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TMI Blog2024 (11) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation of two years as provided under section 47A (3). There is legal force in the argument advanced by the learned Senior Counsel for the petitioner that the exercise of power conferred upon the respondent by section 47A (3) is appearing to be barred by limitation. A Coordinate Bench of this Court in Delhi Towers Ltd. observed that the Supreme Court in HINDUSTAN LEVER VERSUS STATE OF MAHARASHTRA [ 2003 (11) TMI 335 - SUPREME COURT] held that orders passed by courts have been subjected to levy of stamp duty in several situations. It was also observed that the thing which is liable to stamp duty is the instrument and it is not a transaction of purchase and sale which is struck at. The Court also observed that merely because the legislature has not amended the existing statutory provision as applicable to Delhi to specifically include transfer of property under an order approving a scheme of amalgamation in the definition of conveyance, it is of no consequence at all. The same does not amount to exclusion from applicability of the Indian Stamp Act and chargeability to stamp duty thereon. It was also observed that the statutory definition of conveyance under section 2 (10) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings pursuant to, or in furtherance of, the Impugned Order against the Petitioner, its Directors, officials, representatives etc.; c) Issue any other appropriate writ, order or directions as the facts and circumstances of the present case may require; and d) Grant costs. 2. The factual background of the case is that Holcim (India) Private Limited (hereinafter referred to as the petitioner ) is a private limited company incorporated under the Companies Act, 1956 and is a wholly owned subsidiary of Holderind Investments Ltd., Mauritius (hereinafter referred to as Holderind ). Ambuja Cements India Private Limited (hereinafter referred to as ACIPL ) was incorporated under the Companies Act was an investment company and did not undertake any business. ACIPL was a 100% subsidiary of Holderind which held 55% shares of ACIPL directly and the remaining 45% shares were held by the petitioner. The Boards of Directors of the petitioner and ACIPL approved a scheme of amalgamation between these two companies on 03.04.2009 and 04.09.2009 and ACIPL was proposed to be merged into the petitioner. Thereafter an application under sections 391 to 394 of the Companies Act, 1956 was filed for san ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent on 27.03.2014 along with supporting documents. The petitioner submitted a preliminary reply dated 06.05.2014 and detailed reply dated 21.05.2014 wherein it was stated that no stamp duty was payable on the merger order under the head conveyance and the transfer of shares of ACC and ACL from ACIPL to the petitioner in dematerialized form did not attract any stamp duty. The respondent issued another notice to the petitioner on 28.05.2014 stating that the petitioner has submitted an application for adjudication of stamp duty on merger and the petitioner was directed to produce certain documents. The petitioner filed a written response dated 03.06.2014 wherein it was stated that the petitioner had not submitted any application to the respondent and was under no obligation to submit any documents to the respondent. It was also stated that both the transferor and transferee companies were wholly owned subsidiaries of a common parent company. The merger had taken place between two subsidiary companies of each of which not less than 90 per cent of the share capital was in the beneficial ownership of a common parent company and the said transaction was not exigible to stamp duty by virt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of shares exempted under Article 62 of Schedule IA of the Act. The transfer of shares of ACC and ACL held by ACIPL in dematerialized form was not liable to attract stamp duty as per section 8A of the Act. The impugned order is erroneous in concluding that the merger order is an instrument of conveyance chargeable under Article 23 of Schedule IA of the Act. 2.3 The respondent has exceeded his jurisdiction by requiring the petitioner to produce documents or information which is not provided for under either section 31 or 33 of the Act. The respondent did not have jurisdiction to issue notices dated 20.03.2014 and 28.05.2014 directing the petitioner to appear before him and produce the documents. The respondent erred in dismissing the jurisdictional objections raised by the petitioner by stating that the petitioner is estopped from raising such objections. The respondent failed to appreciate that lack of jurisdiction cannot be cured by consent or acts of the parties. The respondent has exceeded its jurisdiction in seeking to levy on the petitioner as section 40 of the Act provides for imposition of penalty only in cases where the respondent exercises powers under section 33 or sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e orders sanctioning the scheme would be instruments for the purpose of the Act and would attract stamp duty. 3.1 The petitioner has mixed the issue of chargeability of the order approving a scheme with the chargeability of shares issued in pursuance of such scheme. The stamp duty is chargeable on scheme and not on transfer of shares and the scheme is chargeable to stamp duty in terms of Article 23 of Schedule IA. The exemption granted under section 8A of the Act is for securities dealt in a depository and shares would not qualify as securities and as such the exemption granted under section 8A is not applicable to shares dealt in a depository. The scheme where all properties of transferor company are transferred to the transferee then duty is payable as conveyance under Article 23 of Schedule IA of the Act and share certificates issued to the shareholders of the transferor company in pursuance of the scheme shall be exigible to additional stamp duty in terms of Article 19 of Schedule IA. The petitioner did not take the plea of exemption granted vide the 1937 Notification during the adjudicatory process and the conditions pre-requisite for applicability of 1937 Notification are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and as such, it is not necessary that unless the original instrument is produced, duty cannot be recovered. The case of the petitioner is not covered by the 1937 Notification as neither the 1937 Notification is applicable in case of Schedule IA of the Act, nor the petitioner satisfies the condition of at least 90% holding of shares of the subsidiary company by the holding or the parent company. The petitioner is also liable to pay the stamp duty on the issue of share certificate. It is stated that the present petition is not maintainable and liable to be dismissed. 