This judgment shall dispose of W.P. No,19491 of 1999 and W.P. No,22525 of 1999 which involve the same controversy.
2. On 10-12-1996 Messrs Lahore Cable and Engineering Limited the petitioner in W.P. No,19491 of 1999 entered into an agreement with Messrs Chaudhry Wire Products (Pvt.) Limited to purchase (i) land measuring 56 Kanals, 9 Marlas fully described in the Schedule attached to the agreement, (ii) building and structure constructed thereon and (iii) the plant and machinery lying therein for a consideration of Rs,27,00,00,000. It may be Mentioned that the aforesaid properties stood mortgaged in favour of M/s. Prime Commercial Bank Limited. In order to effectuate the sale Messrs Chaudhry Wire Products (Pvt.) Limited appointed Prime Commercial Bank Limited as its attorney on 1-9-1996 with powers to execute the sale-deed with respect to the land and the building mentioned in the agreement dated 10-12-1996. However, there was no power of sale of the plant and machinery delegated to the attorney by Messrs Chaudhry Wire Products (Pvt.) Limited.
3. Pursuant to the agreement for sale the sale-deed was executed on behalf of Chaudhry Wire Product (Pvt.) Limited by Prime Commercial Bank Limited as its attorney on 22-9-1997. This sale- deed was in respect of the land and the building/structure standing thereon but did not purport to transfer the plant and machinery lying therein. The sale-deed was executed for a consideration of Rs,36,000,000 and was registered on 22-9-1997.
4. It may be mentioned that the sale-deed was stamped at the rate of 6% stamp duty on the assumption that the land was situate in non-urban area. However, later on an issue arose as to whether the land was situate in urban or non-urban area and whether the duty paid on the instrument was sufficient. The petitioner referred this matter for decision to the Collector by filing an application under section 31 of the Stamp Act who vide his order dated 2-1-1998 came to the conclusion that the duty was deficient by Rs,1,440,000. This additional amount of duty was *duly deposited by the petitioners.
5. It appears that subsequently a dispute with regard to a portion of land and its mutation arose between the petitioner and Siraj Steel Mills Limited which applied for review of the mutation of the land in question before the Collector, Sheikhupura who on 19-8-1999 dismissed the application for review of the mutation filed by Siraj Steel Mills Limited. He, however, went on to observe that in the agreement for sale between the petitioner and Chaudhry Wire Products (Pvt.) Limited the sale consideration mentioned was Rs,27,00,00,000 but in the registered sale-deed dated 22-9-1997 the consideration has been shown at Rs,36,000,000 to evade the stamp duty to the extent of Rs,234,00,000 which should be recovered from the petitioner as arrears of land revenue. That order of the Collector was challenged by the petitioner by filing an appeal before the Commissioner which is stated to be still pending. However, during the pendency of the appeal the petitioners were threatened with penal action with the result that the petitioners were obliged to file W.P. No,19491 of 1999.
6. On the basis of the order of the Collector dated 19-8-1999 the respondents started proceedings for recovery of the amount as also launching some criminal prosecution against the petitioners in Writ Petition No,22525 of 1999 in which the validity of those proceedings was challenged.
7. Various contentions have been raised by the learned counsel for the petitioner in support of their petitions which are:--
(i) That the petitioner has been condemned unheard inasmuch as the dispute before the Collector was with respect to the review of a mutation and the question of deficiency in stamp duty or otherwise, was not in issue before the Collector but without giving an opportunity to the petitioner to explain their position has proceeded to pass the impugned order without hearing them on that aspect of the matter.
(ii) That the Collector has altogether omitted to notice that though the agreement for sale was with respect to the land, building/structure and machinery the sale-deed only relate to the land and building/structure and not plant and machinery and as such the consideration was rightly mentioned at Rs,36,000,000, which was the price of land and building/structure shown in the balance-sheet of Messrs Chaudhry Wire Products (Pvt.) Limited.
(iii) That in any case the order passed by the Collector under section 31 of the Stamp Act determining the stamp duty payable was final and his successor had no jurisdiction to review or interfere with the aforesaid order.
(iv) That according to the agreement for sale the stamp duty was payable by the seller and not the buyer and therefore, the petitioner cannot be burdened with any additional liability.
8. Mr. Muhammad Ashraf learned Assistant Advocate-General has conversely defended the impugned order of the Collector by emphasising that the petitioners have evaded payment of huge amount of duty and was not entitled to any relief. The learned Assistant Advocate-General also objected to the maintainability of this petition by arguing that the petitioner has an efficacious remedy to file revision before the Chief Revenue Authority under section 56 of the Stamp Act.
