Chapter V Stamp Duty and Registration Fees

CHAPTER-V : STAMP DUTY AND REGISTRATION FEES

5.1 Results of audit

Test check of the assessment records in the offices of Sub-Registrars/Dy.
Collectors (VOP) conducted during 2007-08 disclosed underassessment of
Rs. 91.09 crore in 284 cases. These cases fall under the following categories:
(Rupees in crore)
Sl. No. Category No. of cases Amount
1. Misclassification of documents 51 31.63
2. Undervaluation of property 41 5.89
3. Irregular acceptance of time barred cases resulting in 3 0.78
postponement of realisation of duty
4. Under assessment of stamp duty on instrument of 16 0.32
mortgage deeds
5. Other irregularities 172 52.05
6. IT Review of implementation of Registration of 1 0.42
Documents System
Total 284 91.09

During the year 2007-08, the department accepted under assessment of Rs. 5
crore in 281 cases and recovered Rs. 5.62 lakh in 11 cases.
An IT review of implementation of Registration of Documents System and
few illustrative cases involving Rs. 77.79 crore are mentioned in the following
paragraphs:

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Audit Report (Revenue Receipts) for the year ended 31 March 2008

5.2 Implementation of Registration of Documents System

Highlights
The system software lacked adequate system security. The department has not
laid down any security policies and procedures.
(Paragraph 5.2.7)
The input controls in system are inadequate and weak, which may cause
misleading/loss of data, leading to loss of revenue. The system did not cover the
requirement of classification of documents essential for determining the duty
leviable.
(Paragraph 5.2.8)
The centralised data bank was not maintained. Adequate backup of database
was also not maintained.
(Paragraph 5.2.12)
The department does not have any training plan to run the system by its staff.
(Paragraph 5.2.14)
5.2.1 Introduction
The Government of Gujarat (February 2005) implemented a new system
‘Registration of Documents System’, designed by NIC1, in two sub-registrar
offices (SROs) on pilot basis in August 2003. The system after initial
implementation in 25 SROs was later extended to all the other SROs from April
2007.
The implementation of the system is outsourced to a service provider, who is
responsible for providing, installing and maintaining the required hardware,
system software, data entry, scanning of documents and maintaining data
backup.
5.2.2 Registration of Documents system (system)
The system was to cover all the activities related to registration i.e. market value
calculation of immovable property, calculation of stamp duty and registration
fee, scanning of the documents and generation of various reports for
administration as well as for public. The documents filed by the executants is
registered; after due verification of the document by the sub-registrar and on
payment of required registration fee and duties determined by him. The
document is then scanned and data pertaining to the registration is entered in the
system by data entry operator (DEO) and the original document is endorsed and
returned to the applicant.
5.2.3 Organisational set up
The overall control on levy and collection of stamp duty and registration fees
rests with the Revenue Department at the Government level. The Inspector
General of Registration (IGR) is the head of the office and is assisted by one
Deputy IGR, four Assistant IGRs and 25 Inspectors of Registration. The sub-

1
National Informatics Centre

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 Chapter V Stamp Duty and Registration Fees

registrars report to the Inspector of Registration. There are 150 SROs in the
State.
5.2.4 Scope of audit and methodology
The present review conducted in June 2008 covered the implementation of the
system in IGR office during the period May 2005 to March 2008. During the
review, data collected from three SROs in Ahmedabad (City, Paldi and Wadaj)
for the period from May 2005 to March 2008 was analysed. Records/data were
test checked using Standard Audit Analysis Software viz. Structured Query
Language (SQL) and Interactive Data Extraction and Analysis (IDEA) package.
Audit applied both substantive and compliance tests to evaluate the extent of
reliability of various controls.
5.2.5 Audit objectives
The review was conducted with a view to:
• examine the implementation of system with respect to assessment and
collection of stamp duty and registration fees;
• examine and evaluate the controls provided in system, for safeguarding the
data and the programme, for their availability and effectiveness;
• analyse the data captured by system and other related sources to check for
inconsistencies and resultant loss of revenue; and
• evaluate the audit trails as existing in system.
5.2.6 Acknowledgement
Indian Audit and Accounts Department acknowledges the co-operation of the
IGR office in providing necessary information and records for audit. Audit
findings, on the review were reported to the Government in August 2008. Reply
of the Government has not been received (November 2008).
Audit Findings