4. The petitioner filed a rejoinder to the counter affidavit filed on behalf of the respondent wherein the contents of the counter affidavit were denied and the contents of the writ petition were reiterated. It is stated that the present case is not filed for evasion and the petitioner has paid the stamp duty exigible on the issuance of Share Certificate no.12. The respondent has constantly attempted to improve its case which is impermissible and has attempted to provide supplemental reasoning for making the merger order exigible to stamp duty on grounds which were not even considered while passing the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as wrongly created a distinction between shares and securities. The respondent never raised issue of stamp duty payable on the shares issued in pursuance of the scheme of amalgamation either in the show-cause notice or at the time of hearing. The petitioner prayed that the present petition be allowed in terms of the prayer clause of the petition. 5. Sh. Sudhanshu Batra, the learned Senior Counsel for the petitioner advanced oral arguments and written submissions are also filed on behalf of the petitioner. It is argued that the respondent has acted beyond the powers vested in him as the respondent does not have power to adjudicate stamp duty except under the provisions of section 31 (where an instrument is brought to the Collector to seek his opinion as to the duty chargeable) and section 33 (where an authorized officer impounds an instrument that comes into his possession) of the Act. The Act does not empower or authorise the respondent to adjudicate or levy stamp duty in any other manner. The impugned order is ex facie illegal as it has not been passed under the abovementioned provisions. The respondent has clearly admitted in the impugned order as well as its counter affidavit th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in two years from the date of registration i.e. till 06.12.2013. However, the show-cause notice was issued on 20.03.2014 which is beyond the period of limitation provided under section 47A. Section 47A was enacted to remedy the mischief of undervaluation of immovable properties and is not applicable to the present case. The learned Senior Counsel cited V .N. Devadoss V Chief Revenue Control Officer-cum-Inspector and Others, (2009) 7 SCC 438. 5.2 Sh. Batra primarily and forcefully argued that the scheme of amalgamation is exempted from payment of any stamp duty in terms of the 1937 Notification which specifically exempts duty on instruments transferring property between two subsidiary companies of each of which not less than 90% of the share capital is in the beneficial ownership of a common parent company. In the present case, more than 90% share capital of the petitioner and ACIPL is held by a common parent company i.e. Holderind. Therefore, the 1937 Notification exempts the scheme of amalgamation from any stamp duty. Sh. Batra in support of his argument cited Delhi Towers Ltd. wherein it was held that the 1937 Notification is applicable and binding. 5.3 The respondent in impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoking the writ jurisdiction of this Court. The learned Senior Counsel placed reliance in this regard on Whirlpool Corporation V Registrar of Trademarks, (1998) 8 SCC 1 and State of Uttar Pradesh V Mohammad Nooh, 1957 SCC OnLine SC 21. 5.5 Sh. Batra argued that present case is covered under section 8A of the Act as it stood prior to the amendment made in the year 2019. The Depository is defined under section 2 (1) (e) of the Depositories Act, 1996 which means a company which has been granted a certificate of registration under section 12 (1A) of SEBI Act, 1992 and which holds securities like shares, debentures, bonds, government securities etc. The depository becomes the registered owner in respect of the security whereas the person who surrenders the physical shares is recorded as the beneficial owner. In the present case, there is only transfer of shares in dematerialized form and the legislative intent, as expressed in section 8A of the Act, is that such transfer of dematerialized shares should not be charged with stamp duty. It would be against the legislative intent to authorize the levy of stamp duty on transfer of dematerialized shares which has been specifically exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi is payable only as per Schedule IA which does not contain any Article remitting the stamp duty in terms of the 1937 Notification. Schedule IA was comprehensively amended by the Delhi Assembly in 2001 therefore, the 1937 Notification is not applicable. 6.2 Sh. Tripathi also referred that the petitioner has contended that orders under section 394 of the Companies Act have not been specifically included within the definition of conveyance by the Delhi Assembly. However this Court in Delhi Towers Ltd. has held that the amendments made to the Stamp legislations in other states were only clarificatory in nature and absence of similar state amendment for Delhi does not exempt orders under section 394 of the Companies Act from stamp duty. He argued that lack of comparable state amendment for Delhi does not preclude imposition of stamp duty on orders of the court sanctioning scheme of amalgamation under section 394 of the Companies Act, 1956. 6.3 Sh. Tripathi also argued that the scheme of amalgamation transferred a going business concern, therefore Article 23 (conveyance) is applicable and not Article 62 (transfer of shares). The scheme of amalgamation results in destruction of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powers and it is settled law that the power to do a thing also carries the power to regulate the manner in which it may be done as held by the Supreme Court in State of Uttar Pradesh V Batuk Deo Tripathi, (1978) 2 SCC 102. The petitioner has not availed the statutory remedy of appeal before the District Court provided under section 47A (4) of the Act and cannot be allowed to invoke the extraordinary writ jurisdiction of this Court. 