2012 (6) TMI 28 - HC - Companies Law

Authority and competence to levy and collect stamp duty on the increased authorized share capital under the Indian Stamp (Delhi Amendment) Act, 2007 - public limited company - Petitioner was directed to pay the stamp duty on increase in the authorized share capital by 15-4-2010 failing which the e-Form 5 would be treated as invalid and would not be taken on record in terms of Regulation 17 of the Companies Regulations, 1956. The Petitioner then wrote to the ROC on 4-3-2010 stating that there is no provision in the Delhi Stamp Act to pay the stamp duty on increase in the authorized share capital. However, the ROC insisted by e-mail dated 15-4-2010 that the Petitioner should file Form-67 in all respects and clarified that if the stamp duty is not paid by the Petitioner, the amount of Rs. 58,25,000 deposited with the ROC will stand forfeited - Held that - Articles of Association and the Memorandum of Association of a company are required to be submitted at the time of registration of the company. At that stage stamp duty is payable in terms of either Article 10 or Article 39 of the Schedule IA to the Act. Neither Article 10 nor Article 39 refers to increase in the authorized share capital as a basis for levy of stamp duty. In the absence of a specific provision that permits the levy of stamp duty on the increase in authorized share capital, it would not be open to the Respondents to insist upon the Petitioner having to pay stamp duty for the increased authorized share capital. The fact that the Petitioner earlier paid stamp duty when the authorized share capital was increased to Rs. 8.5 crores cannot act as an estoppel against the Petitioner. Also, the mere fact that the website of the ROC indicates that stamp duty shall be 0.5 per cent of amount on increase in the authorized share capital does not lend a legal basis for such levy, in the absence of any amendment to the Act to that effect. writ petition and the pending application are disposed of

Summary

Issues:
Authority of Registrar of Companies and Collector of Stamps to levy stamp duty on increased authorized share capital under Indian Stamp Act.

Analysis:
1. The petitioner challenged the authority of the Registrar of Companies (ROC) and the Collector of Stamps to collect stamp duty on the increased authorized share capital under the Indian Stamp Act.
2. The petitioner, a public limited company, increased its authorized share capital from Rs. 3.50 crores to Rs. 125 crores. The ROC demanded stamp duty on this increase, leading to a dispute.
3. An order was passed by the Collector of Stamps directing the petitioner to pay stamp duty on the increased share capital, citing the Indian Stamp Act provisions.
4. The petitioner argued that the Act does not specifically mention stamp duty on increased authorized share capital and referred to provisions in other state legislatures for comparison.
5. The court analyzed the relevant provisions of the Act and compared them with amendments in other states, emphasizing the strict construction of fiscal statutes.
6. The court held that the Act does not provide for stamp duty on the increase in authorized share capital, unlike specific provisions in other states, leading to the dismissal of the Collector's demand.
7. The court cited legal principles on the interpretation of fiscal statutes to support its decision and emphasized the need for clear words in charging sections for taxation.
8. It was clarified that neither the Articles of Association nor the Memorandum of Association mention stamp duty on increased authorized share capital, and the petitioner cannot be compelled to pay stamp duty for the increase.
9. The court directed the ROC to accept the petitioner's Form 5 without insisting on stamp duty payment for the increased authorized share capital, while also denying any refund for previously paid stamp duty.

This detailed analysis of the judgment highlights the legal arguments, statutory provisions, and court's reasoning leading to the decision regarding the authority to levy stamp duty on increased authorized share capital under the Indian Stamp Act.