed Payable Paid Short
levy
Banjara Hills, 922/2002 1) Market value of 90.44 4.52 - 4.52
Hyderabad Dt.8 March developers share of
2002 land
2) Security/Earnest 30.00 1.50 - 1.50
Money Deposit
Banjara Hills, 2992/2001 1) Market value of 183.33 9.17 16.86
Hyderabad Dt.23 August developers share
2001 of land
2) Security/ Earnest 200.00 10.00 - 2.31
Money Deposit
-do- 3193/2001 1) Cost of proposed 132.00 6.60 5.10 1.50
Dt.25 construction
September 2001
2) Market value of
developers share 68.98 3.45 - 3.45
of land
3) Security/ Earnest
Money Deposit 25.00 1.25 - 1.25
Golconda, 2465/2001 1) Cost of proposed 97.24 4.86 1.28 3.58
Hyderabad Dt.1 October construction
2001
2) Market value of 33.22 1.66 - 1.66
developers share
of land
3) Security/ Earnest 12.00 0.60 - 0.60
Money Deposit
Chikkadpally, 2322/2001 1) Cost of proposed 90.78 4.54 --
Hyderabad Dt.October construction
2001
2) Market value of 95.44 4.77 4.59 5.47
developers share
of land
3) Security/ Earnest 15.00 0.75 --
Money Deposit

On this being pointed out in audit, it was stated that stamp duty was levied
correctly in accordance with the provisions of the Act. This contention is not
correct as according to the recitals of these documents, there are three distinct
matters and hence as per the Act stamp duty on the corresponding values had
to be levied.


Hyderabad and Visakhapatnam

Hyderabad (Banjara Hills, Chikkadpally, Golconda, Kukatpally) and Secunderabad (Maredpally)

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Audit Report (Revenue Receipts) for the year ended 31 March 2003

The above matter was referred to the Department in March 2003 and to the
Government in May 2003. No response was received from them
(January 2004).

6.4 Loss of revenue due to incorrect adjustment of stamp duty

According to a clarification issued by Commissioner and Inspector General
of Registration and stamps, stamp duty paid on “Agreement of sale” can be
adjusted from duty payable on subsequent sale of the same property if the sale
deed is executed between the agreement holder and agent or his nominee as
per terms of the agreement.

During the course of audit of four District Registries and 12 Sub-Registries,

it was noticed in 485 documents that adjustment of stamp duty was allowed
even though claimants in subsequent sale deeds were neither agreement
holders, agents nor nominee as per the agreement. This resulted in loss of
revenue of Rs 1.01 crore.

On this being pointed out in audit, it was stated that adjustment was allowed
in accordance with the I.G’s clarification. The reply is not tenable as
according to the clarification, adjustment of stamp duty is admissible if sale
deed is executed in favour of agreement holder and agent or his nominee. But
in these cases, sales were executed in favour of parties not mentioned in the
agreements.

The above matter was referred to the Department in February 2003 and to the
Government in May 2003. No response was received from them
(January 2004).

6.5 Deficit stamp duty on lease deeds

Under Section 17 (as amended with effect from 29 January 1999) of the
Registration Act, 1908, all leases are compulsorily registerable.

6.5.1 According to The Indian Stamp Act, 1899, lease includes any
instrument by which tolls of any description are let. During the course of
audit of National Highway Circle, Hyderabad, Godavari Headworks Division,
Dowlaisawaram and 10j Roads & Buildings Divisions, it was noticed in 18
cases that lease deeds for collection of toll fee on various bridges in the State
were not executed with the Department by the respective lessees and

S1/3405/1999 dated 2 April 1999

Hyderabad, Karimnagar, Nalgonda and Warangal

Bhongir, Chevella, Hyderabad (Champapet, Charminar, Golconda, Hayathnagar, Peddamberpet,
Vallabhnagar), Miryalaguda, Secunderabad (Malkajgiri), Shamirpet and Shamshabad
j
Bhongir, Eluru, Hyderabad, Kakinada, Khammam, Krishna(Machilipatnam), Mahaboobabad,
Miryalaguda, Narasaraopet and Tirupathi

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 Chapter VI - Stamp Duty and Registration Fees

registered. This resulted in loss of stamp duty of Rs 93.38 lakh. Further, non-
registration of the above lease deeds resulted in non-realisation of registration
fee of Rs 8.67 lakh.

On this being pointed out in audit, it was replied that action was being
initiated to recover the stamp duty from the lessees.

The above matter was referred to the Department between April 2001 and
May 2003 and to the Government in May 2003. No response was received
from them (January 2004).

6.5.2 As per Rule 29 (3)(b) of Andhra Pradesh Indian Liquor and Foreign
Liquor Rules (APIL&FL), 1970, no license shall be granted for sale of IML
unless the applicant produces lease deed on a stamp paper for the proposed
licensed premises from the owner of the premises.

