2024 (9) TMI 237 - HC - Indian Laws

Maintainability of pettion - availability of efficacious and alternative remedy - Liability to pay stamp duty on the order of NCLT Allahabad in view of the express statutory provision contained in the Indian Stamp Act, 1899 - order passed by NCLT Allahabad is an instrument or not. Whether the Petitioner has an efficacious and alternative remedy and whether this objection can be considered in the light of order dated 25-11-2020 passed by this Court? - whether the principle of res-judicata is applicable to the interlocutory orders or not? - HELD THAT - Since, the respondents did not challenge the order dated 25-11- 2020, therefore, the principle of Res-Judicata would apply and the respondents cannot re-agitate the question of alternative remedy in the same proceedings. Therefore, the preliminary objection with regard to availability of alternative remedy is hereby rejected. What was the very genesis for starting the proceedings and its effect? - HELD THAT - The impugned order is primarily based on interpretation of law. According to Collector of Stamps, Sidhi, the instrument became chargeable on the date of execution i.e., 2-3-2017, whereas it is the case of the Petitioners that the instrument is chargeable on the date when it is received in State of Madhya Pradesh. Therefore, this Court is of the considered opinion, that so far as the interpretation of law is concerned, the vague Show Cause Notice will not have any adverse effect. Therefore, this Court would like to proceed further to decide that which date is relevant for making an instrument chargeable in State of Madhya Pradesh, i.e., whether the date on which the instrument was executed in State of Uttar Pradesh or the date on which the instrument was received in Madhya Pradesh - the submissions made by the Counsel for the parties shall be considered in the light of the law relating to interpretation of fiscal laws. Whether order dated 2-3-2017 passed by NCLT Allahabad is an instrument? - HELD THAT - The order passed by NCLT Allahabad, thereby accepting the Scheme of arrangement by which the properties were transferred is an instrument chargeable under Indian Stamp Act. Whether the Stamp Duty is payable on the date of execution of instrument or it is payable when it is received in State of M.P.? - HELD THAT - In order to apply the provisions of Section 19-A of Indian Stamp Act, the date of ascertainment and payment of Stamp Duty is not material, but the important aspect is the liability to pay stamp duty. In the present case, since, the instrument was executed in State of Uttar Pradesh, therefore, the first liability of the Petitioner No.1 was to pay the Stamp Duty chargeable in the State of U.P. and thereafter, the Petitioner No.1 was liable to pay the difference of stamp duty to the State of M.P., provided the rate of duty is higher than that of State of Uttar Pradesh - since, the instrument was executed in State of Uttar Pradesh, therefore, the date of execution of instrument for the purposes of charging stamp duty in State of M.P. would not be relevant but the relevant date would be the date on which the instrument was received in State of M.P. However, as the Petitioner No.1 had not paid the stamp duty in Uttar Pradesh prior to ascertainment of stamp duty by Collector of Stamps, Sidhi, therefore, the Petitioner No.1 would not be entitled to seek adjustment/ set off of the stamp duty paid by it in Uttar Pradesh. What is the date on which the instrument was received in the State of M.P.? - HELD THAT - Not only there was reference of order of NCLT Allahabad in the registered deeds, but the execution of four Mining Lease Transfer Deeds clearly show that the Petitioner No.1 had acted upon the order passed by the NCLT Allahabad. Once, the Petitioner no.1 had put the instrument i.e., order of