The Supreme Court has referred an important question concerning stamp duty and alleged undervaluation of property to a Bench larger than the present two-Judge Bench, questioning whether authorities must find a fraudulent intention before initiating proceedings under Section 47-A of the Indian Stamp Act.
The judgment was delivered on September 7, 2026, by Justice Dipankar Datta and Justice Sheel Nagu in Bharat Petroleum Corporation Limited v. The District Revenue Officer (Stamps) & Anr.
Background of the Case
Bharat Petroleum Corporation Limited had purchased land from the Government of India. The sale consideration was fully paid through cheques in 2014, and possession was handed over on January 21, 2014. A transfer deed was subsequently executed on June 24, 2016.
At the time of registration, BPCL paid stamp duty and registration charges on the sale consideration mentioned in the deed. However, the registering authority referred the matter under Section 47-A after noticing a difference between the guideline value of ₹500 per square foot and the value of ₹168.30 per square foot shown in the instrument. A show-cause notice was consequently issued seeking additional stamp duty.
The Madras High Court's Single Judge had earlier quashed the notice, holding that there was no material indicating deliberate undervaluation or fraudulent intent. The Division Bench later reversed that order and restored the proceedings before the revenue authority.
Supreme Court's Observation
The Supreme Court clarified that the immediate question before it was not the actual market value of the property or whether BPCL ultimately owed additional stamp duty. The issue was whether the proceedings under Section 47-A could validly be initiated in the first place.
The Bench examined the earlier three-Judge decision in V.N. Devadoss v. Chief Revenue Control Officer-cum-Inspector of Stamps, which had treated wilful undervaluation with fraudulent intention to evade stamp duty as the basis for invoking Section 47-A.
The present Bench, however, found serious difficulty with reading such an additional requirement into the wording of the statute.
"Section 47-A does not require the registering authority to issue notice having 'reason to believe' of a culpable mindset being the motive behind the transaction; it merely requires reason to believe that the market value of the property has not been truly set forth."
The Court also considered that making fraudulent intention a mandatory condition could create difficulties in both genuine and dishonest transactions. In an honest sale where a property has objective reasons for having a lower market value, the purchaser could face an unnecessary enquiry into their state of mind. Conversely, in a concealed cash transaction, authorities might be unable to initiate proceedings if evidence of fraudulent intention was required at the threshold.
Decision
The Bench held that it could not overrule the three-Judge decision in V.N. Devadoss because of judicial discipline. Since it had serious doubts about the correctness of that precedent, it referred the issue to a larger Bench.
The larger Bench will consider whether Section 47-A requires wilful undervaluation coupled with fraudulent intention, or whether the registering authority can initiate an enquiry simply when it has reason to believe that the true market value has not been stated in the instrument.
The papers were directed to be placed before the Chief Justice for appropriate orders.
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