"How can you say this is reasonable classification?" Kerala High Court grants interim stay on increase of stamp duty in Lakshadweep

The Kerala High Court on Thursday passed an interim stay order on the notification issued by the Lakshadweep Administration increasing the stamp duty levied for transfer of land (Adv. Mohammed Salih P.M Vs. Union of India and ors.).Single Judge, Justice Raja Vijayaraghan V, issued notice to the Lakshadweep administration and issued an interim order staying the operation of the notification increasing stamp duty for three weeks. .The notification had increased the stamp duty to 6 percent for female, 7 percent for jointly owned property by male and female and 8 percent for others of the total valuation of the landed property.Prior to this notification the stamp duty rate in the island was only 1 percent for all..Justice Vijayaraghavan questioned the imposition of three different rates of duties for three different sections of people and demanded to know the justification for this classification, if any. While issuing notice to the administration, he remarked, "You are coming here and imposing stamp duty for individuals who are residing there who are fundamentally all members of scheduled tribes. How can you justify this imposition of stamp duties? 6% for women, 7% for women and men jointly, and 8% for others?"Noting that the District Collector signed the notification, he questioned, "How can the district collector say this was issued by the approval of the competent authority?"Justice Vijayaraghavan also observed that there seems to be a pattern in the recent orders passed in the Union Territory. He remarked that "some orders (are) passed by district collectors, some by block development officers when statute says its government that will have to pass all these orders".On May 5,2021, the District Collector, Lakshadweep had issued a notification to revise the existing stamp duty levied on instruments for the purpose of affecting transfer of interest in land by way of conveyance/ gift/ exchange / sale etc. As per this notification, the stamp duty for the transfer of interest of landed property was increased from 1 percent to 6 percent for female, 7 percent for jointly owned property by male and female and 8 percent for others of the total valuation of the landed property..The petition was filed by a resident of the Union territory challenging the notification issued by the Lakshadweep Administration on the grounds that it was issued without jurisdiction and is highly arbitrary, unconstitutional, and violative of the fundamental rights guaranteed by the Constitution of India to the inhabitants of the Island who primarily belong to Scheduled Tribes..Advocate Saiby Jose Kidangoor, appearing for the petitioner, made his primary contentions based on the provisions under Section 9 of the Indian Stamp Act, 1899. Kidangoor submitted that Section 9 of the Act gives power to reduce remit or compound duties. But he argued that the order is a revision and restructure of the existing duty which is not within the purview of said section.He further pointed out that according to the Act only the Government, by way of a legal enactment to amend the existing rule, can make changes to the stamp duty. He drew attention to the fact that the notification mentions that it is approved by the competent authority but is in fact signed only by the District collector.He contended that an amendment to the schedule fixing the stamp duty cannot be carried out by a mere notification, that too one issued by the District collector who is not the competent authorityHe also submitted that as per Section 76 of the Act, all rules made under the Act shall be published in the official gazette. In the instant case, he argued that, in addition to the fact that there was no amendment to the rule as envisaged under the Act, the administration even without Gazette publication implemented the order..Kidangoor also based his arguments on the basis of the provisions of Article 15(4) which provides for special arrangements for promoting the interests and welfare of socially and educationally backward classes of the society such as Scheduled Tribes. He alleged that this increase in stamp duties is an attempt by the Administration to deprive the financially disadvantaged islanders of their ability to sell or purchase property and give an advantage to rich investors to privatise the islands. Therefore, he submitted that the hike in the stamp duty is also against the scope of the of The Laccadive, Minicoy and Amindivi Islands (protection of scheduled tribes) Regulation, 1964 which governs the transfer and attachment of land..The fixing of different rates for different categories of persons, is not only arbitrary, it is also clearly violative of Article 14 of the Constitution of India..Standing Counsel for the Administration relied on a judgment of the Supreme Court in Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd. and Ors and argued that the Apex Court would deprecate the practice of grant of interim order in matters relating to collection of public revenue..The Court saw merit in the petitioner's argument that the notification lacked any intelligible differentia and proceeded to issue an interim order staying the operation of the notification for three weeks.The Administration has been given three weeks time to file their response after which the case will be heard again. .[Read Interim Order]