NCLT Allahabad into operation and had also got the mining lease transferred in its name, then it is held that even if the copy of order of NCLT Allahabad might not have been filed, but still the reference of said order and further action on the basis of said order, would certain mean that the instrument i.e., order of NCLT Allahabad was received in State of M.P. on 29-6-2017 - the chargeable instrument i.e., order of NCLT Allahabad was received in Madhya Pradesh on 29-6-2017 and not on 24-10-2017 or 5-8-2019. Whether the Notification dated 3-7-2017 by which cap of Rs. 25 Cr. was provided would apply to the facts of the case or not? - HELD THAT - Since, the instrument i.e., the order of NCLT, Allahabad was already received in M.P. on 29-6-2017, therefore, it became chargeable on the said date and the rate of stamp duty which was prevailing on 29- 6-2017 would apply. It is held that since, the cap on stamp duty to the tune of Rs. 25 Cr came into existence by Notification dated 3-7-2017, therefore, the Petitioner No. 1 is not entitled for the benefit of cap of Rs. 25 cr. Thus, the Collector of Stamps, Sidhi did not commit any mistake by not extending the benefit of cap of Rs. 25 cr. Thus, the findings recorded by the Collector of Stamps, Sidhi regarding cap of Rs. 25 cr. is affirmed, although on different ground. It is further observed, that the findings given by Collector of Stamps, Sidhi are not well reasoned as claimed by State Counsel. Whether Stamp Duty of 1% is chargeable on movable properties? - HELD THAT - From plain reading of Section 9 of Indian Stamp Act, it is clear that Section 9 is not a charging provision and it merely gives power to the Govt. to reduce, remit or compound duties. Since, there is no provision in proviso to Article 25 of Schedule 1-A of Indian Stamp Act, for charging stamp duty on movable property, therefore, the State Counsel is incorrect in submitting that 1% stamp duty can be charged on movable properties. Therefore, the stamp duty imposed by the Collector of Stamps, Sidhi, on the movable properties of the Petitioner No.1 is bad in law and is hereby quashed. Whether Upkar Cess @ 10% is chargeable on stamp duty - HELD THAT - None of the parties have disputed the fact that Upkar Cess is chargeable on the stamp duty @ 10%. Therefore, imposition of Upkar Cess @ 10% on stamp duty is hereby affirmed. Whether the Janpad Cess @ 1% is payable on the value of immovable assets or on Stamp Duty? - HELD THAT - Since, this Court has already held that the instrument i.e., order of NCLT Allahabad was received in Madhya Pradesh on 29-6-2017, therefore, whatever Janpad Cess was payable on the said date would apply. Since, the Notifications dated 6-10-2018 and 25-8-2020 are subsequent to the relevant date, therefore, the Janpad Cess @ 1% on the stamp duty is not chargeable, but it is chargeable @ 1% of the value of the immovable assets. Therefore, the imposition of Janpad Cess @ 1% on the value of the immovable assets is hereby affirmed. Penalty - HELD THAT - The Petitioner is correct in submitting that while calculating the Penalty, the Cess payable under different statutes should not have been taken into consideration. Therefore, the Collector Stamps, Sidhi is directed to recalculate the Penalty by excluding the Janpad Cess and Upkar Cess. Thus, the Petition filed by the Petitioners is partially allowed and the Stamp Duty fixed/ascertained by the Collector of Stamps, Sidhi @ 5% on the value of immovable assets is upheld; the Upkar Cess @ 10% on stamp duty is also upheld; Janpad Cess @ 1% on the value of the immovable property is also affirmed. However, the Stamp Duty on the movable assets is hereby quashed. However, the matter is remanded back to the Collector of Stamps for reassessing the amount of Penalty by not taking the Upkar Cess and Janpad Cess into consideration.

