Letter No. 2090/C2/2023, Proportionate Recovery of Government Losses

What the guidance covers

The Inspector General of Registration, Tamil Nadu Registration Department, issued Letter No. 2090/C2/2023, dated 9 February 2024, following the clarification given by the Commercial Taxes and Registration Department in Letter No. 5173628/J1/2023-1, dated 24 November 2023. It addresses confirmed losses of stamp duty or registration fees connected with an earlier document, including losses confirmed through statutory proceedings or audit findings.

When such a loss is confirmed, a remark may be entered in Schedule 2 relating to the affected document and shown in the encumbrance certificate. Earlier practice could prevent registration of later documents until the entire loss was paid, even where the current owner had purchased only part of the property or an undivided share.

Who may be affected

The guidance affects current owners who acquired a portion or undivided share through documents registered after the document that caused the government loss. It is particularly relevant where an owner wants to register a sale, mortgage or another later document but the encumbrance certificate carries a loss remark linked to an earlier transaction.

Key provisions

• A current owner who comes forward to pay may be charged the confirmed loss in proportion to the extent or share of the property owned by that person.
• The proportionate amount must be calculated correctly and collected by the registration office.
• Payment details must be noted in Schedule 2 of the relevant document.
• The Sub Registrar must certify the collection on the original document and scan it.
• After the applicable proportionate loss is collected, a further document presented by that owner may be accepted for registration.
• For valuation cases covered by the listed provisions of section 47A, where payment was not made within two months of the order, interest on the proportionate loss must be collected at 1 per cent per month until payment.
• The additional interest under section 47A(4) does not apply to proportionate losses arising from other statutory provisions or audit remarks.
• If owners object to or do not offer to pay either the full loss or their proportionate amount, notices must be issued to the current owners and the persons who obtained the earlier document. The notice must seek payment based on their respective proportions.

Practical effect

The procedure allows a person who owns only part of an affected property to clear the liability relating to that part, rather than being required to pay the loss for the entire property. District Registrars and Deputy Inspectors General of Registration are directed to resolve doubts arising for registration officers and the public.