5.2.7 Access controls

Information Technology (IT) controls in a computerised system are the physical
and programmed methods, policies and procedures that ensure the protection of
the entity’s assets, the accuracy and reliability of its records and the operational
adherence to the management standards.
5.2.7.1 Physical Access Controls
Audit observed that no physical access controls existed and any person could
enter the area where computers were kept for recording the transactions. It was
also observed in the three SROs in Ahmedabad (City, Paldi and Wadaj) that
separate secured places were not provided for the server and data storage. The
contract agreement with the service provider also did not mandate this.
5.2.7.2 Logical Access Controls
• The system software needs User ID and password to access the system,
but the backend data base instance is not locked by NIC. Thus, the service

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Audit Report (Revenue Receipts) for the year ended 31 March 2008

provider has full unrestricted access to the database, who can change any
data without leaving any trace or track of the changes made.
• The IGR office did not have any system security policies and procedures
regarding system security login, password etc.
• The software requires User ID and password for its access. The system
software allows the password which can even be of just one character and
only alphabets instead of the general password policy requirement of
minimum six to eight characters and a combination of alphabets, number
and special characters. In data analysis of the three SROs, it was observed
that out of 57 users name created, 15 had single character passwords.
• The system software should be capable of maintaining audit trail of all
functional activities in the system like login time, logout time, log of each
changes made by user etc. An analysis of the login table in the SROs
showed that the logout time was not recorded.
• Generally, the user rights should be based on need to know basis. In data
analysis of the SROs (City, Paldi, Wadaj), it was however noticed that
user were assigned rights to all modules except master and initial setup. A
user name ‘Guest’ with a universal password ‘g’ and all rights except
initial setup and master data was found in all places where the system was
installed.
• A secure system should restrict the login time based on the server system
time. An analysis of the log tables revealed login at odd hours like 00:24
etc. In SRO, Wadaj, the records show that 1,591 logins were made outside
office working hours (i.e. 10:00 am to 6:00 pm) out of which 1,519
instances were Guest login.
5.2.8 Input controls and data validation
The system operation is handled by the DEO of the service provider who had
unrestricted access to the system and its backend data. The department do not
have mechanism to check/validate the data entered by the DEO. As such
possibility of cases of under valuation or misuse or fraud cannot be denied. The
following input control weakness was observed in the system.
5.2.8.1 Incomplete master database tables pertaining to Jantri
The system has no provision for verification of the jantri (schedule of rates)
entered in the master tables while calculating market value of property. In
several cases, in the absence of integration of jantri rates into the system, these
were fed manually where the possibility of human error cannot be denied.
5.2.8.2 Land classification data not maintained
Master database has no provision for entry of the details of purpose of the
non-agricultural land (‘residential’, ‘commercial’, ‘industrial’ etc.) for which
permission is granted by the Collector. Due to lack of this information, sub-
registrar has to rely upon the information furnished by the executants for the
purpose of valuation.

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 Chapter V Stamp Duty and Registration Fees

5.2.8.3 Mutation of ownership data not maintained

There is no provision for integration of the system with the Collector/Mamlatdar
offices to give effect to the changes in the ownership by mutation entries due to
application of Section 2 (g) of the Bombay Stamp Act.2 As such incorrect
mutation entries and consequent evasion of stamp duty and registration fees
could not be ruled out.
5.2.9 Processing controls

5.2.9.1 No provision for entry of documents containing distinct

matters
The software does not have provision for registration under more than one
article as provided under Section 5 of the Bombay Stamp Act, 1958. Some
instances where such document has been registered under one Article only
resulting in short levy of stamp duty and registration fees of Rs. 42.15 lakh is
detailed in Annexure II.
5.2.9.2 Inadequate validation checks
In the receipt of registration fees module, it was observed that stamp duty,
registration fee and other fees, though displayed by the system, can be edited by
the DEO. In the test data fed with a consideration of Rs. 2,50,000, the system
accepted the change in registration fee as Rs. 25,000 and printed the receipt. In
the office of the SRO, Paldi, it was observed that even the rates of registration
and stamp duty were not displayed on the receipt.
5.2.10 Output controls
In the generation of reports meant for Income Tax Department, for enabling
them to catch offenders of income tax evasions, the software throws an error
message and quits. Also in consolidated reports which involve data for more
than a day, the system generated the reports after prolonged time or just hangs.
5.2.11 Change management system
It was observed from the version table that the software had five version
changes after its implementation from April 2005. No formal system of
approval of changes by the IGR was established.
5.2.12 Internal controls

5.2.12.1 No segregation of duties

The service provider had engaged a single or double DEO for the entire
operation. The single DEO has unrestricted access to all the system modules and
backend data also, which increases the risk of data mishandling and fiddling.
5.2.12.2 Non-maintenance of the centralised data bank
The system envisaged creation of a centralised data bank to provide a decision
support system for the department. However neither a central database nor a

2
As per explanation 1, in case of transfer of property by a co-owner to another co-owner of the
property, the transactions are liable to stamp duty and registration fees.