Summary

Issues Involved:

1. Whether the petitioner has an efficacious and alternative remedy.
2. The genesis for starting the proceedings and its effect.
3. Whether the order dated 2-3-2017 passed by NCLT Allahabad is an instrument.
4. Whether the Stamp Duty is payable on the date of execution of the instrument or when it is received in the State of M.P.
5. What is the date on which the instrument was received in the State of M.P.
6. Whether the Notification dated 3-7-2017 by which the cap of Rs. 25 Cr. was provided would apply.
7. Whether Stamp Duty of 1% is chargeable on movable properties.
8. Whether Upkar Cess @ 10% is chargeable on stamp duty.
9. Whether the Janpad Cess @ 1% is payable on the value of immovable assets or on Stamp Duty.
10. Penalty.

Detailed Analysis:

1. Whether the petitioner has an efficacious and alternative remedy:
The court considered the submissions and noted that the objection of alternative remedy had already been rejected by an earlier order dated 25-11-2020. The principle of res judicata applies, preventing the respondents from re-agitating the question of alternative remedy within the same proceedings. Therefore, the preliminary objection regarding the availability of alternative remedy was rejected.

2. The genesis for starting the proceedings and its effect:
The proceedings began with a letter dated 30-7-2019 from the Collector of Stamps, Sidhi, directing the petitioner to submit copies of orders passed by NCLT Mumbai and Allahabad. The petitioner complied, but the Collector of Stamps, Sidhi, issued a show cause notice under Section 48-B of the Indian Stamp Act, directing the petitioner to produce the original instrument. The court found that the petitioner was directed to perform an impossible act, as the original order was in the file of NCLT Allahabad. This initial error did not vitiate the entire proceedings since the impugned order was primarily based on the interpretation of law.

3. Whether the order dated 2-3-2017 passed by NCLT Allahabad is an instrument:
The court referred to the Supreme Court judgment in Hindustan Lever (Supra) and concluded that the order passed by NCLT Allahabad, which resulted in the transfer of properties, is indeed an "instrument" chargeable under the Indian Stamp Act.

4. Whether the Stamp Duty is payable on the date of execution of the instrument or when it is received in the State of M.P.:
The court examined Sections 3(bb) and 19-A of the Indian Stamp Act. It concluded that the stamp duty is payable when the instrument is received in the State of Madhya Pradesh, not on the date of execution. The date of receipt in M.P. determines the chargeability of the instrument.

5. What is the date on which the instrument was received in the State of M.P.:
The court determined that the instrument was received in the State of M.P. on 29-6-2017. This conclusion was based on the fact that the petitioner had acted upon the NCLT Allahabad order by executing four Mining Lease Transfer Deeds on that date.

6. Whether the Notification dated 3-7-2017 by which the cap of Rs. 25 Cr. was provided would apply:
The court held that since the instrument was received in M.P. on 29-6-2017, the cap of Rs. 25 Cr. provided by the notification dated 3-7-2017 does not apply. The legal position as of 29-6-2017 would govern the case, and the notification did not have retrospective operation.

7. Whether Stamp Duty of 1% is chargeable on movable properties:
The court found that there is no provision in the proviso to Article 25 of Schedule 1-A of the Indian Stamp Act for charging stamp duty on movable property. Therefore, the imposition of 1% stamp duty on movable properties by the Collector of Stamps, Sidhi, was quashed.

8. Whether Upkar Cess @ 10% is chargeable on stamp duty:
The court affirmed that Upkar Cess @ 10% on stamp duty is chargeable, as this was not disputed by any party.

9. Whether the Janpad Cess @ 1% is payable on the value of immovable assets or on Stamp Duty:
The court held that the Janpad Cess @ 1% is chargeable on the value of the immovable assets, not on the stamp duty, as the relevant notifications dated 6-10-2018 and 25-8-2020 were subsequent to the relevant date of 29-6-2017.

10. Penalty:
The court noted that the penalty was calculated incorrectly by including Upkar Cess and Janpad Cess. The penalty should only be on the stamp duty. Although no show cause notice was given to the petitioner regarding the penalty, the court found that this would have been a simple formality with no power to waive or remit the penalty. The matter was remanded back to the Collector of Stamps, Sidhi, to reassess the penalty by excluding Upkar Cess and Janpad Cess.

Conclusion:
The petition was partially allowed. The stamp duty fixed by the Collector of Stamps, Sidhi, @ 5% on the value of immovable assets, Upkar Cess @ 10% on stamp duty, and Janpad Cess @ 1% on the value of immovable assets were upheld. However, the stamp duty on movable assets was quashed, and the penalty was remanded back for reassessment. The petitioners were directed to appear before the Collector of Stamps, Sidhi, on 26 August 2024, and the reassessment was to be completed within one month thereafter. The petition challenging the stamp duty without the cap of Rs. 25 Cr., Upkar Cess @ 10%, and Janpad Cess @ 1% on the value of immovable assets was dismissed.