Is Fraud Needed for a Stamp Duty Reference? Supreme Court Doubts V.N. Devadoss and Refers Section 47-A Question to Larger Bench

Case at a glance: In a dispute over deficit stamp duty on land BPCL bought from the Government of India, a two-judge Bench has doubted the three-judge ruling in V.N. Devadoss, (2009) 05 SC CK 0259 that Section 47-A of the Indian Stamp Act requires wilful undervaluation with fraudulent intent. Finding that the provision on its plain terms requires only reason to believe the market value was not truly set forth, it referred the question to a larger Bench.

BPCL bought land from the Government of India at a fixed price paid in 2014 and took possession on 21 January 2014. The deed was executed on 24 June 2016 and duty was paid on the stated consideration. The registering authority referred the instrument under Section 47-A, and a notice of 22 August 2016 demanded deficit duty, comparing a guideline value of Rs 500 per sq ft with the declared Rs 168.30 per sq ft.

A Single Judge of the High Court quashed the notice in 2022, relying on V.N. Devadoss. A Division Bench reversed in 2025, holding the writ premature and restoring proceedings before the District Revenue Officer. BPCL, represented by the ASG, argued there was no ‘reason to believe’ and that a sale by the President of India cannot involve fraudulent intent.

The Key Question Before the Court

Does Section 47-A require fraudulent intent or deliberate undervaluation before an instrument can be referred for determination of market value?

Plain Text Versus Judicial Gloss

The Court held that writ interference with a show cause notice is an exception, confined to want of jurisdiction or its abuse; here the officer had jurisdiction and the challenge concerned how it was invoked. On the text, the Court said Section 47-A “merely requires reason to believe that the market value of the property has not been truly set forth”, and that reading in fraudulent intent amounts to judicial legislation. It rejected BPCL’s argument based on the President being the transferor.

The Court observed that the fraud test can be unfair to honest buyers of encumbered property yet too lax for clandestine cash deals, relying on Ramesh Chand Bansal, (1999) 05 SC CK 0034 on the revenue-protection object. Because a coordinate Bench cannot overrule a three-judge decision, it stated that it was “unable to accept the proposition laid down therein as correct law” and placed the papers before the Chief Justice.

What the Court Actually Held

• Two questions were referred: whether V.N. Devadoss correctly requires wilful undervaluation with fraudulent intent, and whether Ramesh Chand Bansal and Shanti Bhushan, (2023) 04 SC CK 0079 state the correct law.
• The papers were placed before the Chief Justice for constituting a larger Bench.
• If V.N. Devadoss is upheld, the Single Judge’s quashing of the notice would be justified; otherwise not.
• The Court did not decide market value or BPCL’s liability.

Why This Judgment Matters

• It may reshape how stamp authorities across States invoke undervaluation references.
• It reopens the settled requirement of fraudulent intent under Section 47-A.
• It reiterates the narrow scope of writs against show cause notices.

What Should Advocates Take Away From the Judgment?

For Property Buyers

• Until the larger Bench decides, V.N. Devadoss remains binding.
• Prepare to justify declared values against guideline rates.

For Revenue Authorities

• Record reasons to believe undervaluation before referral.
• Watch the larger Bench outcome on the need for fraudulent intent.

Key Takeaways

Frequently Asked Questions

No. A two-judge Bench cannot overrule it; the question has been referred to a larger Bench.

Rs 168.30 per sq ft declared against a guideline value of Rs 500 per sq ft.

No. It left market value and liability undetermined pending the reference.

Conclusion

Read the full judgment on CourtKutchehry: View judgment →