SHEZADA MAZHAR J.---Through the present writ petition, the petitioners have challenged the demand by respondent/Defence Housing Authority with regard to stamp duty amounting to Rs,1,40,000/- to be declared without lawful authority and of no legal effect.
2. Facts necessary for the disposal of the present writ petition are that petitioner No,2, out of love and affection gifted his property bearing house No,261-K Phase I, DHA, Lahore to petitioner No,1, who is his only child on 02.122009. The gift orally made was duly accepted by petitioner No,1 and the possession of the house was also delivered to petitioner No,
1. The gift was completed in all respects. After some time petitioner No,1 approached respondent DHA for giving effect to the aforementioned gift in DHA record. The DHA supplied certain documents with instruction to fill the same. The petitioners after submitting duly filled documents appeared before the DHA authorities for the formalities which were duly completed and petitioner No,1 was asked to deposit stamp duty @ 2% of the value of the property i.e, Rs,1,40,000/- for giving effect to the gift in DHA record under Article 63-A of the Stamp Act, 1899, hence the present writ petition.
3. Learned counsel for the petitioners submits that it is settled law that writing is not essential or necessary to the validity of a gift of immovable property under Muhammadan Law. In this regard relied upon Maulvi Abdullah and others v. Abdul Aziz and others (1987 SCMR 1403). Submits that the gift is complete in all respects. The donor and donee have already appeared before the concerned official to reaffirm the genuineness of the gift transaction. Submits that filing a compulsory declaration on a printed form is merely an evidence of a past transaction. No stamp duty is payable on the same. The said compulsory declaration cannot be termed as a gift deed nor embodiment of gift or memorandum of gift. Learned counsel submits that Section' 129 of the Transfer of Property Act, 1882 clearly states that a gift created by a Muslim shall not be required registration. Submits that in the case in hand the gift was orally made and the written declaration which the petitioners have been compelled to file in a particular format did not embody the gift.
Submits that stamp duty is payable for registration of a document/instrument under Registration Act, 1908 creating a right, title or interest in the property. Submits that there is a plethora of case law by the august Supreme Court and High Courts that a gift is not compulsorily registerable.
Therefore, the demand regarding the payment of stamp duty on oral gift is illegal and void.
Submits that as the oral gift made under Islamic Law is not required to be registered and therefore by extension no stamp duty can be paid on it. Submits that the validity of gift under .Islamic Law cannot hinge upon payment of stamp duty. Submits that respondent/DHA's refusal to issue the transfer letter. To the petitioner No,1 without payment of stamp duty is patently illegal and violative of Articles 2, 2A and 227 of the Constitution of Islamic Republic of Pakistan. Submits that Article 63-A of the Stamp Act 1899 applies to transfer of immovable property by a development authority, housing authority, statutory body, cooperative housing society, company or a developer. It has no application to gift made by members. Submits that the action of respondent No,1 demanding payment of stamp duty .Amounting to Rs,1,40,000/- be declared to be without lawful authority of no legal .Effect. Further submits that the law laid by this Court in Tahir Umar v. Model Town Society, Model Town, Lahore through Secretary and 2 others (2007 MLD 304) is fully applicable to the case in hand. Learned counsel also relied upon the notifications issued by the Cantonment Board dated 14.03.1995, 09th January, 1999 and 11.07.2000 wherein it is notified that no transfer tax or registration fee is payable if the transfer is made to legal heirs.
4. On the other hand, respondent No,2 has submitted report and parawise comments in which it has been submitted that Article 63-A of Stamp Act 1899 is applicable on every transfer of a right or interest relating to an immovable property or an acknowledgement of such transfer by a development authority etc. The instant case is also of a transfer of immovable property and therefore petitioners are required to pay 2% stamp duty. It is also mentioned in the comments that Article 63-A does not require imposition of stamp duty on oral transaction. But once it is reduced into writing, stamp duty @ 2% of value of the property is to be leviable. As long as the petitioners do not intend to get the oral transaction recorded no stamp duty is leviable.
5. Learned counsel for the DHA has also made submissions on the same lines as taken by the respondent No,2 in its parawise comments. .However, learned counsel further submitted that the present case is not a case of transfer to legal heirs but recording of a transfer made by oral gift.
Submits that as and when petitioners request for recording/ acknowledging the oral gift the provision of Article 63-A shall become applicable. Further submits that the present case is of transfer by oral gift to a child and therefore the notifications relied upon are not applicable.
Learned counsel for the DHA further submits that Transfer of Property Act 1882 is not applicable to the Province of the Punjab and therefore, Section 29 Of the said Act is of no help to the case of the petitioners. In this regard relied upon Khushi Muhammad and others v. Muhammad Ashlaq and others (PLD 2014 Lahore 26). Learned count;e1 has also referred to the declaration of gift which has been admittedly signed by petitioner No,2 to state that gift is being made the day when petitioner appeared before the respondent's office for the completion of formalities of transfer. Therefore, Article 63-A of the Stamp Act, 1899 is applicable to the case in hand.
6. Arguments heard, record perused.
7. The courts of this country have time and again held that under Muslim Law a valid gift could be affected orally if the formalities prescribed by the Muslim Law are complied with even if instrument of gift is not registered. This proposition does not require any deliberation by this Court.
