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Harinder Singh Sodhi v. State of Rajasthan

Civil Appeal · 2026 INSC 922Decided 24 Aug 2026
Civil Appeal (Arising out of SLP (C) No.36745 of 2025)
Justice J.B. Pardiwala · Justice K. Vinod Chandran

Background

A family owned a multi-storey building in Jaipur where they ran a business; separate floors/shares were assigned to different siblings, and one brother gifted his share to another via a gift deed stamped as "residential" property. The Sub-Registrar sought to enhance the stamp duty by treating the property as "commercial" (citing its use as a showroom for "Sodhi Carpets"), while the appellant argued the premises were actually "industrial," being registered as a factory under the Factories Act, 1948 and with the District Industries Centre, Jaipur. The Collector's inspection found manufacturing activity and agreed the property was industrial, a finding upheld by the Rajasthan Tax Board, but the State challenged this before the High Court, which reversed the finding and held the property commercial.

Decision Breakdown

The Supreme Court held that the High Court applied a test, requiring the property to be located in an industrial area and used exclusively for manufacturing with nothing further, that does not derive from the State's own governing Circular No.2/2004. The Court found that Circular 2/2004 bases industrial valuation on the actual "user" of the land (whether it is put to industrial use, situated in a RIICO industrial area, or converted for industrial purposes), not on zoning classification under the Master Plan. Since the Collector's physical inspection had confirmed manufacturing activity on the premises, the fact that manufactured goods were also being sold (even retail) did not convert the use into "commercial." The Court restored the findings of the statutory authorities (Collector and Tax Board) and set aside the High Court's judgment, while clarifying that no refund would be due for the higher (residential-rate) duty voluntarily paid at the time of registration.

Lesson Learnt

For stamp duty purposes, what actually matters is how a property is genuinely used (its "user"), not just its zoning classification on paper, and courts must apply the specific valuation criteria laid down in the government's own circulars rather than inventing new tests.

Official source (sci.gov.in)View Judgment (PDF)

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