1. Court’s decision
The Delhi High Court dismissed an intra-court appeal (LPA 1177/2024) filed by an auction purchaser who challenged a 10% deduction made by the Collector of Stamps while refunding the value of unused stamp papers purchased in 2019 for execution of a sale deed. The Court held that Section 54 of the Indian Stamp Act, 1899 expressly permits deduction of ten naye paise per rupee when unused stamps are surrendered. The appellant’s reliance on a Supreme Court judgment interpreting Section 52 of the Maharashtra Stamp Act was rejected because the two statutes contain materially different language. The Court concluded that the Collector’s action and the Single Judge’s refusal to interfere were legally correct.
2. Facts
The appellant purchased stamps worth ₹23,58,000 and paid e-registration fees of ₹3,93,136 on 09.01.2019 after successfully bidding in a bank auction for an industrial property in Shahdara. Shortly thereafter, a tribunal stayed the auction under proceedings arising from challenged measures under the SARFAESI Act. The auction sale was later set aside, and the bank was directed to refund the auction money with 10% interest.
The appellant then applied to the Collector for refund of stamp duty. Although the registration fee was fully refunded, the Collector refunded only ₹21,22,000 out of ₹23,58,000, deducting 10% pursuant to Section 54. Dissatisfied, the appellant filed a writ petition seeking refund of the deducted amount plus 6% interest on the stamp value and registration fee. The Single Judge dismissed the petition on 23.10.2024, prompting the present appeal.
3. Issues
The High Court examined the following issues:
- Whether the Collector lawfully deducted 10% from the refund of unused stamps under Section 54 of the Indian Stamp Act.
- Whether the Supreme Court’s decision in Rajeev Nohwar under the Maharashtra Stamp Act applied to Delhi.
- Whether the appellant was entitled to interest at 6% on the stamp duty and registration fee refunded to him.
- Whether the Single Judge’s reference to Section 53(c) constituted a substantial error.
- Whether any equitable grounds existed to override statutory deduction.
4. Appellant’s arguments
The appellant’s counsel argued that the deduction of 10% was contrary to the Supreme Court judgment in Rajeev Nohwar v. Chief Controlling Revenue Authority, where full refund of stamp value and interest at 6% had been ordered. The appellant contended that the two provisions—Section 52 of the Maharashtra Stamp Act and Section 54 of the Indian Stamp Act—are pari materia and therefore identical treatment should apply.
He further argued that since the sale was cancelled through no fault of the appellant, imposing a deduction would unfairly penalise him. The appellant also asserted entitlement to 6% interest on the entire stamp value and registration fee from 2019 until refund, claiming that the Collector erred in refusing this. According to him, the Single Judge incorrectly upheld the deduction by misreading statutory provisions.
5. Respondents’ arguments
The State argued that the appellant’s reliance on Rajeev Nohwar was entirely misplaced because Section 52 of the Maharashtra Stamp Act does not contain the deduction clause found in Section 54 of the Indian Stamp Act. The governing law in Delhi is Section 54, which expressly mandates deduction of ten naye paise per rupee for unused stamps surrendered for refund.
The State also contended that interest cannot be claimed as a matter of right and is permitted only when statute authorises it. The Collector correctly complied with the Court’s earlier direction to decide the refund application but was not required to pay interest or waive statutory deduction. The State maintained that the Single Judge rightly found no illegality in the deduction, except for inadvertently citing Section 53(c), which governs spoiled stamps, not unused ones.
6. Analysis of the law
The Court conducted a side-by-side comparison of the statutory provisions. Section 54 of the Indian Stamp Act provides that when unused stamps are surrendered within six months of purchase, the Collector must refund the value after deducting ten naye paise per rupee. The deduction is explicitly mandated.
In contrast, Section 52 of the Maharashtra Stamp Act permits deduction as prescribed by Rules but contains no fixed statutory deduction. More importantly, the Supreme Court judgment in Rajeev Nohwar did not address the permissibility of deductions—it dealt solely with limitation for claiming refund. The appellant’s entire argument rested on an issue the Supreme Court never examined.
The High Court emphasised that statutory provisions relating to refund of fiscal impositions must be strictly construed. Courts cannot rewrite legislation by importing language from a different state statute. Accordingly, the Collector’s decision to deduct 10% was fully aligned with Section 54.
7. Precedent analysis
The judgment relies primarily on internal statutory interpretation rather than wide precedent. However, several principles of interpretation are implicit:
1. Fiscal statutes must be strictly construed
Refund provisions cannot be expanded beyond their explicit terms.
2. Parity cannot be drawn between statutes with materially different language
The Court rejected application of Rajeev Nohwar because the statutory frameworks differed.
3. Clerical errors do not vitiate otherwise correct judicial outcomes
The Single Judge’s reference to Section 53(c) (governing spoiled stamps) was an error of description, not substance, because the essence of the holding relied on Section 54.
4. Refund rights are statutory, not equitable
Interest or waiver of deduction cannot be claimed unless statute authorises it.
These principles collectively guided the Court in affirming the dismissal of the writ petition.
8. Court’s reasoning
The Court held that Section 54 directly applies to the appellant’s case and allows refund of unused stamps only after statutory deduction. The absence of the phrase “deducting ten naye paise per rupee” in Section 52 of the Maharashtra statute made Rajeev Nohwar fundamentally inapplicable.
The Court further clarified that Rajeev Nohwar did not decide anything about deductions; it addressed limitation for seeking refund. Hence, extending it to eliminate statutory deduction would distort legislative intent.
Regarding interest, the Court held that neither Section 54 nor any Delhi rule provides for interest on refund of unused stamps. Therefore, the Collector’s refusal was lawful.
The Single Judge’s erroneous reference to Section 53(c) was clerical, and the outcome remained correct because refund in the present case concerned unused, not spoiled, stamps.
9. Conclusion
The High Court affirmed that the Collector correctly deducted 10% from the stamp value refund and lawfully refused interest. The appeal was dismissed with no order as to costs. The Court confirmed that Section 54 governs the situation and its statutory deduction cannot be avoided through analogy to Maharashtra law or by invoking judgments delivered under different legislative schemes.
10. Implications
This ruling reinforces that:
• Refunds of unused stamps in Delhi are strictly governed by Section 54;
• A 10% statutory deduction is compulsory and cannot be waived;
• Supreme Court cases interpreting other state statutes cannot be transplanted where the statutory text significantly differs;
• Interest on stamp duty refunds is not available unless expressly provided;
• Courts will not enlarge fiscal refunds through equitable reasoning or analogy.
The judgment clarifies refund jurisprudence for future stamp-duty disputes involving cancelled property transactions.
CASE LAW REFERENCES
1. Rajeev Nohwar v. Chief Controlling Revenue Authority (2021)
Concerned limitation for refund under Maharashtra Stamp Act; did not address deduction.
Held inapplicable due to different statutory language.
2. Principles of fiscal interpretation
Strict construction of refund provisions; deduction mandatory where statute prescribes it.
Applied to uphold Section 54.
FAQs
1. Why did the Delhi High Court uphold the 10% deduction on stamp duty refund?
Because Section 54 of the Indian Stamp Act expressly mandates deduction of ten naye paise per rupee when unused stamps are surrendered.
2. Does the Supreme Court ruling in Rajeev Nohwar entitle bidders to full refund?
No. That ruling was under the Maharashtra Stamp Act, which contains no mandatory deduction clause; the Delhi statute does.
3. Can interest be claimed on the refund of unused stamp papers?
Not in Delhi. Neither Section 54 nor local rules provide for interest on such refund.