9. The contentions raised by the learned counsel for the petitioner noted above have considerable force. Admittedly the matter in dispute before the Collector was as to the validity or otherwise of the mutation sanctioned in favour of the petitioner of which review as sought by Siraj Steel Industries Limited. The question of deficiency or otherwise of the stamp duty on the sale-deed in favour of the petitioner was not the subject-matter of the proceedings before the Collector. In these circumstances, if the Collector wanted to take some suo motu action he should have at least observed minimum rule of natural justice which is to serve a notice to show-cause on the affected party before passing any order. In the present case admittedly no notice was served on the petitioner.
10. Be that as it may, the argument of the learned counsel for the petitioner that the Collector has misread the agreement for sale and the sale-deed is unexceptionable. According to agreement for sale executed on 10-12-1996 by Chaudhry Wire Products (Pvt.) Ltd. The sale consideration was fixed at Rs,270,000,000 but that agreement related to (i) land measuring 56 Kanals and 9 Marlas fully described in the Schedule attached; (ii) building and superstructure constructed thereon and (iii) the plant and machinery while the sale-deed was executed only in respect of land measuring 50 Kanals and 13 Marlas and the building/structure thereon. There is no mention in the sale-deed about the sale of the plant and machinery. As explained by the learned counsel for the petitioner it was for this reason that sale consideration was mentioned as Rs,36,000,000 which according to the learned counsel was the value of the land and the building/structure standing thereon shown in the balance-sheet of Chaudhry Wire Products (Pvt.) Limited.
11: There is also merit in the contention that no intention to evade the duty could be attributed to the petitioner inasmuch as in the sale-deed the agreement for sale itself has been referred to.
There is nothing in the sale-deed from which it could even be inferred that it pertained to the sale of plant and machinery also. Unfortunately this aspect of the matter was not properly looked into by the Collector who assumed without any foundation that the petitioner has been guilty of evasion of duty.
12. The law is well-settled that it is the document as it stands which is determinative of the duty payable and not the transaction. In other words the Stamp Act does not deal with the bargain but the instrument which records the bargain. It was so held in Shamim Akhtar v. Najma Baqai PLD 1978 SC 7. Relevant observation reads as under:-- "It must be remembered that what Stamp Act deals with is not the bargain which arises out of the consent of the parties, but the precise instrument which records the bargain. The stamp duty is on the 'instrument' as such and not on the transaction. (1909) AC 633 Minister of Stamps v. Townend. In Hankins v. Cluttarbuck (175 ER 340) Baron Ralf said, 'if the party so acted as not to be hit by the Stamp Act, he had a right to do so' . In my opinion the execution, i,e, signing of an instrument."
' Again in re: The Incorporation of Sweadeshi Cotton Mills Company Limited AIR 1932 Allahabad 291 it was observed:- "It seems to us that if the parties chose to be satisfied with a mere contract for sale without an actual deed of sale, stamp duty payable on a conveyance cannot be demanded. By entering into a mere contract short of an actual conveyance they run a certain amount of risk. If either party resiles from the contract, the other party may have to institute a suit for specific performance of the contract. Trouble may also arise if the vendors subsequently convey the property to a bona fide transferee for value. But if in spite of this risk the parties refrain from getting an actual deed of conveyance prepared, they can successfully, evade the payment of higher duty. As observed by Lord Esher in the Commissioners of Inland Revenue v.G. Angus & Co. (1) at p.593: 'But it is said that if the appeal be decided against the Commissioners purchasers will rest satisfied with an agreement of which specific performance would be decreed and will not go on to execute a conveyance, and so that Crown will lose the stamp duty and it is rather suggested that this would be cheating the Crown and committing a fraud. The Crown, however, must make out its right to the duty and if there be a means of evading the stamp duty, so much the better for those who can evade it. It is no fraud upon the Crown; it is a thing which they are perfectly entitled to. The Crown cannot have the stamp duty unless the parties to the sale chose to effectuate the transaction by an instrument which itself conveys the property, and if they chose to be satisfied with something less, the matter is not brought within section 70 of the Stamps Act of 1870."
' Reference in this respect may also be made to Nanak Chand v. Fattu AIR 1935 Lahore 567) in which the following observations appear:-- "It may be stated however that in considering whether a document is governed by the Article or the proviso, it is important to bear in mind the well-settled (but often forgotten principle), that it is the document as it stands, and not the bargain to which it refers, which has been made chargeable to stamp duty. As has been well put 'the duty is on the instrument and not on the transaction'.
(Halsbury's Laws of England, Vol.24, para.1541); and of (1909) AC 633(3). If therefore a document is so worded that it expressly, or by necessary implication comes within a particular provision of the Act, it must be stamped accordingly. But the implication must arise from the phraseology used in the documents, and not be a matter of legal inference or presumption. An implication of law does not involve liability to duty, though it may give rise to certain legal obligations. It does not therefore follow that simply because a particular document is a good 'acknowledgment' for the Limitation Act, or that it may be the basis of a suit, that it must necessarily be chargeable to duty as an agreement under the Stamp Act."
