Case Background
The case arose from the purchase of a residential flat by two private purchasers in Patna district. They bought Flat No. 204A in a multi-storeyed apartment named Raj Complex, with car parking in the basement, situated at Mauza-Dasaratha, Thana-Phulwarisharif, P.S. Beur, District-Patna.
The sale was completed through a registered sale deed dated 24.03.2023 at the office of the District Sub-Registrar, Patna. At the time of registration, the buyers paid the stamp duty and registration charges as required and the document was duly registered.
After the registration was over, the buyers received a notice in Deficit Stamp Case No. 37 of 2023. They were called upon to show cause regarding alleged deficit stamp duty on the flat purchase. The petitioners appeared before the authority and filed their objections.
Despite their objections, the Assistant Inspector General of Registration, Patna Division (respondent no. 4) passed an order dated 28.06.2023 in Deficit Stamp Case No. 37 of 2023. By this order, the petitioners were directed to pay deficit stamp duty of Rs. 1,54,400/- plus penalty of Rs. 15,440/-, totalling Rs. 1,69,840/-.
Aggrieved by the order, the buyers approached the Patna High Court under its civil writ jurisdiction. They sought quashing of the order dated 28.06.2023 on the ground that the entire deficit stamp proceeding was without jurisdiction.
What the Court Examined and Decided
The single-judge Bench of Hon’ble Mr. Justice Mohit Kumar Shah examined the legality of the deficit stamp proceedings under Section 47-A of the Indian Stamp Act, 1899 (as applicable in Bihar). The central question was whether the District Sub-Registrar could, after completing registration, refer the sale deed to the higher registration authority for determination of deficit stamp duty under Section 47-A(1).
The petitioners’ counsel argued that under Section 47-A(1) of the Stamp Act, the registering officer can make a reference to the Collector for determination of proper market value and stamp duty only before registering the instrument. Once the document is registered, the Sub-Registrar loses that power.
To support this, the petitioners relied on the exact wording of Section 47-A(1), which the Court reproduced. In simple terms, the provision says that when a registering officer, at the time of registering an instrument like a sale deed, is satisfied that the property has been wrongly classified or undervalued as compared to the guideline minimum value, he “shall refer such instrument before registering it to the Collector” for determination of the proper market value and stamp duty.
The proviso to Section 47-A(1) covers a different situation. It deals with cases where the value mentioned in the document is not less than the guideline minimum, yet the registering officer believes the true market value is even higher. In such a situation, the proviso states that the registering officer may, “after registering such instrument”, refer the instrument to the Collector, but only by assigning proper reasons. This is a limited power, exercisable in the specific situation mentioned in the proviso.
The petitioners further relied on two earlier Patna High Court judgments:
First, a Division Bench decision reported in 2018 (3) PLJR 136 (The State of Bihar and others vs. Smt. Tetra Devi). The Court quoted paragraphs 14 and 15 of that judgment. In Tetra Devi, the Division Bench held that the Collector can issue a suo motu notice for deficit stamp duty only within two years from the date of registration. If the notice is based on a Sub-Registrar’s recommendation, that recommendation must be made at the time of registration in terms of the relevant rules. A recommendation made long after registration, when no reference was made at the time of registration, is not permissible. The Division Bench concluded that such delayed initiation of proceedings suffers from patent illegality.
Second, the petitioners relied on a coordinate Bench decision in Shahnaz Begam vs. The State of Bihar & Ors., reported in 2018 (2) PLJR 293. The Court reproduced paragraphs 6 to 9 of that judgment.
In Shahnaz Begam, the Court clearly held that the registering authority can only refer the matter to the Collector “before registering it” for determination of proper market value and duty under Section 47-A(1). In that case also, the registration had already been effected, and only thereafter was the reference made to the Collector/Assistant Inspector General. The Court found such a reference to be against the statutory provisions.
Shahnaz Begam also discussed Section 47-A(3), which allows the Collector to act suo motu within two years from the date of registration where no reference has been made under sub-section (1). Under this power, the Collector can call for and examine the instrument to check the correctness of the market value and duty and, if required, determine the correct value and duty following the procedure under sub-section (2). Any difference in duty becomes payable by the person liable.
However, in Shahnaz Begam, the High Court noted from the counter affidavit that the proceeding was not a suo motu action under Section 47-A(3), but a reference under Section 47-A(1). Since Section 47-A(1) allows reference only before registration, the entire reference and the consequent order were declared wholly illegal and arbitrary and were quashed.
In the present case, the State’s counsel sought to justify the impugned order relying on the factual sequence shown in the counter affidavit. After the registration of the sale deed on 24.03.2023, the District Sub-Registrar conducted a spot inspection and submitted a report dated 27.03.2023. The spot inspection report recorded that the land in question falls within the commercial category. However, in the sale deed it was shown as residential category.
