The Bombay High Court (HC) Thursday told realty firm Lodha Group to pay Rs 202 crore as the principal amount of stamp duty payable for a Rs 5,700-crore land transaction in Wadala in Central Mumbai.

The Indian Express had reported Thursday about the Maharashtra government’s order that charged the construction group of willful avoidance of stamp duty in the matter. The Collector of Stamps, who passed the order, had directed the firm to pay Rs 202 crore in principal and Rs 272 crore in penalty for evasion of duty.

Senior Maharashtra BJP MLA Mangal Prabhat Lodha is the founder and mentor of the firm, which is developing a premium residential and commercial township, called New Cuffe Parade, on the 9.96 lakh-square-foot land parcel. While the project entails construction of nearly 4,000 residential and commercial units, about 1,200 have been built.

Aggrieved by the government’s order, the Lodha group had challenged it before the Bombay High Court. A division bench of Justice B P Colabawalla and Justice S S Kemkar directed the group Thursday to pay the principal amount within 60 days. The government side said the court had vindicated its stand that the stamp duty was chargeable on the transaction.

But the court extended partial relief to the firm by staying the recovery of penalty and allowing the firm to appeal against it before the Inspector General of Registration within 60 days.

The Lodha group contended that the judgment had gone in its favour.

“The High Court has immediately stayed the levy of penalty and interest. It has also asked us to file an appeal against the order before the competent authority along with deposit of the principal amount in 60 days. We are pleased that our stand has been vindicated,” said an official statement released by the Lodha group.

As reported in The Indian Express Thursday, the case pertains to an agreement executed between Lodha group’s Lodha Crown Buildmart Private Limited and the state government’s own Mumbai Metropolitan Region Development Authority (MMRDA) on August 1, 2011, for the land parcel in question.

While the document executed was an agreement to create lease in future (agreement to lease), the order by the Collector of Stamps had contended that in substance it had created development rights in favour of the firm. It had pointed out that the firm had already sold over 1,000 sale apartments on the property, creating third party rights, and had also raised loans.

It had said a 5 per cent stamp duty on the consolidated premium payable by the firm to the MMRDA for the land parcel was chargeable on the 2011 transaction, which was avoided.

The firm, on the other hand, has maintained that the document had to be treated as an agreement to create lease in future where the stamp duty is not chargeable.

“We are pleased that our stand has been vindicated and will now approach the competent authority to explain the Supreme Court order in ICICI vs State of Maharashtra and convince them that the principal amount of stamp duty is payable at time of execution of lease deed, not agreement to lease,” said the group’s official statement.

Government Pleader Poornima Kantharia, who appeared for the Collector of Stamps, however, said, “Our understanding is that the court has asked the firm to pay up the amount in principal. They can appeal before the IGR against the penalties levied. The court order has confirmed that the stamp duty was chargeable on the document.”

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