' The relevant facts are that M/s. Imtiaz Rafi Butt, Ijaz Anwar, Ayaz Anwar, Capt. (Retd.) Tariq Qureshi and Yasmin Iqbal petitioners purchased property bearing Nos.8-77-R-111 and 113 commonly known as Nos. 5 and 6, Jail Road, Lahore from M/s. Hayat Industrial Ventures Ltd. Through the sale-deed registered on 31-5-1993 for a consideration of Rs,206,250,000 on payment of stamp duty of Rs,20,62,500. The property was residential in character when the sale transaction had taken place.
After the registration of sale-deed one Altaf Hussain an unknown person made a complaint to the Chief Minister, Punjab, alleging that the sale transaction in question had been under-valued and that the proper stamp duty had not been paid on the sale-deed. The said complaint was sent t- the Deputy Commissioner/Collector, Lahore for necessary action. The Controller, Lahore directed the Sub-Registrar, Cantonment, Lahore and Illaqa Magistrate for looking into the matter. They reported that residential houses on the site in question had been demolished and a commercial plaza was being built thereon. Treating the property to be commercial they reported that deficient stamp duty had been paid by the vendees on the registration of the sale-deed. On receipt of the above report the Collector purportedly issued notice to the parties. As per record Altaf Hussain complainant did not appear in any proceedings either before the Sub-Registrar, Cantt, or the Collector. One Azam Chaudhary is said to have appeared before the Collector on 11-7-1993 and he was asked to produce the power of attorney on behalf of the petitioners on the next date of hearing i,e, 25-7-1993 on which date he did not appear. According to the petitioners they had not appointed any person to represent them in the proceedings before the Collector. The latter passed an ex parte order on 25-7-1993. The operative part of his order reads as under:-- "I have given my thoughtful consideration to the facts relating to this sale-deed. Since the property transacted through this sale-deed is commercial and has been registered under-valued, I, as District Registrar order that the above said sale-deed whenever presented before any officer for implementation be impounded forthwith. At the same time I order that status quo be maintained and the implementation of the sale-deed be not made in revenue record. As the above sale-deed has been registered under-valued, I also order under section 40(1)(b) of Stamp Act, 1899 to make good the deficiency of stamp duty amounting to Rs,28,87,500 together with five times the amount of deficiency in stamp duty which comes to Rs,1,44,37,500. Accordingly I hold that this sale-deed is chargeable with a Stamp Duty of Rs,49,95,000 on the consideration of the value of the property which has been determined on the classification of the property as commercial, as per valuation Table referred to above and not on the stamp duty of Rs,20,62,500, on which it has been registered.
The amount of deficiency in stamp duty be made good within the period of one week from the issue of this order as also five times the amount of deficiency in stamp duty. Thus the total amount of deficiency in stamp duty to be made good comes to Rs,28,87,500 (deficient amount) plus five times of the deficient amount which comes to Rs,1,44,37,500. The total of the two comes to Rs,1,73,25,000."
2. The petitioners submitted an application to the Collector to recall the order dated 25-7-1993 which was dismissed by him on 24-8-1995 on the ground that he was not competent to review the order passed by his learned predecessor. Hence this writ petition.
3. It is, inter alia, contended on behalf of the petitioners that when the property in question was purchased, it was being used for residential purposes, as such the assessment had been rightly made on the basis of its character at that time and its subsequent use could not be made the basis for assessm ent of the valuation for the purposes of stamp duty. The authority of the Collector to pass the impugned order under section 33 of the Stamp Act is also seriously challenged. It is stated that the instrument in question had not been produced before him nor, did it come before him in the performance of his functions nor was it sent to him pursuant to section 38 of the Stamp Act by any Court or authority competent to receive evidence or admit such instrument in evidence.
4. Mr. Muhammad Bashir Chaudhary, A.A.-G. Contested the writ petition and justified the action of the Collector stating that since he was holding a public office and it was during the performance of his function that a complaint addressed to the Chief Minister, Punjab was endorsed to him complaining that the sale-deed in question had been registered by evading stamp duty, he was, therefore, justified to proceed against the petitioners under section 40(1)(b) of the Stamp Act.
5. The petitioners have submitted a certificate issued by the Excise and Taxation Officer, Lahore certifying that Property No,S-77-R-111 and 113 located at 5/6, Jail Road, Lahore was residential in 1993. The sale-deed pertaining to this property was registered on 31-5-1993. Report of the Inquiry Officers that it was a commercial property is not based on any material. The rates approved by the District Collector, Lahore for different localities in the urban areas of Lahore under section 27-A of the Stamp Act make a distinction between the valuation of residential and commercial properties.
For properties situated at Jail Road, Lahore different valuations are mentioned for residential and commercial properties in the Gazette Notification, dated July 12, 1995 issued by the District Collector. Lahore under section 27-A of the Stamp Act. According to the learned counsel for the petitioners the distinction between valuation of residential and commercial properties existed even before that.
7. The valuation of urban land for the purposes of stamp duty is to be made on the basis of the character of the property at the time of registration of the sale-deed and not on its subsequent use. Nature of the property in question at the time of registration of sale-deed was residential as borne out from the certificate of the Excise and Taxation Department and the stamp duty was also charged accordingly and it would not be open to the Collector to say that when the matter was brought to his notice the character of the property had been changed from residential to commercial. Ultimate use of the property subject-matter of sale will not determine value of the stamp duty but its character at the time of registration of the sale-deed would be relevant. It cannot be said that all properties situate at Jail Road. Lahore are commercial because still there are many residential houses on that road and it would be unjustified to charge stamp duty at commercial rates if any sale or purchase transaction takes place in their respect.
8. The valuation table issued under section 27-A of the Stamp Act generally makes a distinction between the valuation of commercial and residential properties and the stamp duty is payable at the rates notified for residential or commercial properties. The relevant date for the determination of the chargeable duty would be the date of registration of the instruments. Character of the property at that time would determine the stamp duty and not any subsequent use that may be made of the said property. Since after the registration of the sale-deed in question, the nature of the property is reported to have undergone a change, any further transaction in respect of it may be subject to valuation provided for commercial properties for the purpose of stamp duty.
9. The essential requirement of section 33 of impounding the instrument was not fulfilled in that the Collector did not himself impound the instrument but mentioned in his order dated 25-7-1993 that the sale-deed in question shall be impounded whenever presented for implementation. It would also be worthwhile to mention that the instrument in question was not produced by the petitioners before any Court in evidence calling for action under section 38 of the Stamp Act.
10. In view of the above discussion, the stamp duty had been rightly paid by the petitioners on the basis of the residential character of the property and they cannot be required to pay stamp duty at the commercial rates.
11. In consequence the writ petition is accepted and the impugned orders of the Collector, Lahore are declared to be illegal, passed without any lawful authority and of no legal effect and are hereby set aside.
' The parties are left to bear their own costs.