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Audit Report (Revenue Receipts) for the year ended 31 March 2008

database at district levels has been created, depriving the department of a

decision support system and data security.
5.2.13 Outsourcing
5.2.13.1 The service provider has to transfer the data on daily basis to the
servers at district level and in the IGR office. However, the service provider did
not send the same to IGR office but sent only soft copy of scanned documents
on monthly basis.
5.2.13.2 The agreement with the service provider does not provide for delivery
of the MS-SQL server data to the sub-registrar on termination/expiry of the
agreement.
5.2.14 Training
5.2.14.1 The system after initial implementation and maintenance by the
service providers for five years was to be run by departmental staff. However,
the Department has neither created pool of sufficiently trained IT staff nor has
any plans for training of the staff in the new system.
5.2.14.2 As per the system requirement, the DEO can access the system only
after the sub-registrar using his User ID and password starts the system. Further,
master data like rates of duty, jantri etc. can be accessed only by the sub-
registrar. However, the department had not conducted any training for the sub-
registrars for the use of the system.
5.2.14.3 The DEOs and the service providers need to be well conversant with
the system for the smooth operation of the system. Department had not imparted
any training to the service providers and their DEOs.
5.2.15 Business continuity plan and disaster recovery plan
5.2.15.1 The IGR office has not drawn up a formal business continuity and
disaster recovery plan.
5.2.15.2 There was no record in the IGR office indicating that the backup of
scanned documents had ever been tested.
5.2.15.3 As the sub-registrar or the IGR office does not have the back up of the
SQL database in the absence of any alternate arrangement in case of loss of data
or termination of the services of the service provider, the database cannot be
restored.
5.2.16 Summary of recommendations
Following recommendations are proposed to improve the system.
• the department must have IT strategy to keep abreast with changing
Information and Communication Technology environment;
• the system should have proper controls to ensure security by implementing
password policy, restricted access to sensitive database;
• the reliability of data can be maintained by making necessary changes in
various modules;
• integrity of data can be safeguarded by having a sound policy, train
departmental staff to reduce dependency on outside agency; and

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• urgent steps need to be taken to incorporate provisions for maintaining

backup with IGR.

5.3 Non-realisation of stamp duty due to non-execution of lease deed

The Petroleum and Natural Gas Rules, 1959 empower the State Government to
grant a mining lease of petroleum and natural gas on land within the State, with
the approval of the Central Government. The Registration Act, 1908, requires
that deeds conveying lease hold rights for period beyond one year should be
registered compulsorily. The Bombay Stamp Act, 1958 (BS Act), applicable to
Gujarat, provides for levy of stamp duty in case of lease of mines in which
royalty or share of produce is received as rent or part of a rent at the prescribed
rate on average annual royalty. The Superintendent of Stamps has additionally
issued instructions which provide for levy of stamp duty in case of lease of
mines on aggregate of annual dead rent, annual royalty payable during the first
year, surface rent and deposit.
Test check of the records of the Director of Petroleum, Gandhinagar for the
period between 2002-03 and 2006-07 revealed that the Government of Gujarat
had sanctioned 102 mining leases of oil and natural gas to ONGC Ltd. and
three3 private oil companies during the period from 1 April 2002 to 31 March
2007, with the condition that the lessee shall execute the prescribed lease deed.
In another 12 cases, the Director of Petroleum allowed extraction of oil and
natural gas to ONGC Ltd. without the sanction of the State Government. In
none of these 114 leased mining sites, did the Director of Petroleum got the
lease deeds executed by the lessees, leading to loss of stamp duty and
registration fees totaling Rs. 70.63 crore. The loss of revenue would be much
more if all the mining leases sanctioned through the Director of Petroleum are
taken into account beyond the cited period covered by audit, as audit found no
systemic arrangement in place either with the Director of Petroleum or with the
Superintendent of Stamps to capture this revenue.
Audit reported the matter to the department in December 2007 and to the
Government in May 2008. The reply of the Government (July 2008) does not
touch upon the essential audit point of not getting the lease deed executed from
the mining lessees.

