ISLAMABAD: The Supreme Court has held that the date when an agreement is prepared and presented for registration in a matter relating to transfer of ownership of an immovable property, will be considered the material date for such a deed.

Thus, the stamp duty required to be paid/affixed will be according to the value of the property on the date when the agreement is prepared, says a judgment authored by Justice Qazi Faez Isa.

It is immaterial whether such a document has been prepared pursuant to a court decree in a suit for a specific performance in the case of a dispute, compelling the parties to execute a contract according to the precise terms agreed upon.

The apex court’s decision came on an appeal against two verdicts of the Lahore High Court (LHC), one from June 18, 2008 and another from March 19, 2012, which dealt with similar issues.

Overruling LHC judgement, the court says that stamp duty on property registration should be paid on the basis of its actual price

A three-judge bench, headed by former chief justice Jawwad S. Khawaja, had decided the matter on Aug 19, but the verdict was issued on the day the former chief justice retired.

Appeals against the high court order were filed by the Punjab government and some private parties.

The issue before the Supreme Court was to determine whether the value of the sale or conveyance deed or other documents regarding the transfer of ownership of a property, prepared pursuant to a court decree in a suit for specific performance, should be stamped on the basis of the sale consideration mentioned in the sale agreement/decree, or whether it should be stamped on the basis of the value of the immovable property when the document was presented for registration.

The appeals were filed against the insertion of Section 27A in the Stamp Act 1899, which deals with the value of immovable property. The amendment suggested that the value of the immovable property would be calculated according to the valuation table, notified by the district collector.

The purpose of bringing the amendment was to discourage the tendency, by buyers and sellers of property, to evade stamp duties by mentioning an amount lesser than the actual sale price paid or received. Thus, the district collectors were authorised under the law to notify valuation tables in respect of the immovable properties situated in their localities.

In the final conclusion, the Supreme Court held that the high court travelled beyond the provisions of the Stamp Act.

A document which is presented for registration is required to be stamped as per the stamp duty applicable on such date, the SC verdict held, adding that it makes no difference whether the document was voluntarily presented by the executants or had been prepared pursuant to a decree.

The registration officer cannot change the contents of the document which is presented for registration, but is only concerned with determining the applicable stamp duty on the date when the document is presented for registration, the judgment said.

The date the document is presented for registration is the material date and it is immaterial whether it has been prepared pursuant to a decree of a court, the judgment said adding that if the valuation of the immovable property had been notified pursuant to Section 27A of the Stamp Act, then the amount of the stamp duty should be calculated on the basis of the existing value of the property.

Published in Dawn, September 20th, 2015

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