Based on this inspection report, the District Sub-Registrar, Patna, by letter dated 27.03.2023, referred the matter to the Assistant Inspector General of Registration (respondent no. 4) for recovery of the alleged deficit stamp duty. Acting on this reference, Deficit Stamp Case No. 37 of 2023 was registered. Notices were then issued to the petitioners, and after hearing them, the impugned order dated 28.06.2023 directing payment of Rs. 1,69,840/- as deficit duty and penalty was passed.
The State argued that since the land was in fact commercial but had been treated as residential in the document, there was no illegality in the demand for additional stamp duty and penalty.
After hearing both sides and examining the record, the Court focused on the timing and nature of the Sub-Registrar’s reference. It was “apparent” from the materials that the Sub-Registrar’s reference to respondent no. 4 was made on 27.03.2023, i.e., after the sale deed had already been registered on 24.03.2023.
The Court held that, in such a situation, the District Sub-Registrar had “no authority/jurisdiction” to refer the matter to the Assistant Inspector General under Section 47-A(1) of the Stamp Act, 1899. The provision, as interpreted in earlier judgments, does not permit a reference under sub-section (1) after registration.
Further, the Court found that the present case was squarely covered by the decision in Shahnaz Begam. There, too, the reference was made after registration, and the Court had declared such a reference contrary to law.
On this basis, the Court concluded that the actions of both the District Sub-Registrar (respondent no. 6) and the Assistant Inspector General (respondent no. 4) were not only arbitrary and perverse but also against the clear mandate of Section 47-A of the Stamp Act.
Consequently, the impugned order dated 28.06.2023 passed in Deficit Stamp Case No. 37 of 2023 by respondent no. 4 was quashed as being contrary to law. The writ petition was allowed. No further directions were deemed necessary.
Why This Judgment Matters
This judgment is significant for property buyers and sellers in Bihar, especially those dealing with flats and apartments in urban areas.
First, it reassures buyers that once their sale deed is properly registered and stamp duty is paid, the Sub-Registrar cannot later reopen the same registration under Section 47-A(1) on the ground of undervaluation. Any such late reference by the registering officer is without jurisdiction.
Second, the ruling reinforces previous Patna High Court decisions that strictly limit the powers of registration authorities. If the authorities wish to question the valuation before registration, they must do so at that stage, as the law requires. If they fail, they cannot bypass the statute by sending a post-registration reference in the name of deficit stamp duty.
Third, while the law still allows the Collector to act on his own within two years of registration under Section 47-A(3), this power has to be exercised in the correct manner and under the correct provision. Mixing up a Section 47-A(1) reference with a Section 47-A(3) suo motu action is not acceptable.
For ordinary citizens, especially first-time flat buyers, this decision by the Patna High Court offers protection against sudden, large stamp duty demands that come months after registration on the strength of a Sub-Registrar’s belated report.
Legal Issues and Answers
- Issue: Can the District Sub-Registrar, after registering a sale deed, refer the instrument to the higher registration authority under Section 47-A(1) of the Indian Stamp Act, 1899, for determination of deficit stamp duty on the ground of wrong classification or undervaluation?
Answer: No. The Patna High Court held that a reference under Section 47-A(1) can only be made before registration. A post-registration reference by the Sub-Registrar is without authority and contrary to law. - Issue: Was the order dated 28.06.2023 in Deficit Stamp Case No. 37 of 2023 directing payment of Rs. 1,69,840/- as deficit duty and penalty valid?
Answer: No. Since the proceeding was founded on an invalid post-registration reference, the Court found the actions of respondent nos. 6 and 4 to be arbitrary, perverse and against Section 47-A, and quashed the impugned order.
Cases Cited by the Court
- 2018 (3) PLJR 136, The State of Bihar and others vs. Smt. Tetra Devi (Division Bench of Patna High Court)
- 2018 (2) PLJR 293, Shahnaz Begam vs. The State of Bihar & Ors. (coordinate Bench of Patna High Court)
Case Details
Case Number: Civil Writ Jurisdiction Case No. 17837 of 2023
Case Title: Rishu Raj & Anr. vs. The State of Bihar & Ors.
Citation: 2024 (4) PLJR 169
Court: High Court of Judicature at Patna
Coram: Hon’ble Mr. Justice Mohit Kumar Shah
Date of Judgment: 28.08.2024
Advocates:
For the petitioners: Mr. Manohar Pd. Singh, Advocate; Mr. Bhim Sen Prasad, Advocate
For the respondents (State): Mr. Raghwanand (GA-11); Mr. Sanjay Kr. Tiwari, AC to GA-11
Nature of the Case: Writ petition under civil writ jurisdiction challenging an order in Deficit Stamp Case No. 37 of 2023 relating to alleged deficit stamp duty after registration of a sale deed.
Link to Judgment: Patna High Court Judgment CWJC No. 17837 of 2023
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