5.4 Non-levy of stamp duty on instruments of amalgamation of the

companies
The Indian Registration Act (IR Act), 1908 provides that instruments of
conveyance should be registered compulsorily after payment of the registration
fees. Further, Section 394 of the Companies Act, 1956 provides that every
amalgamation order of the High Court is to be filed with the Registrar of
Companies (RoC) within 30 days for registration of the amalgamated company.
The BS Act provides that stamp duty on conveyance, relating to an order of the
High Court in respect of amalgamation of companies, is leviable at the
prescribed rate on the market value of shares/immovable property on the
appointed date mentioned in the scheme of amalgamation.

3
Joshi Technology International Incorporation, Niko Resources Ltd. and Selan Exploration
Technology Ltd

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Audit Report (Revenue Receipts) for the year ended 31 March 2008

Test check of the records of the Superintendent of Stamps (SoS), Gandhinagar

in January 2008 revealed that the department did not set up system for obtaining
periodical information of amalgamation of companies from the RoC. From the
records available with the RoC it was noticed that 91 cases of amalgamation
were registered with the RoC from 2004-05 to 2006-07. Cross checking of these
cases with those adjudicated by the SoS revealed that in 48 cases, the transferor
companies did not pay stamp duty and registration fees on orders issued for
reconstruction or amalgamation as these orders were never presented before the
SoS for adjudication. This resulted non-levy of stamp duty and registration fees
of Rs. 32.68 crore in 10 cases. In remaining 38 cases, non-levy could not be
quantified in absence of details of consideration paid and true market value of
the property transferred.
The matter was reported to the department in January 2008 and the Government
in May 2008; their reply has not been received (November 2008).

5.5 Short levy of stamp duty and registration fees due to

misclassification of deeds
Section 3 of the BS Act provides that every instrument mentioned in Schedule I
shall be chargeable with duty at the prescribed rates. For the purpose of levy of
stamp duty, an instrument is required to be classified on the basis of its recitals
given in the document and not on the basis of its title. Registration fees on such
documents are also to be charged ad valorem on the amount of the purchase
money/loans.
During test check of the records of 22 SROs4 and Additional Superintendent of
Stamps, Gandhinagar, it was noticed that 138 documents registered between
2005 and 2006 were classified on the basis of their titles and stamp duty and
registration fees were levied accordingly. Scrutiny of recitals of these
documents revealed that these documents were misclassified. This resulted in
short levy of stamp duty and registration fees of Rs. 24.58 crore as mentioned
below:
(Rupees in crore)
Sl. Location No. of Consideration/ Short Nature of irregularity
No docu- amount of loan levy
ments
1. Ahmedabad, 66 282.05 21.47 Though agreements contain
Bhavnagar, recitals such as, possession of the
Gandhinagar property will be handed over
and Vadodara after execution of the agreement,
all taxes will be born by
purchasers henceforth, vendor
will execute irrevocable power of
attorney in favour of purchasers,
etc., duty was levied as
agreement instead of as
conveyance.

4
Ahmedabad II, III, and VII, Bhavnagar I, Dabhoi, Dhandhuka, Gandhinagar, Jamnagar II,
Kadi, Kalol, Kalol (NG), Mehsana, Navsari, Palanpur, Sanand, Savali, Surat II,
Surendranagar, Vadodara I, II and IV and Waghodia

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2. Ahmedabad, 31 41.20 2.79 Though recitals in respect of

Banaskantha, handing over possession,
Gandhinagar, acceptance of money by
Jamnagar, developers from prospective
Mehsana, buyers, payment of all taxes by
Navsari and developers after execution of
Vadodara agreement, giving irrevocable
power of attorney to developers
etc. clearly indicated conveyance
of property, stamp duty was
levied as development
agreements.
3. Ahmedabad, 40 26.09 0.26 Though recitals contained
Gandhinagar, conditions such as payment of
Mehsana, compound interest, handing over
Navsari, Surat, demand promissory note, power
Surendranagar of attorneys, etc., clearly
and Vadodara indicating creation of charge over
properties, the document was
classified as equitable mortgage
instead of mortgage.
4. Gandhinagar 1 230.50 0.06 Though recitals indicated
creation of further charge on an
already existing mortgage on the
property on a portion of loan,
duty was levied on entire amount
of loan treating the property
under a new mortgage.
Total 138 579.84 24.58

After the cases were pointed out between May 2006 and January 2007, the
department accepted audit objection of Rs. 4.64 lakh in eight cases. A report on
recovery and reply in the remaining cases has not been received (November
2008).

