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2020 (12) TMI 288 - HC - Companies LawExemption from Stamp Duty - G.O.Ms.No.1224 - whether the Petitioner is entitled to the benefit of exemption from stamp duty in respect of the Sale Deed? - HELD THAT - Upon perusal of the Annual Return of VIL, which was made up to 23.09.1997, it is clear that the total issued, subscribed and paid-up share capital of VIL was 6,00,000 shares of which the Petitioner held 5,99,994 shares as on 23.09.1997. An annual return is required to disclose all share transfers that took place between the date of the previous annual return and the current one. The aforesaid Annual Return does not disclose that any share transfers were effected between 05.08.1997 (the date of Sale Deed) and 23.09.1997. Therefore, it is clear that the share holding of the Petitioner in VIL was 5,99,994 shares as on the date of execution of the Sale Deed, and this would constitute more than 99% of the issued share capital of VIL. Whether the proviso imposes additional conditions and whether the Petitioner's claim for exemption is liable to be rejected on account of the proviso? - HELD THAT - The scope, ambit and implications of the proviso should be gleaned from the text thereof, including any necessary implications, and not from unstated intentions. The text of the proviso prescribes that a certified copy of the relevant records of the companies from the Office of the Registrar of Companies, Madras should be produced to prove that the conditions specified in the principal clause are fulfilled. Upon consideration of this proviso, it is clear that the production of the records of the companies is required for purposes of proving that Voltas Limited held at least 90% of the issued share capital of VIL. In view of the fact that neither Voltas Limited nor VIL were incorporated by the Registrar of Companies, Madras, it is not possible to produce any records from the Registrar of Companies, Madras in order to prove the above. To put it differently, the Registrar of Companies, Madras, would not possess records relating to two companies that were incorporated in the State of Maharashtra. Whether the inability of the Petitioner to produce records from the Office of the Registrar of Companies, Madras, would justify rejection of its claims for exemption? - HELD THAT - The position that emerges is that the text of the proviso concerned should be subjected to close scrutiny so as to understand the scope and implications thereof. The proviso to entry 38 of G.O. Ms. No.1224 clearly does not impose conditions for availing the exemption. This is clear from the fact that it calls for the production of the records of the companies concerned so as to prove fulfilment of the conditions in the enacting clause. Method of proof prescribed therein of the essence of the exemption notification - HELD THAT - As regards the proviso to entry 38 of G.O.Ms.No.1224, I find that the proviso does not prescribe conditions to be fulfilled in order to avail the exemption. Instead, the proviso specifies a method of proving that such conditions have been satisfied. As stated earlier, the method of proof provided in the proviso is the production of the relevant records of the companies kept in the office of the Registrar of Companies, Madras. Given the fact that both Voltas Limited and VIL were incorporated in the State of Maharashtra, it is not possible to produce records from the Registrar of Companies, Madras in order to prove the entitlement of the Petitioner. Instead, the Petitioner produced certified copies of the balance sheet and annual returns from the records of the Registrar of Companies, Bombay. Whether the Petitioner has fulfilled all conditions and requirements, wholly or substantially, to avail the exemption? - HELD THAT - As regards fulfillment of conditions, entry 38 of G.O.Ms.No.1224 prescribed three circumstances in which there would be entitlement to exemption. Upon perusal of the Annual Return of VIL, there is no doubt at all that Voltas Limited held more than 99% of the issued share capital of VIL as on the date of the Sale Deed. In effect, the Petitioner undoubtedly fulfilled the condition prescribed in the principal clause. More significantly, the text of entry 38 of G.O. Ms.No.1224 does not disclose the intention to restrict the exemption to companies which were incorporated by the Registrar of Companies, Madras, or have their registered offices in Tamil Nadu. The production of the relevant records of the companies concerned from the Registrar of Companies, Madras is not a condition for availing the exemption, and, on the contrary, is merely a method of proving that the conditions specified in the principal clause are fulfilled. The Petitioner produced the records from the office of the Registrar of Companies, Mumbai, Maharashtra, to prove the fulfillment of the condition. Both the Registrar of Companies, Mumbai, and the Registrar of Companies, Madras/Chennai are statutory authorities functioning under the Ministry of Corporate Affairs, Government of India. As a corollary, the production of records from the office of the Registrar of Companies, Mumbai to establish compliance with the condition is an acceptable near substitute and clearly qualifies as a reasonable alternative method of proving compliance with the condition. Accordingly, the impugned order dated 31.12.2009 is liable to be quashed because the said order has been passed on the basis that the Petitioner could not produce records from the Registrar of Companies, Madras as prescribed in G.O.Ms.No.1224 - the Petitioner is entitled to the benefit of G.O.Ms.No.1224 as regards the Deed of Conveyance dated 05.08.1997 - Petition allowed - decided in favor of petitioner.