8. However, the dispute in the case in hand is not of the oral gift made by the petitioner No,2 in favour of the petitioner No,
1. The dispute is with regard to the demand raised by the respondent/DHA of 2% stamp duty under Article 63A of the Stamp Act, 1899 when the petitioner approached respondent/DHA for recording/giving effect to the oral gift.
9. In order to resolve the controversy it is necessary to reproduce the Article 63-A of the Stamp Act, 1899 which was included in the .Stamp Act on 27.06.2008 through the Punjab Finance Act, 2008. The Article 63-A is reproduced as under:- "63-A TRANSFER OF RIGHT OR INTEREST RELATING TO AN IMMOVALBE PROPERTY that is to say, transfer of a right or interest relating to an immovable property or an acknowledgement of such transfer, by a development authority, housing authority, of statutory body, cooperative housing society, company or a developer and every instrument by which a right or interest relating to an immovable property is being transferred, registered, recorded or acknowledged by the authority, body, society, company or developer.Two per cent the value of the property The reading of the above clause reveals that the Article imposes stamp duty @ 2% of the value of the property on two situation:---
(a) transfer of a right or interest to an immovable property.
OR an acknowledgment of such transfer by a development authority, housing authority, statutory body, cooperative housing society, company or a developer; AND b) every instrument by which a right or interest relating to an immovable properly is being transferred, registered, recorded or acknowledged by the authority, body society, company or developer.
From the above it is clear that all kinds, of transfers are liable to the application of Article 63-A of the Stamp Act, 1899.
10.In the case in hand respondent/DHA is acknowledging a transfer of a right/interest to an immovable property and therefor; as explained above the said transaction falls under Article 63-A of the Stamp Act, 1899. Being a housing authority, it is necessary upon the DHA to demand stamp duty @ 2% of the value of the property at the time of entering the transfer in its record.
11. It is also clear from the reading of Article 63-A of the Stamp Act, 1899 that the same does not require necessarily an instrument for the levy of 2% stamp duty of the value of the property. Even if no document/instrument has been executed between the transferor and transferee even then at the time of giving effect to the transfer of interest in the immovable property from one person to another person the stamp duty @ 2% of the value of the property is to be collected by the development authority, housing authority, statutory body, cooperative housing society, company or a developer.
12. The case law relied upon by the learned counsel for the petitioner Tahir Umar v. Model Town Society, Model Town, Lahore through Secretary and 2 others (2007 MLD 304) is not relevant to the case in hand. Firstly on the ground that in the said case no issue with .Regard to the payment of stamp duty was involved. Secondly the case was with regard to the refusal by a society to give effect to the gift made by the mother in favour of her son. Therefore, a suit for declaration and permanent injunction was filed which was decreed by the Civil Court. However, on appeal by the society the decree was set aside. Therefore, civil revision was filed which was decided by the referred judgment to hold that gift was a valid gift and decree of the civil court was affirmed.
13. Similarly the notifications relied upon are also not applicable to the case in hand. The notifications are reproduced as under. Notification dated 14.03.1995 states as under:- "Subject:- TRANSFER OF PROPERTIES BY GIFT UNDER MOHAMMADAN LAW BY ATTORNEYS Reference your letter No, SK-Bung/94/PT-2-A/145, dated 27.02. 1995.
2. It is clarified that the TIP Tax/Transfer fee is only recoverable when the properties are being transferred from one party to the other, but is not recoverable on transfer of properties to legal heirs/natural heirs."
The notification dated 09.01.1999 states as under:-- Subject:- TRANSFER OF IMMOVABLE PROPERTIES BY WAY OF ORAL GIFT UNDER MOHAMMADAN LAW.
The subject matter has been under consideration with Law and Justice Division. It has been decided that there would be no legal bar for transfer of immovable property by way of oral gift under Muhammadan Law without registration of the instrument under Registration Act, 1908 if the property is being transferred from the lessee/grantee to his legal heir(s)."
Notification dated 11.07.2000 states as follow:- "Subject:- IMPOSITION OF TAX ON TRNASFER OF IMMOVABLE PROPERTY (LANDS AND BUILDINGS)- TRANSFER TO LEGAL HEIRS.
Reference this Department letter No,123/27/C/ML&C/23 dated 22nd July, 1993.
2. Instructions were issued vide this Department letter under reference that no tax should be charged on transfer of properties to legal heirs irrespective of the fact whether the transferor is living or dead."
14. The said notifications are only applicable to transfer to legal heirs/natural heirs. In the case in hand the transfer is to a daughter who is admittedly not the only legal heir of the petitioner No,2.
Further all these notifications dated 14.03.1995, 09.01.1999 and 11.07.2000 are prior to the promulgation of the Punjab Finance Act, 2008. Therefore for this reason also these notifications are not applicable to the case in hand.
15. For what has been discussed above, it is held that the demand raised by the respondent/DHA for the payment of 2% stamp duty at the value of the immovable property is in accordance with the Article 63-A of the Stamp Act, 1899. Therefore, the writ petition has no substance and the same stands dismissed within no order as to costs.