The matter was reported to the Government in May 2008; their reply has not
been received (November 2008).

5.6 Non/short recovery of stamp duty on notes sent by brokers/

sub-brokers to their principals intimating purchase/sale of
shares
The BS Act provides to levy stamp duty at the prescribed rate on note sent by a
broker/sub-broker to his principal intimating purchase/sale of shares on account
of the principal. Further, non-payment of appropriate stamp duty attracts interest
at the rate of 15 per cent per annum on the amount due.
During test check of the records of two Dy. Collectors5 (VOP) it was noticed
between August and September 2007 that five brokers/sub-brokers of shares
carried out cash/delivery based transaction and forward contract worth
Rs. 19,151.44 crore on account of their respective principals between 2003-04
and 2006-07 and sent notes to that effect to their respective principals.
However, the departmental officials either did not recover stamp duty or

5
Surat I and Vadodara I

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Audit Report (Revenue Receipts) for the year ended 31 March 2008

recovered it at incorrect rate resulting in non/short recovery of stamp duty and

interest of Rs. 6.43 crore.
After the cases were pointed out between August and September 2007, the
department accepted (November 2007) the audit observation involving
Rs. 4.05 crore in three cases. A report on recovery and reply in remaining cases
has not been received (November 2008).
The matter was reported to the Government in May 2008; their reply has not
been received (November 2008).

5.7 Short levy of stamp duty and registration fees on documents

comprising several distinct matters
Section 5 of the BS Act provides that any instrument comprising or relating to
several distinct matters is chargeable with the aggregate amount of the duties for
which such separate instrument would be chargeable under the Act.
During test check of the records of 29 Sub-Registrars6, it was noticed between
May 2006 and January 2008 that 143 documents comprising several distinct
matters of immovable properties valued at Rs. 79.85 crore were charged to
stamp duty and registration fees for only one matter/transaction resulting in
short levy of stamp duty and registration fees of Rs. 5.66 crore. Some important
cases noticed in 118 documents involving short levy of Rs. 5.18 crore in
properties valued at Rs. 61.47 crore are mentioned below:
(Rupees in lakh)
Sl. Location No. of Value of Short Remarks
No. docu- property levy
ments
1. Ahmedabad, 60 3,575.59 289.02 As documents contained two
Banaskantha, distinct matters, deemed
Bhavnagar, conveyance between vendor and
Gandhinagar developer for entire property as
Mehsana, mentioned in the document and
Porbandar, present conveyance of property by
Vadodara and vendor and developer to ultimate
Valsad purchaser, stamp duty (SD) and
registration fees (RF) were
leviable on both the matters. It was
levied only on the second matter.
2. Ahmedabad, 45 1,800.57 157.69 As documents contained two
Banaskantha distinct matters, deemed
Bhavnagar, conveyance between mortgagor
Kheda, (the defaulting company) and
Mehsana, mortgagee (the Bank) and present
Navsari, conveyance of property by the
Panchmahal, Bank through auction to the
Patan and purchaser, SD and RF were
Vadodara leviable on both the matters. It was
levied only on second matter.

6
Ahmedabad III, IV, V and VII, Ankleshwar, Bhavnagar I, Bhuj, Dabhoi, Deesa, Gandevi,
Gandhinagar, Godhara, Jamnagar, Kadi, Kalol, Kheda, Nadiad, Padra, Palanpur, Patan,
Porbandar, Vadodara I, II, III and IV, Valsad, Vijapur, Visnagar and Waghodia

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3. Vadodara 13 771.20 71.11 The documents contained two

distinct matters i.e. execution of a
power of attorney for
consideration and present
conveyance of land and hence SD
and RF were leviable on both
matters. It was levied only on the
second matter.
Total 118 6,147.36 517.82

The payment of stamp duty and registration fees for only one matter/transaction
resulted in less receipt of Rs. 5.66 crore (November 2008).

The matter was reported to the department between January and August 2006
and the Government in May 2008; their reply has not been received (November
2008).