Issues Involved:
1. Entitlement to exemption from stamp duty under G.O.Ms.No.1224. 2. Applicability of G.O.Ms.No.37 to the transaction. 3. Interpretation of the proviso in G.O.Ms.No.1224 regarding the production of records from the Registrar of Companies, Madras. Detailed Analysis: 1. Entitlement to Exemption from Stamp Duty under G.O.Ms.No.1224: The primary issue was whether the Petitioner was entitled to an exemption from stamp duty on the Sale Deed executed on 06.08.1997, based on G.O.Ms.No.1224. The Petitioner claimed that it held 5,94,000 shares out of 6,00,000 shares in Voltas International Limited (VIL), thus satisfying the condition of holding at least 90% of the issued share capital of the transferee company. This was supported by the Annual Return of VIL made up to 23.09.1997, which confirmed that the Petitioner held 5,99,994 shares. The Court found that the Petitioner indeed fulfilled the condition of holding more than 99% of the issued share capital of VIL, thus meeting the requirement for exemption under G.O.Ms.No.1224. 2. Applicability of G.O.Ms.No.37 to the Transaction: G.O.Ms.No.37, which came into force in the year 2000, introduced a second proviso stipulating that the exemption would apply only if both companies had their registered offices within Tamil Nadu. The Court had previously quashed the appellate authority's order imposing stamp duty, concluding that G.O.Ms.No.37 was not applicable to the transaction since it was executed in 1997. Therefore, the claim for exemption was to be tested solely against G.O.Ms.No.1224, and G.O.Ms.No.37 was not considered relevant for this transaction. 3. Interpretation of the Proviso in G.O.Ms.No.1224 Regarding Production of Records from the Registrar of Companies, Madras: The proviso to G.O.Ms.No.1224 required the production of a certified copy of the relevant records of the companies from the Registrar of Companies, Madras, to prove that the conditions for exemption were fulfilled. The learned Additional Advocate General argued that this implied the exemption was available only to companies incorporated in Tamil Nadu. However, the Court found that the proviso did not explicitly state that the companies must be incorporated by the Registrar of Companies, Madras, or have their registered offices in Tamil Nadu. Instead, it specified a method of proving compliance with the conditions for exemption. The Court referred to the principle of "substantial compliance," which allows for alternative methods of proving compliance with statutory requirements if the essential conditions are met. Since the Petitioner produced certified copies of the balance sheet and annual returns from the Registrar of Companies, Bombay, the Court held that this was a reasonable alternative method of proving compliance with the conditions. Therefore, the Petitioner was entitled to the exemption from stamp duty under G.O.Ms.No.1224. Conclusion: The Court quashed the impugned order dated 31.12.2009, which had denied the exemption based on the inability to produce records from the Registrar of Companies, Madras. The Court concluded that the Petitioner was entitled to the benefit of G.O.Ms.No.1224 for the Deed of Conveyance dated 05.08.1997, as the Petitioner had substantially complied with the requirements by producing records from the Registrar of Companies, Bombay. The writ petition was allowed, and the connected miscellaneous petition was closed without costs.
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