Supreme Court Clarifies Limitation Period for Stamp Duty Refunds Under Maharashtra Stamp Act

In a significant ruling, the Supreme Court of India addressed the commencement of the limitation period for seeking refunds of stamp duty under the Maharashtra Stamp Act, 1958. The Court clarified that the limitation period begins from the date of execution of the cancellation deed, not its registration date.

Background of the Case

The appellants, dissatisfied with the developer's delay in completing a housing project, decided to cancel their booking. They executed a cancellation deed on March 17, 2015, which was subsequently registered on April 28, 2015. At the time of execution, the Maharashtra Stamp Act allowed a two-year period to apply for a refund of stamp duty. However, an amendment effective from April 24, 2015, reduced this period to six months.

Contentions of the Parties

The State authorities denied the appellants' refund application, arguing that it was filed beyond the six-month limitation period. They contended that since the cancellation deed was registered on April 28, 2015—after the amendment's effective date—the reduced limitation period applied. Conversely, the appellants argued that their right to claim a refund arose on March 17, 2015, the date of execution of the cancellation deed, when the two-year limitation period was still in effect. Therefore, their application filed in August 2016 was within the permissible period.

Supreme Court's Analysis and Judgment

The Supreme Court emphasized that the right to claim a refund originates from the date of execution of the cancellation deed, not its registration. The Court noted that the High Court had "laid undue emphasis on the registration date without fully appreciating that the Appellants' accrued right to claim a refund arose the moment the Cancellation Deed was validly executed."

The Court further stated, "The legislative scheme governing the earlier proviso to Section 48(1) of the Act contemplated a broader two-year window. Constricting that window retroactively, merely because registration happened post-amendment, unduly defeats a vested cause of action."

In support of its decision, the Court referred to the case of M.P. Steel Corporation v. Commissioner of Central Excise (2015) 7 SCC 58, which held that an amendment reducing the limitation period should not bar an existing claim if it would make the remedy time-barred before the amended period expires.

Implications of the Judgment

This ruling clarifies that for the purpose of calculating the limitation period for stamp duty refunds under the Maharashtra Stamp Act, the date of execution of the cancellation deed is pivotal. The decision ensures that parties are not unfairly disadvantaged by amendments to limitation periods, especially when their cause of action arose before such amendments.

Conclusion

The Supreme Court's judgment provides clarity on the application of limitation periods for stamp duty refunds, emphasizing the importance of the execution date of cancellation deeds. This interpretation upholds the rights of individuals to seek refunds within the period that was in effect at the time their cause of action arose, preventing retrospective application of reduced limitation periods.