During the test check of records of 16††† Prohibition and Excise

Superintendent (PES) offices, it was observed that the Department during
2001-2002 accepted 667 unregistered lease deeds of immovable property.
Non-registration of these documents resulted in loss of registration fee of
Rs 3.29 lakh. Besides, against a stamp duty of Rs 16.48 lakh, only
Rs 2.76 lakh was paid resulting in short levy of stamp duty of Rs 13.72 lakh.

Registration and Stamps Department did not point out these cases though
Section 73 of Indian Stamp Act provides for inspection of Public Offices by
them to detect deficit stamp duties. Thus there is a total loss of revenue of
Rs 17.01 lakh towards Stamp duty and Registration fee.

On this being pointed out, Rs 11.34 lakh was collected by the PES towards
deficit Stamp duty; report regarding collection of balance amount is awaited
(January 2004).

6.6 Misclassification of 'Conveyances of Sale' as 'Releases'

A document by which one of the co-owners of a property purports to abandon
or relinquish his claim in consideration of a certain sum of money would be in
the nature of a release document. A release should necessarily be in favour of
someone who had already some title to the estate and the effect of the release
is only to enlarge that right. If any person having interest in the property is
left out of the transaction of release, the instrument evidencing such release
should be classified as a conveyance on sale and charged with stamp duty
accordingly.

†††
Adilabad,Ananthapur, Chittoor, Kadapa, Guntur, , Karimnagar, Krishna, Kurnool, Nalgonda,
Nellore, Nizamabad, Prakasam, Ranga Reddy, Visakhapatnam, Vizianagaram and West Godavari

79
Audit Report (Revenue Receipts) for the year ended 31 March 2003

In two District Registries‡‡‡ and four Sub-Registries, it was noticed that nine
conveyances on sale were misclassified as releases resulting in short levy of
duties of Rs 9.27 lakh.

On this being pointed out in audit, the Registering Officer at Guntur collected
the duties of Rs 0.62 lakh. In respect of Sub-Registry, Chimakurthy the
objection was accepted in June 2000 by the Commissioner and Inspector
General of Registration and Stamps and the Registrar was addressed to take
steps for recovery and initiate action against the Sub-Registrar responsible. In
respect of other cases it was stated that the matter would be examined.
Further report has not been received (January 2004).

The above matter was referred to the Government in May 2003. No response
was received from them (January 2004).

6.7 Under-valuation of properties

According to Article 47-A of Schedule 1-A to the Indian Stamp Act, 1899,
instruments of sale are chargeable to stamp duty at the prescribed rate
depending on the location of the property, on the amount or value of the
consideration for such sale as set forth in the instrument or the market value of
the property whichever is higher. Besides, transfer duty at five percent is
leviable on sale deeds on the amount or value of the consideration for such
sale or the market value of the property whichever is higher under the
provisions of various Acts of local bodies.

6.7.1 During the course of audit of two District Registries and three§§§
Sub-Registries it was noticed that under-valuation of properties and adoption
of incorrect rate of duty in 46 sale deeds resulted in short levy of stamp duty,
registration fee and transfer duty of Rs 14.42 lakh.

On this being pointed out, the Commissioner and Inspector General of

Registration and Stamps accepted the objections in September/November
2002 in two cases. In 44 cases, it was contended that the property was either
agricultural land situated in a gram panchayat or was not on the main road and
therefore lower rate was adopted. The reply is not tenable as market value
adopted was less than that indicated in the guidelines of market value prepared
by the Registries themselves.

The above matter was referred to the Department between November 1999
and March 2003 and to the Government in May 2003. No response was
received from them (January 2004).

‡‡‡
Guntur and Ongole

Banjara Hills,Chikkadapally,Chimakurthy and Samalkot

Adilabad and Rangareddy
§§§
Hyderabad (Chikkadpally), Kovur and Samalkot

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 Chapter VI - Stamp Duty and Registration Fees

6.7.2 Under the above article, stamp duty is chargeable at the rate of seven
percent in respect of properties situated in special grade and selection grade
municipalities. In respect of properties situated in areas other than municipal
corporation and municipalities, stamp duty at six per cent is leviable. During
the year 2001, government upgraded the municipalities of Khammam and
Adoni as special grade municipalities.

During the course of audit of District Registry, Khammam and

Sub-Registry, Adoni it was noticed that stamp duty was charged at six percent
instead of seven percent in respect of 444 properties situated in these
municipalities and registered between May 2001 and July 2001 after their
upgradation, resulting in short levy of stamp duty of Rs 6.14 lakh.

On this being pointed out in audit, the registering authorities stated that action
would be taken to collect the deficit amount from the parties.

The above matter was referred to the Government in May 2003. No response
was received from them (January 2004).


G.O.Ms.No.208 Municipal Administration and Urban Development (J2) Department dated
18 May 2001

81