2016 (2) TMI 818 - HC - Companies Law

Scheme of Amalgamation - stamp duty and penalty was payable as presentation was not within one year from the date of the order of the Company Court - Held that - When the order under Section 394 of the Companies Act sanctioning the Scheme of Amalgamation is made chargeable to duty, levy of duty is not on the order as such, but it is on the effect of the order, that is transfer of properties and assets of the transferor company to the transferee company envisaged under the Scheme. The said transfer took effect only upon sanction granted by the BIFR which was a condition mentioned in the order of the Company Court. In other words, the properties/assets can be said to have been transferred or conveyed when BIFR granted sanction. The conveyance within the meaning of Section 2(g)(iv) can be said to have been created at such point of time when the BIFR granted sanction. Therefore it is the said date and not the date of the order of the Company Court. In the facts and circumstances of the case, would bring the subject matter within the ambit of Section 2(g)(iv) to become the conveyance. Such conveyance was presented within one year as above for the purpose of stamp duty, the same was therefore regularly presented. The impugned orders taking view that stamp duty and penalty was payable as presentation was not within one year from the date of the order of the Company Court are not liable to be sustained. They are therefore hereby quashed and set aside. It appears from order dated 28th January, 2011 in the petition that petitioner had paid 25% of the total amount at the time of preferring Appeal before the Chief Controlling Revenue Authority and had also paid remaining 75% subsequently under protest. As the impugned orders are set aside, consequences including refund of the said amount to the petitioner, shall follow.

Summary

Issues:
1. Stamp duty liability on an amalgamation order under the Companies Act, 1956.
2. Calculation of the period for presenting the order for stamp duty payment.
3. Authority's power to levy penalty under the Stamp Act.

Analysis:
1. The judgment dealt with the stamp duty liability arising from an amalgamation order between two companies under Sections 391 and 394 of the Companies Act, 1956. The order was subject to the approval of the Board of Industrial & Financial Reconstruction (BIFR) and was presented for stamp duty payment after BIFR's sanction. The dispute arose when the stamp authorities contended that the order should have been presented within one year from the date of the Company Court's order, leading to a demand for deficit stamp duty and penalty.

2. The Court clarified that the period for presenting the order for stamp duty payment should be calculated from the date of BIFR's sanction, not the Company Court's order. The transfer of properties and assets occurred upon BIFR's approval, making it the relevant date for stamp duty liability. Since the order was presented within one year from BIFR's sanction, it was deemed to be timely, and the demand for deficit stamp duty and penalty based on the incorrect calculation of the period was deemed invalid.

3. The judgment further emphasized that the levy of stamp duty was not on the order itself but on the transfer of assets as per the sanctioned scheme. As the conveyance was completed upon BIFR's approval, the presentation for stamp duty payment within one year from this date was considered regular. Consequently, the impugned orders demanding stamp duty and penalty based on the incorrect calculation of the presentation period were quashed, and the petitioner was entitled to a refund of the amount paid under protest.

In conclusion, the judgment clarified the calculation of the period for presenting an amalgamation order for stamp duty payment, emphasizing the significance of BIFR's approval date in determining the stamp duty liability. The decision protected the petitioner from erroneous demands and highlighted the importance of aligning stamp duty obligations with the actual transfer of assets under the sanctioned scheme.