Bombay HC Orders Stamp Duty Refund Despite Delayed Application
The Bombay High Court has ordered the refund of stamp duty to a petitioner despite the application being filed beyond the five-year limitation period. The court ruled that the delay was justified due to the petitioner's efforts under the Real Estate (Regulation and Development) Act, 2016 (RERA Act).
Stamp DutyRefundBombay High CourtRera ActMaharashtra Stamp ActReal Estate MaharashtraSep 10, 2025
The petitioner had entered into a registered Agreement for Sale to purchase a flat in a building for a consideration of Rs 5,12,79,327. He paid a stamp duty of Rs 25,64,120 along with the registration charges on 26-12-2013. The developer was supposed to deliver possession of the flat by 31-12-2017 but failed to do so. The developer unilaterally extended the date to 31-12-2018, but again failed to deliver. Consequently, the petitioner terminated the Agreement for Sale on 25-03-2019 and called upon the developer to refund the consideration paid along with interest. When the developer failed to comply, the petitioner filed a complaint under Section 18 of the RERA Act before the Real Estate Regulatory Authority (RERA).
RERA dismissed the complaint on 11-12-2020, holding that the developer was entitled to a further grace period till 31-12-2019. Dissatisfied, the petitioner appealed to the Maharashtra Real Estate Appellate Tribunal, which quashed RERA’s order and directed the developer to refund the amount paid by the petitioner, along with interest. During the pendency of the developer's Second Appeal before the High Court, the parties amicably resolved the dispute. The developer agreed to pay Rs 6,80,00,000, and the parties executed a Deed of Cancellation on 28-12-2022.
Subsequently, the petitioner filed an application before the Collector of Stamps seeking a refund of the stamp duty. The proceedings were transferred to the Inspector General of Registration & Superintendent of Stamps (Respondent 1), who rejected the application on 13-03-2025, citing that the Cancellation Agreement was not executed within five years of the Agreement for Sale. According to the proviso to Section 48(1) of the Maharashtra Stamp Act, 1958, the claim for refund of the stamp duty was not maintainable.
The petitioner’s counsel argued that Respondent 1 had mechanically rejected the claim for refund without considering the circumstances that led to the delay. He contended that the authorities were bound to refund the stamp duty paid and that the petitioner should be compensated with interest for the unjustified deprivation of the substantial amount of the stamp duty.
The Additional Government Pleader (AGP) countered that a cumulative reading of Sections 47 and 48 of the Stamp Act indicated that the Deed of Cancellation must be executed within five years from the execution of the Agreement for Sale, and the application for refund must be filed within six months from the date of registration of the cancellation deed. He argued that only the second condition was met in this case, justifying the rejection of the refund.
The Court relied on the case of Satish Buba Shetty v. Inspector General of Registration & Collector of Stamps, where the Court directed the refund of stamp duty on an Agreement for Sale that was cancelled due to proceedings initiated by the purchasers. The Court noted that the petitioner was constrained to approach RERA for the cancellation of the Agreement for Sale and the refund of the consideration. It was only after the High Court's Second Appeal that the developer agreed to refund the consideration and execute the Deed of Cancellation. Thus, denying the refund of the stamp duty was unjustified and inequitable.
The Court also addressed whether the refund could be ordered with interest. The Court clarified that interest represented the profit the creditor would have made if they had the use of the money to which they were entitled. The Court referred to Rajeev Nohwar v. State of Maharashtra, where the Supreme Court directed the refund along with interest, and Harshit Harish Jain v. State of Maharashtra, where the Court ordered the refund with 6% interest per annum for the wrongful retention of the stamp duty.
Consequently, the Court allowed the petition, quashed the order passed by Respondent 1, and directed the refund of the stamp duty along with simple interest at the rate of 6% per annum from the date of the application.
Frequently Asked Questions
What was the main reason for the delay in filing the application for stamp duty refund?
The main reason for the delay was the petitioner's necessity to approach the authorities under the Real Estate (Regulation and Development) Act, 2016 (RERA Act) for the cancellation of the Agreement for Sale and the refund of the consideration.
What conditions must be met for a refund of stamp duty under the Maharashtra Stamp Act, 1958?
To claim a refund of the stamp duty, the Deed of Cancellation must be executed within five years from the execution of the Agreement for Sale, and the application for refund must be filed within six months from the date of registration of the cancellation deed.
Why did the Bombay High Court rule in favor of the petitioner?
The Bombay High Court ruled in favor of the petitioner because the delay in filing the application was due to the petitioner's efforts under the RERA Act, and denying the refund was deemed unjustified and inequitable.
What is the significance of the interest component in the Court's decision?
The interest component in the Court's decision is significant as it compensates the petitioner for the unjustified deprivation of the substantial amount of the stamp duty.
What precedent did the Court rely on to support its decision?
The Court relied on the case of Satish Buba Shetty v. Inspector General of Registration & Collector of Stamps, where the Court directed the refund of stamp duty on an Agreement for Sale that was cancelled due to proceedings initiated by the purchasers.
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