Proceedings No. 3677/P1/2020, Lease Agreement Stamp Duty Appeal

What the proceedings decide

Proceedings No. 3677/P1/2020 of the Head of the Tamil Nadu Registration Department and Chief Controlling Revenue Authority concerns a lease between D. Chandrasekaran, the lessor, and M.G. Residency Private Limited, Athanayur Village, the lessee. The lease was executed on 9 February 2018 and registered as Document No. 1339/2018 at the Tirupattur Sub-Registrar Office.

The Sub-Registrar treated the document as a one-year lease under Article 35(a) of the Indian Stamp Act and collected stamp duty of ₹1,35,820. The Vellore District Registrar later treated it as a nine-year lease and determined deficient stamp duty of ₹9,28,290.

Why the lease was treated as nine years

The Head of the Tamil Nadu Registration Department rejected the appellant’s claim that the nine-year period was merely a typing error. The decision relied on the following terms:

• The lease stated that it commenced on 1 August 2017 and remained valid until 1 August 2026.
• The agreement contained a one-year lock-in period.
• After the lock-in period, either party could terminate by giving three months’ notice or paying rent in place of notice.
• These termination provisions showed that the total lease period extended beyond one year.

A later correction document and the court decisions cited by the appellant did not change this conclusion. The cited cases concerned different types of documents and different circumstances.

Revised stamp duty calculation

Proceedings No. 3677/P1/2020 applied Registration Department Circular No. 16125/02/2019 dated 16 April 2019. Under that clarification, GST payable by a lessee is not treated as part of rent when calculating stamp duty on a lease.

The final calculation used:

• Monthly rent of ₹8,20,000 for nine years.
• Advance of ₹16,40,000.
• Municipal tax of ₹30,000 for each of nine years.
• Total amount chargeable to stamp duty of ₹9,04,70,000.
• Stamp duty payable at 1 per cent of ₹9,04,700.
• Stamp duty already collected of ₹1,35,820.
• Deficient stamp duty payable of ₹7,68,880.

Who is affected

The payment direction directly affects D. Chandrasekaran and the parties to Document No. 1339/2018. The GST clarification is also relevant to registering officers and parties registering lease deeds, because GST on rent is not to be included as rent for stamp duty purposes in the cases covered by the cited circular.