5.8 Non-levy of service charge

Section 46(2) of the BS Act provides that all duties, penalties, interest and other
dues required to be paid under the Act may be recovered by the Collector as
arrears of land revenue. Further, Rule 117C of Gujarat Land Revenue Rules,
1972 provides that in cases, where recovery proceedings are to be initiated
because of default in payment, five per cent of the dues recoverable as arrears of
land revenue shall be recovered as service charge from the defaulters.
During test check of the records of eight Dy. Collectors7 (VOP), it was noticed
between March and September 2007 that Rs. 29.35 crore was recovered in
28,301 cases during 2006-07 as arrears of land revenue from the defaulters.
However, service charge was neither levied nor collected from such defaulters.
This resulted in non-levy of service charge of Rs. 2.54 crore.
After the cases were pointed out between March and September 2007, the
department accepted the audit observation involving of Rs. 56.62 lakh in 6,930
cases. A report on recovery and reply in remaining cases has not been received
(November 2008).
The matter was reported to the Government in May 2008; their reply has not
been received (November 2008).

5.9 Short levy of stamp duty and registration fees due to incorrect
application of rate
The BS Act provides that lease including under lease or sublease and any
agreement to let or sublet for a term in excess of 10 years but not more than 30
years attracts duty at the rate applicable to conveyance for twice the amount of
average annual rent reserved. In case of lease of movable property, the Act
provides to levy duty at the rate of two per cent on the amount of average
annual rent.
During test check of the records of Additional Superintendent of Stamps,
Gandhinagar, it was noticed in January 2007 in two adjudicated cases that lease
agreements executed in February 2005 and May 2005 between two companies

7
Ahmedabad I and II, Bhuj, Gandhinagar, Jamnagar, Navsari, Surat and Vadodara

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Audit Report (Revenue Receipts) for the year ended 31 March 2008

for 24 years and 11 months, and 26 years to provide facility for setting of power
plants by a company at annual rent of Rs. 70.47 crore. Though lease agreements
related to immovable property, duty was levied at the rate applicable to movable
property. This resulted in short levy of stamp duty and registration fees of Rs.
2.47 crore.
The matter was reported to the department in December 2007 and the
Government in May 2008; their reply has not been received (November 2008).

5.10 Short levy of stamp duty due to undervaluation of properties

Provisions of the BS Act stipulates that if the officer registering the instrument
has reasons to believe that the consideration set forth in the document presented
for registration is not as per the market value of the property, he shall, before
registering the document, refer the same to the Dy. Collector (VOP) for
determining the market value of the property. The market value of the property
is to be determined in accordance with the Bombay Stamp (Determination of
Market Value of the Property) Rules, 1984.
During test check of the records of two Dy. Collectors8 (VOP) and 20 Sub-
Registrars9, it was noticed between May 2007 and January 2008 that the market
value of the property was determined incorrectly in 92 documents registered
between 2003 and 2006. This resulted in short levy of stamp duty and
registration fees of Rs. 1.47 crore as mentioned below:
(Rupees in lakh)
Sl. Location No. of Short Nature of irregularity
No. docu- levy
ments
1. Amreli, 60 97.37 The Government has prescribed jantri
Banaskantha, for determining market value of land
Bharuch, and constructed properties respectively.
Gandhinagar, Instead of adopting jantri, lesser value
Godhara, of the properties as shown in the
Jamnagar, documents was accepted.
Navsari, Surat
and Vadodara
2. Mehsana 3 17.67 While calculating market value, entire
cost of transaction is required to be
taken into consideration. In these
documents, additional amount to be
paid by purchaser in the form of
premium was not taken into
consideration.

3. Sabarkantha 1 10.39 The Sub-Registrar (SR) did not adopt

general value of non-agricultural land in
the vicinity which was higher than the
rate adopted.

8
Gandhinagar and Navsari
9
Ankleshwar, Bharuch, Dahod, Deesa, Gandhidham, Gandhinagar, Godhra, Himatnagar,
Jamjodhpur, Jamnagar II, Kadi, Kalol(NG), Kunkavav, Navsari, Padra, Palsana, Rajkot I,
Vadodara I and IV and Vagra

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4. Godhara, 5 7.98 Though the deeds were executed for

