Proceedings on deficit stamp duty for Lease Deeds 1944/2007 and 193/2008
The Inspector General of Registration and Chief Controlling Revenue Authority, Chennai, in proceedings P.Mu.19836/P1/2023 dated 11.08.2023, decided a stamp duty dispute about two lease deeds registered at Thiruthuraipoondi Sub Registrar Office. The proceedings confirm the District Registrar, Nagapattinam order that deficit stamp duty is payable on both documents, even though the document holder argued that the leases were later cancelled.
What this document is
The Inspector General of Registration and Chief Controlling Revenue Authority, Chennai, proceedings P.Mu.19836/P1/2023 dated 11.08.2023, give a final decision on two lease deeds, document numbers 1944/2007 and 193/2008, from Thiruthuraipoondi Sub Registrar Office, now within Tiruvarur Registration District and earlier within Nagapattinam Registration District. The matter was taken up after the High Court of Madras, in Writ Petition No. 30189/2013 dated 11.04.2023, directed the head of the Registration Department to enquire into it and pass orders.
Who is affected
This matters to:
- Leo Muthu Educational Trust, the document holder.
- The lessor, Thiru M. Jothipirakasam alias Leo Muthu of Leo Real Estate.
- Anyone dealing with long term lease deeds where rent escalation clauses affect stamp duty calculation.
- Property owners and buyers who assume later cancellation removes stamp duty liability.
What the dispute was about
The two documents were both titled LEASE DEED.
- Document 1944/2007 was dated 11.12.2007.
- Document 193/2008 was dated 20.02.2008.
- Both were in favour of M/s. Leo Muthu Educational Trust, represented by trustee Thiru Jo. Saipirakash.
The Sub Registrar had calculated stamp duty based on the stated total rent and advance:
- For 1944/2007, total rent of Rs.2,00,81,600 and advance of Rs.2,00,000, with stamp duty of Rs.2,01,000.
- For 193/2008, total rent of Rs.76,86,400 and advance of Rs.1,00,000, with stamp duty of Rs.78,000.
But the documents also contained clauses stating that rent would increase by 10 percent every year up to the end of the lease term. On audit by the Accountant General, it was found that this yearly increase had not been included in the rent calculation.
What was decided
The District Registrar had recalculated the lease amounts and fixed deficit stamp duty as:
- Rs.5,83,119 for document 1944/2007.
- Rs.3,11,819 for document 193/2008.
- Total, Rs.8,94,938.
Leo Muthu Educational Trust argued that the lease deeds were later cancelled and were no longer in force, and that a later 30 year lease had been registered. The Inspector General rejected that argument. The proceedings rely on court rulings stating that stamp duty liability arises before or at the time of execution, and later cancellation does not remove that liability.
Practical takeaway
For lease deeds in Tamil Nadu, stamp duty can be examined based on the actual terms written in the document, including annual rent escalation clauses. If a document was chargeable with duty when executed, later cancellation does not by itself wipe out deficit stamp duty liability.
This summary is generated from the source document to help you find what is relevant. The PDF above is authoritative. For advice on your own property, use LandLens One or speak to a qualified professional.
Common questions
If a lease deed was later cancelled, do I still have to pay deficit stamp duty?
Yes, according to these proceedings, later cancellation does not remove stamp duty liability. The decision says liability arises before or at the time of execution, and the deficit duty can still be demanded.
Why was extra stamp duty demanded on these two lease deeds?
Extra stamp duty was demanded because the documents contained clauses for a 10 percent increase in rent every year, but that increase had not been included in the original calculation. The audit objection led to recalculation of the lease amounts and deficit duty.
How much deficit stamp duty was confirmed in this case?
The proceedings confirm Rs.5,83,119 for document 1944/2007 and Rs.3,11,819 for document 193/2008, making a total of Rs.8,94,938.
Does this document affect ordinary property buyers, or only the parties to this case?
It directly concerns the parties to these two lease deeds, but it is also useful guidance for anyone dealing with lease documents in Tamil Nadu. It shows that rent escalation clauses can affect stamp duty and that cancellation later may not avoid liability.
