Is Fraudulent Intent Necessary to Initiate Stamp Undervaluation Proceedings? Supreme Court Doubts V.N. Devadoss and Refers the Scope of Section 47-A to a Larger Bench

Case Name: Bharat Petroleum Corporation Limited v. District Revenue Officer (Stamps) & Another

Date of Judgment: 7 September 2026

Citation: 2026 INSC 963

Bench: Justice Dipankar Datta and Justice Sheel Nagu

Held: The Supreme Court expressed serious doubt over the correctness of the proposition laid down in V.N. Devadoss v. Chief Revenue Control Officer-cum-Inspector of Stamps, (2009) , that proceedings under Section 47-A of the Indian Stamp Act, 1899 can be initiated only when there is wilful undervaluation accompanied by fraudulent intent to evade stamp duty.

The Court observed that the plain language of Section 47-A does not contain the expressions “wilful undervaluation” or “fraudulent intention.” The provision merely requires the registering authority to have reason to believe that the market value or consideration has not been truly stated in the instrument. Reading an additional requirement of culpable intent into the provision could amount to judicial legislation and transform a valuation-based inquiry into a quasi-criminal inquiry.

However, since V.N. Devadoss is a binding decision of a three-Judge Bench and was subsequently followed in Registrar of Assurances v. ASL Vyapar (P) Ltd., the two-Judge Bench refrained from overruling or declaring it incorrect. The issue was referred to a larger Bench.

The Court also reiterated that a writ petition against a show-cause notice may ordinarily be entertained only where there is a complete lack of jurisdiction or a mala fide or abusive exercise of jurisdiction. These are exceptional grounds and cannot become routine methods of challenging every show-cause notice under Article 226 of the Constitution.

Summary: Bharat Petroleum Corporation Limited purchased a parcel of land from the Government of India for a fixed consideration. The consideration was fully paid through cheques in 2014, and possession was delivered to BPCL on 21 January 2014. A deed of transfer was subsequently executed in its favour on 24 June 2016.

At the time of execution and registration, BPCL paid stamp duty and registration charges on the entire consideration recorded in the instrument. The registering authority, however, did not release the registered document and instead referred the matter to the District Revenue Officer under Section 47-A of the Indian Stamp Act, 1899. A show-cause notice dated 22 August 2016 was issued demanding alleged deficit stamp duty.

The reference was based on the difference between the guideline value of ₹500 per square foot and the value of ₹168.30 per square foot reflected in the instrument. BPCL challenged the reference and notice before the Madras High Court, contending that there was no material showing deliberate undervaluation or fraudulent intent to evade stamp duty.

The Single Judge allowed the writ petition by relying on V.N. Devadoss. It was held that Section 47-A could be invoked only where material existed to show that the property had been deliberately undervalued with fraudulent intent to evade stamp duty. The Single Judge further observed that guideline value is only a prima facie indicator and cannot, by itself, conclusively establish the market value of a property. The notice was consequently quashed, and the registering authority was directed to release the transfer deed.

The Division Bench reversed that decision. It held that once the registering authority entertained a doubt regarding undervaluation, it was competent to make a reference under Section 47-A. BPCL should have participated in the statutory proceedings and, if aggrieved by the eventual determination, pursued the appellate remedies provided under the Stamp Act and the applicable rules. The Division Bench, therefore, restored the matter to the District Revenue Officer.

Before the Supreme Court, the central question was whether the statutory machinery under Section 47-A could have been initiated in the absence of material indicating wilful undervaluation or fraudulent intent.

Examining the text of Section 47-A, the Supreme Court observed that the provision focuses on whether the true market value or consideration has been stated in the instrument. It does not expressly require the registering authority to possess material demonstrating the parties’ culpable mental state before initiating an inquiry.

The Court explained that stamp duty is imposed upon the actual market value of the property and not merely upon the value disclosed in the instrument. Guideline or circle rates provide prima facie material to enable the registering authority to assess whether the stated value requires further examination, though such rates are not conclusive evidence of market value.

The Bench illustrated the difficulty arising from the test in V.N. Devadoss. In an honest transaction, a property may legitimately sell below its circle rate because it is tenanted, encumbered, involved in litigation or suffers from inadequate access. Requiring fraudulent intent in such a case would force an honest purchaser to defend their character instead of merely establishing the property’s actual value. Conversely, in a dishonest transaction involving undisclosed cash consideration, proof of fraudulent intent may be unavailable at the initial stage because the relevant facts remain exclusively within the knowledge of the parties. Insisting upon such proof as a jurisdictional precondition could prevent the authority from initiating any inquiry.

The Court concluded that the V.N. Devadoss test appeared “too harsh” in honest transactions and “too lax” in fraudulent ones. Nevertheless, judicial discipline required the two-Judge Bench to follow the larger Bench precedent or refer the matter for reconsideration.

Decision: The Supreme Court did not finally decide BPCL’s liability to pay additional stamp duty or conclusively adjudicate the validity of the Section 47-A notice. Instead, it referred the following substantive questions to a larger Bench:

Whether V.N. Devadoss correctly holds that wilful undervaluation accompanied by fraudulent intent to evade stamp duty is the essential basis for exercising power under Section 47-A; or whether the registering authority may initiate proceedings whenever it has reason to believe that the true market value or consideration has not been stated, irrespective of the absence of a culpable mindset.

The Court also referred the question whether the decisions in Ramesh Chand Bansal v. District Magistrate/Collector and Shanti Bhushan v. State of Uttar Pradesh, which support a valuation-centred and literal interpretation of the stamp law, lay down the correct legal position.