Jamnagar and conveyance of non-agricultural land,
Vadodara while determining market value of land,
rates prescribed for agricultural land
were considered.
5. Bharuch 3 2.91 While calculating market value, entire
cost of transaction is required to be
taken into consideration. In these
documents, frontage charge to be paid
by purchasers was not taken into
consideration.
6. Bharuch, 4 2.88 While calculating market value, entire
Dahod and area of land is required to be taken into
Rajkot consideration. In these documents,
some portion of land was excluded
while calculating market value.
7. Bharuch 1 2.80 While calculating market value, neither
the rate prescribed in the jantri was
adopted nor the discount given to
purchaser was taken into consideration.
8. Vadodara 1 2.58 In case of sale of property of a
company, value of property as fixed by
Board of Director and mentioned in the
document was not adopted while
calculating market value.
9. Sabarkantha 13 1.48 While calculating market value, the SR
adopted incorrect/lowest rate of jantri
and excluded certain portion of the land.
10. Godhara 1 0.72 While calculating market value, only
value of land was considered and value
of properties attached to land was
omitted.
Total 92 146.78

After the cases were pointed out between May 2007 and January 2008, the
department accepted audit observation of Rs. 11.01 lakh in 16 cases and
recovered Rs. 1.75 lakh in seven cases. A report on recovery and reply in
remaining cases has not been received (November 2008).
The matter was reported to the Government in May 2008; their reply has not
been received (November 2008).

5.11 Non-realisation of revenue due to non-registration of documents

Section 17 of the IR Act, 1908 provides that registration of every document of
sale, mortgage, lease or exchange of the property of the value of Rs. 100 or
more is compulsory. Further, the BS Act empowers every person in charge of a
public office to impound any instrument, produced before him in the
performance of his functions, if it appears that such instrument is not duly
stamped.

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Audit Report (Revenue Receipts) for the year ended 31 March 2008

During test check of the records of three Collectors10 and three district
development offices11, it was noticed between November 2006 and January
2007 that in 13 cases, the concerned Collectors/District Development Officers,
while according permission for non-agricultural purposes, did not impound the
unregistered/unstamped irrevocable powers of attorney of properties valued
Rs. 9.33 crore produced by the parties before them. Failure on the part of the
departmental officials to exercise the powers conferred upon them under the BS
Act, resulted in non-realisation of revenue in the form of stamp duty and
registration fees of Rs. 82.46 lakh.
After the cases were pointed out between November 2006 and January 2007, the
department accepted audit observations involving Rs. 15.61 lakh in four cases
and recovered Rs. 2.61 lakh in three cases. A report on recovery and reply in the
remaining cases has not been received (November 2008).
The matter was reported to the Government in May 2008; their reply has not
been received (November 2008).

5.12 Non/short levy of stamp duty on allotment of Government land

As per the amendment to the BS Act in 2002, every instrument executed by or
on behalf of the Government is chargeable to stamp duty at the rates specified in
the Act. Accordingly, the Revenue Department instructed (April 2002) all
competent authorities allotting Government land to state undertakings,
corporations, companies, private parties to insert condition of payment of proper
stamp duty in allotment letters.
During test check of the records of four Collector offices12 and three taluka
development offices13, it was noticed between February and November 2007
that in 274 cases of allotment of Government land measuring 4.80 lakh sq. mts.
relating to period 2002-03 to 2006-07, condition of payment of stamp duty was
not inserted in the sanads14. Possession of land was also handed over without
realising stamp duty. Sanads executed between revenue officers and allottees of
the land were not registered. This resulted in non/short levy of stamp duty and
registration fees of Rs. 46.54 lakh.
After the cases were pointed out between February and November 2007, the
department accepted audit observations involving Rs. 7.57 lakh in 260 cases and
recovered Rs. 1.26 lakh in one case. A report on recovery and reply in the
remaining cases has not been received (November 2008).
The matter was reported to the Government in May 2008; their reply has not
been received (November 2008).

10
Anand, Junagadh and Vadodara
11
Anand, Bharuch and Kheda
12
Bhavnagar, Rajkot, Surat and Surendranagar
13
Jodia, Rapar and Vanthali
14
Sanad is an agreement in prescribed form containing conditions and restrictions of usage of
land.

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 Chapter V Stamp Duty and Registration Fees

5.13 Non/short levy of stamp duty and registration fees on

dissolution of partnership
The BS Act provides that where any immovable property is taken as share on
dissolution of partnership by a partner other than a partner who brought that
property as a share or contribution to partnership, stamp duty is leviable at the
rate applicable to conveyance. In all other cases of dissolution of partnership,
stamp duty is leviable at a fixed rate of Rs. 100 per document.
During test check of the records of two Sub-Registrars15, it was noticed between
May and December 2007 that in four documents, though at the time of
dissolution of partnership, the partner distributed among themselves immovable
properties purchased by their respective firms, the departmental officials did not
levy stamp duty at the rate applicable to conveyance. This resulted in non/short
levy of stamp duty and registration fees of Rs. 27.36 lakh.
The matter was reported to the department between December 2007 and
February 2008 and the Government in May 2008; their reply has not been
received (November 2008).