13. There is another aspect of the matter which did not receive attention of the Collector which was that the agreement for sale had been executed by Chaudhry Wire Products (Pvt.) Limited while the sale-deed was executed by Prime Commercial Bank Limited as attorney of Chaudhry Wire Products (Pvt.) Limited. In the said power of attorney dated 1-9-1996 only the power to sell land and building has been granted to the attorney and, therefore, even if the attorney wanted it could not have transferred the plant and machinery for a separate power was required.
14. Another vice from which the impugned order suffers is that as has been mentioned earlier the petitioner had filed an application under section 31 of the Stamp Act for determination of the stamp duty before the predecessor of respondent No,3, who had determined that there was deficiency in stamp duty of Rs,1,440,000. The petitioner deposited that amount and as such the determination by the Collector attained finality under section 42 of Stamp Act. Respondent No,3 was not competent to reopen the matter or to review the order passed by his predecessor as the Stamp Act does not vest any such power in him. Strangely enough no reference of the earlier order of the Collector, Sheikhupura has been made in the impugned order of the Collector.
15. Coming now to the question as to whether the petitioner/buyer or the seller is liable to pay the stamp duty, it is to be seen with reference to sections 29 and 48 of the Stamp Act. According to section 29 in the absence of an agreement to the contrary the expense for providing the proper stamps in the case of conveyance has to be borne out by the grantee and granter in equal share.
However, as the language itself indicates this provision is to apply in absence of any agreement to the contrary. In the present case clause 25 of the agreement for sale provides that all costs and expenditure of Government charges and duties in connection with execution and registration of the sale-deed including the stamp duty shall be borne by the seller. i,e, Chaudhry Wire Products (Pvt.) Limited. Therefore, the liability to pay the so-called evaded duty was that of Chaudhry Wire Products (Pvt.) Limited and could not be placed upon the petitioner. This question came up for hearing in Hakim Muhammad Hussain v. Emperor AIR 1940 Lahore 315 wherein it was observed as under:-- "As already pointed out, there is no provision in the Act, making a person who merely presents an insufficiently stamped document for being admitted in evidence liable for payment of the requisite stamp duty or penalty on the document. He cannot therefore be considered to be a person from whom the stamp duty or penalty is due and consequently the same cannot be recovered from him under section 48. If the stamp duty or penalty has to be recovered compulsorily, it can be legally recovered under section 48 only from the person from whom the same is due. In order to ascertain the person or persons from whom the duty or penalty is due we must go back to section 29.It has been urged that section 29 is not exhaustive, that there are several classes of instruments for which no provision is made in that section and the section would therefore be of no assistance in fixing the liability for payment of duty or penalty in the case of such instruments. This contingency does not, however, arise in the present instance as a deed of settlement is covered by section 29 and the point need not therefore be considered for the purposes of this reference. But it may be observed that if it is found that the Stamp Act does not in fact fix the liability for payment of stamp duty on any particular person in the case of any instrument, the consequence will prsumably be that the Collector will keep the impounded document in his custody and no person interested in the document will be able to make any use of it until and unless the necessary stamp duty and penalty is paid."
Section 48 of the Stamp Act, 1899 which provides for recovery of the dues has to be read along with section 29 of the Stamp Act and recovery can only be made from the person by whom the duty was payable and not by anyone else. This aspect of the matter was altogether ignored by the Collector.
16. It is pertinent to mention that what the law prohibits is evasion of duty and not avoidance of the duty. If a person by legitimate means can draft the document in such a manner so as to pay a lesser amount of duty the Courts should not grudge the same. While interpreting a fiscal law like Stamp Act, the doubt, if any should be resolved in favour of the subject.
17. It emerges from the above that the order passed by the Collector is totally without any lawful authority and is liable to be struck down.
18. As regards the contention of the learned Assistant Advocate-General that the petition is not maintainable suffice it to say that there is no provision for appeal or revision in the Stamp Act and as such the Constitutional jurisdiction could validly be invoked by the petitioner. Reference may be made to Ghulam Farid v. The Board of Revenue PLD 1960 Lahore 211 wherein it has been observed that section 56 of the Stamp Act does not grant any right to any person to apply for revision but reference to the control of revenue authority. Furthermore, even if it be taken that section 56 confers the remedy of revision on the aggrieved person, that remedy is not adequate and efficacious. See Mst. Hussain Bibi v. Haji Muhammad Din and others 1976 SCM R 395. As a result of what has been stated above, both the petitions are allowed, order of the Collector dated 19-8-1999 passed by Collector, Sheikhupura is declared to be without lawful authority and of no legal effect with the consequence that the proceedings initiated against the petitioners on basis of the said order stands quashed. No order as to costs.