Stamp Duty Must Reflect Auction Price, Not Artificial Market Value: Andhra Pradesh High Court Rebukes Sub-Registrar for Illegal Demand

“The Sub-Registrar has no other option but to register the sale certificates by fixing the stamp duty based on the successful bid price… the same reflects the true market value as per settled law.”- In a categorical reaffirmation of settled legal principle, the Andhra Pradesh High Court delivered a firm rebuke to the registration authorities for demanding stamp duty based on the government’s market value register, rather than the actual price realized in a public auction. Justice Gannamaneni Ramakrishna Prasad ruled that the Sub-Registrar at Nallapadu, Guntur, acted illegally and contrary to binding precedents when he insisted that auction purchasers pay additional stamp duty beyond the auction price.

The Court decisively directed the registration authority to compute duties only on the amount fetched in the auction, which in the present case was ₹55,10,000, and cautioned against the recurrence of such administrative defiance of established law.

“Law Is Absolutely Clear That Stamp Duty Must Be Calculated on Auction Price”: Court Rejects Registrar’s Justification

The petitioners, Gadde Sandhya and Manthena Subba Raju, had emerged as the highest bidders in a State Bank of India e-auction held on 29 February 2024, acquiring adjacent plots in Turakapalem village, Guntur District, each measuring 1016.40 square yards. The sale certificates were issued on 22 March 2024, and physical possession was duly handed over.

However, when they approached the Sub-Registrar’s office on 27 March 2024 for registering the sale certificates, they were denied registration unless they paid stamp duty as per the higher “market value” recorded in the government’s valuation register, instead of the price they had paid in the auction.

Rejecting this demand outright, the Court declared: “The law is absolutely clear and well settled that the Registration Authorities cannot insist on payment of stamp duty and registration fee basing on the value of the property as indicated in the Market Value Register.”

The Court held that the actual sale price realized in a public auction represents the true market value, stating:

“The Sub-Registrar has no other option but to register the Sale Certificates by fixing the stamp duty based on the successful bid price which is fetched in the auction.”

“Executive Defiance of Settled Law Cannot Be Countenanced”: Court Cites Binding Judgments from SC and High Court

Justice Prasad condemned the recurrent violations of judicial rulings by the State machinery, stating:

“Such well-settled legal issues are again being raked up by the Executive, again and again compelling the citizens to approach this Court.”

In support, the Court relied heavily on authoritative precedents, including:

• The Division Bench decision in State of Andhra Pradesh v. Marvel Financial Services Ltd. which held that “the Registration Authorities must collect stamp duty and registration fee only on the value fetched in auction sale.”

• The Supreme Court’s 2024 ruling in State of Punjab v. Ferrous Alloy Forgings Pvt. Ltd., which made it clear that “when the auction purchaser presents the original sale certificate for registration, it would attract stamp duty… only when used for such purpose, and that too on the amount realized.”

Referring to these authorities, the Court noted:

“After having considered the judgments rendered by the Hon’ble Supreme Court and the Division Bench of this Hon’ble Court, the issue is answered by this Court holding that the Respondent Authorities shall collect stamp duty and court fee on the value of the property as mentioned in the sale certificate.”

The Andhra Pradesh High Court, once again, made it unequivocally clear that registration officials are bound by law to accept the auction price as the basis for stamp duty, and not some arbitrary market rate fixed in valuation registers. Ordering immediate compliance, the Court directed:

“The Sub-Registrar… is directed to receive the Sale Certificates and process the same by assessing the stamp duty basing on the successful bid price… and inform the same to the writ petitioners within two weeks.”

No costs were imposed, but the message was unmistakable: executive overreach in contravention of judicial pronouncements will not be tolerated.

Date of Decision: 30 April 2025