5.14 Non-levy of stamp duty due to incorrect exemption

The BS Act empowers the Government to reduce or remit stamp duty on any
instrument or class of instrument from prospective or retrospective effect by an
order published in the official gazette. The Government vide notification issued
on 20 January 2001, exempted payment of stamp duty for a period of three
years on conveyance or lease of land executed in favour of developer for
development of info city project notified by the Government.
During test check of the records of Sub-Registrar Gandhinagar, it was noticed in
October 2006 that a company executed three subleases cum conveyance deeds
in favour of developers between October 2004 and January 2005 for an info city
project at Gandhinagar. Though period of exemption was over, the departmental
officials allowed exemption from payment of stamp duty on these subleases,
which resulted in non-recovery of duty of Rs. 23.95 lakh.
The matter was reported to the department in July 2007 and the Government in
May 2008; their reply has not been received (November 2008).

5.15 Loss of revenue due to grant of irregular benefit of amnesty

scheme
The Government vide order in April 2006 introduced an amnesty scheme for the
period between 1 May and 30 July 2006 by which 50 per cent of stamp duty and
entire amount of interest were waived off, if the party paid the remaining
amount of 50 per cent of stamp duty within the period of the scheme. The
scheme was applicable to instruments which were presented for registration
prior to 1 April 2000 and wherein order under Section 32A of the BS Act had
been passed prior to 1 February 2006.
During test check of the records of two Dy. Collectors16 (VOP), it was noticed
between August and September 2007 that in three cases, though parties did not

15
Rajkot I and Vadodara I
16
Navsari and Valsad

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Audit Report (Revenue Receipts) for the year ended 31 March 2008

pay 50 per cent of the deficit duty within the prescribed time limit, the
departmental officials granted the benefit of the amnesty scheme. This resulted
in loss of revenue of stamp duty and interest of Rs. 10.34 lakh.
After the cases were pointed out between August and September 2007, the
department accepted the audit observations involving Rs. 2.31 lakh in one case.
A report on recovery and reply in the remaining cases has not been received
(November 2008).
The matter was reported to the Government in May 2008; their reply has not
been received (November 2008).

5.16 Non/short levy of stamp duty on delivery order

5.16.1 The BS Act provides to levy stamp duty on instrument entitling a person
to the delivery of any goods lying in any dock or port or in any warehouse in
which goods are stored. By an amendment made in April 2006, the Government
of Gujarat enhanced rate of stamp duty on delivery of such goods from a fixed
rate of Rs. 20 to Re. 1 for every Rs. 1,000 or part thereof.
During test check of the records of the Dy. Collector (VOP) Jamnagar, it was
noticed in August 2007 that a cement company had taken delivery of coal and
petcoke17 valued Rs. 66.23 crore lying at Bedi port between April and
September 2006. The departmental officials did not levy stamp duty at
prescribed rate on these delivery orders. This resulted in non-levy of stamp duty
of Rs. 6.62 lakh.
The matter was reported to the department in December 2007 and the
Government in May 2008; their reply has not been received (November 2008).
5.16.2 By an amendment made in April 2006, the Government of Gujarat
enhanced rate of stamp duty on delivery of goods lying in any dock or port or in
any warehouse in which goods are stored, from a fixed rate of Rs. 20 to Re. 1
for every Rs. 1,000 or part thereof. Further, Superintendent of Stamp,
Gandhinagar issued instructions in April 2006 to levy stamp duty on gross value
of goods shown in delivery orders.
During test check of the records of two Dy.Collectors18 (VOP) it was noticed
between August and September 2007 that in 22 delivery orders, the
departmental officials did not include amount of custom duty, insurance
charges, freight charges, educational cess etc. in the gross value of the goods
while calculating stamp duty. Gross value includes all charges incurred on
goods lying in any dock or port or warehouse till the time of delivery of goods
from such place. This resulted in short levy of stamp duty of Rs. 6.24 lakh.
The matter was reported to the department between December 2007 and
February 2008 and the Government in May 2008; their reply has not been
received (November 2008).

17
Petcoke is a carbonaceous solid derived from oil refinery coker units or other cracking
processes.
18
Bhuj and Jamnagar

72