Section 47-A Stamp Act | Requirement Of 'Fraudulent Intention' To Evade Stamp Duty Cannot Be Read Into Plain Statutory Text: Supreme Court

"The expressions 'wilful undervaluation' and/or 'fraudulent intention' is/are conspicuously absent in the plain phraseology of sub-section (1) of the said provision. The language is plain and the symmetry is straightforward, which should not be distorted in its purpose, through legal lexicalism." Supreme Court, in a significant order dated September 7, 2026, has expressed strong reservations against reading the requirement of "fraudulent intention" into Section 47-A of the Indian Stamp Act, 1899.

A bench of Justice Dipankar Datta and Justice Sheel Nagu observed that importing such a requirement transforms a valuation-centric fiscal inquiry into a quasi-criminal one, which may defeat the legislative object of protecting state revenue.

"A taxing statute has to be interpreted in accordance with what is clearly expressed therein. While interpreting such a statute and determining the liability to pay tax, the provisions are required to be construed strictly."

The court noted that while previous decisions like V.N. Devadoss v. Chief Revenue Control Officer-cum-Inspector of Stamps had imported the element of "fraudulent intent" as a prerequisite for invoking Section 47-A, the text of the statute contains no such stipulation. The bench emphasized that as a taxing statute, the Stamp Act must be construed strictly according to its literal construction, without implying conditions that the legislature has not expressly provided.

Court Critiques Previous Precedents

The bench observed that the requirement of proving a "culpable mindset" places an undue burden on honest purchasers and potentially disables authorities from curbing genuine undervaluation in clandestine transactions. The court reasoned that in a valuation-centric proceeding, an honest purchaser should only be required to justify the market value of the property, rather than be forced to defend their character against allegations of fraud.

Judicial Propriety and Referral

Because the conflicting interpretation in V.N. Devadoss and Registrar of Assurances v. ASL Vyapar (P) Ltd. was laid down by three-judge benches, the present bench held that it was bound by judicial discipline and could not unilaterally declare the law. Consequently, the court referred the question to a larger bench, specifically asking whether the basis for exercising power under Section 47-A is merely the determination of true market value, irrespective of the presence or absence of a fraudulent intent to evade duty.

Power to Determine True Market Value

The court underscored that the Registering Officer's role is to ensure that the stamp duty is paid on the actual market value, which is not strictly tethered to the "apparent tenor" of the instrument. The bench remarked that the object of the Stamp Act is to protect State revenue, and the registering authority must be empowered to look beyond the stated consideration to determine the true value of the transfer.

"The basis, therefore, per the ratio of the said decision, is 'wilful undervaluation with fraudulent intention to evade proper stamp duty'. However, the expressions 'wilful undervaluation' and/or 'fraudulent intention' is/are conspicuously absent in the plain phraseology of sub-section (1) of the said provision."

Impact on Ongoing Proceedings

Pending the decision of the larger bench, the court left the final determination of the appellant's writ petition to be governed by the eventual outcome. The court noted that if the narrow "fraud-centric" test is upheld by the larger bench, the lower court’s decision to quash the show cause notice would be justified, but if the "valuation-centric" interpretation is confirmed, the authority would be free to proceed with the inquiry.

Date of Decision: 07 September 2026