Proceedings No. 3623/P1/2021, Ratification of Gift to Local Body

What the proceedings decide

The Head of the Tamil Nadu Registration Department and Chief Controlling Revenue Authority issued Proceedings No. P.Mu.3623/P1/2021 on 22 September 2022. The proceedings allow a revision concerning pending document P48/2015 at the Padappai Sub Registrar Office and set aside the South Chennai District Registrar's order dated 15 February 2016.

The disputed document was a Deed of Ratification executed on 25 March 2015 in favour of Saint Thomas Mount Panchayat Union. It confirmed an earlier gift deed concerning land intended for public use in a layout.

Why the document was disputed

The South Chennai District Registrar had treated the Deed of Ratification as a transfer of ownership under Article 23 of the Indian Stamp Act. The District Registrar demanded:

• Deficit stamp duty of Rs.1,85,988.
• A penalty of Rs.4,012.

The document itself carried stamp duty of Rs.100 and did not state a property value. The District Registrar relied on wording that the ratification was for “mutual benefits” and concluded that it was not a voluntary gift without consideration.

The revision petitioner argued that no money or other consideration was received. According to the petitioner, the benefit was for people who had purchased plots, because the document enabled them to use the layout's common areas.

Findings and classification

Proceedings No. P.Mu.3623/P1/2021 found that the wording about mutual benefit did not show that the persons executing the document received consideration. It referred instead to facilitating the use of common areas by existing plot purchasers.

The authority also found that Section 4 of the Indian Stamp Act permits supplemental deeds only for sale, mortgage and settlement documents. It does not provide for a supplemental deed to a gift deed. The Deed of Ratification therefore could not be classified as a supplemental deed under that provision.

The authority classified pending document P48/2015 as a new gift deed under Article 33, rather than as a transfer of ownership under Article 23.

Practical effect

Because the gift was made to a local body, the authority held that the document qualified for the stamp duty concession under Government Order No. 455 dated 23 April 1983. The document was consequently treated as bearing the proper stamp duty, and the earlier demand for deficit stamp duty and penalty was cancelled.