6.5 Sh. Tripathi also addressed issue i.e. value at which stamp duty is to be imposed. He argued that the shares of the transferee company were issued to the shareholders of the transferor company as consideration for the amalgamation therefore, the price of the said shares shall be the basis for calculation of stamp duty. The individual assets and liabilities need not be separately accounted for in arriving at the said calculation as held by the Supreme Court in Li Taka Pharmaceuticals Ltd. V State of Maharashtra, 1996 SCC OnLine Bom 67 which was relied upon by this Court in Delhi Towers Ltd. Sh. Tripathi placed reliance on section 21 of the Act which provides that stock and marketable securities shall be valued according to the average price or value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field. xxx xxx xxx 17. A specific and clear rule was laid down in State of U.P. v. Mohd. Nooh [AIR 1958 SC 86 : 1958 SCR 595] as under: But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies. xxx xxx xxx 20. Much water has since flown under the bridge, but there has been no corrosive effect on these decisions which, though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a writ petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation. 7.2 It is a well-accepted proposition of law that the power of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of document in evidence once it has been admitted. None of these provisions have been amended by the State of Andhra Pradesh. xxx xxx xxx 58. An instrument which is not duly stamped cannot be received in evidence by any person who has authority to receive evidence and it cannot be acted upon by that person or by any public officer. This is the penalty which is imposed by law on the person who may seek to claim any benefit under an instrument if it is not duly stamped. Once detected, the authority competent to impound the document can recover not only duty but also penalty, which provision protects the interest of revenue. In the event of there being criminal intention or fraud, the persons responsible may be liable to be prosecuted. The availability of these provisions, in our opinion, adequately protects the interest of revenue. Unbridled power available to be exercised by any person whom the Collector may think proper to authorise, without laying down any guidelines as to the persons who may be authorised and without recording the availability of grounds which would give rise to the belief, on the existence whereof only, the power may be exercised, deprives the provision of the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act defines chargeable to mean chargeable under this Act . Section 2 (11) of the Stamp Act defines duly stamped to mean that such stamp has been affixed or used in accordance with the law for the time being in force in India . Under Section 33 it is only when an instrument is chargeable with duty and it not duly stamped that it can be impounded. Can the sale deed in question be impounded under Section 33 because the transfer duty is either not paid or is insufficiently paid? The answer must be No . For, the meaning of the expression any instrument chargeable or the expression instrument not duly stamped used in Section 33 of the Stamp Act is to be understood in the light of the definitions in Sections 2 (6) and 2 (11). Chargeable means chargeable under the Stamp Act only and not under any other Act. The Stamp Act authorizes the levy of stamp duty only and not of the duty on transfer of property. The latter is authorized by the Corporation Act alone. The sale deed in question is not, therefore, chargeable to transfer duty under the Stamp Act at all. It is not, therefore, an instrument chargeable to duty within the meaning of Section 33 of the Stamp Act. 8.2 Sh. Tripathi, the Standin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue or consideration and the duty payable thereon. However, such suo-motu power can only be exercised within two years from the date of registration of the instrument. In the present case, the petitioner filed Form 21 with the Registrar of Companies for registration of the merger order on 07.12.2011 and the respondent issued the show-cause notice on 20.03.2014 which is beyond the period of limitation of two years as provided under section 47A (3). There is legal force in the argument advanced by the learned Senior Counsel for the petitioner that the exercise of power conferred upon the respondent by section 47A (3) is appearing to be barred by limitation. 9. Sh. Tripathi, the Standing Counsel for the respondent argued that as per section 3 of the Act, an instrument is the subject matter of the charging provision and as per section 2 (14), an inclusive definition has been provided for instrument which includes every document by which any right or liability is, or purported to be, created, transferred, limited, extended, extinguished or recorded. He further argued that a share certificate whether in physical or dematerialized form, certainly creates, modifies, extinguish or records a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the scheme of amalgamation without payment of stamp duty. The issue for consideration was that whether an order passed by the company court under section 394 of the Companies Act approving a scheme of amalgamation is covered under definition of conveyance as per section 2 (10) of the Act and therefore exigible to stamp duty. It was argued before the court that by virtue of the order sanctioning the scheme for amalgamation, nothing further is required to be done for the property to stand transferred to and vest in the transferee company. 9.2 A Coordinate Bench of this Court in Delhi Towers Ltd. observed that the Supreme Court in Hindustan Lever V State of Maharashtra, (2004) 9 SCC 438 held that orders passed by courts have been subjected to levy of stamp duty in several situations. It was also observed that the thing which is liable to stamp duty is the instrument and it is not a transaction of purchase and sale which is struck at. The Court also observed that merely because the legislature has not amended the existing statutory provision as applicable to Delhi to specifically include transfer of property under an order approving a scheme of amalgamation in the definition of conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Senior Counsel for the petitioner laid much emphasis and referred the 1937 Notification and argued that merger order is covered under the said notification and exempted from stamp duty. It is reflecting that both ACIPL (transferor company) and the petitioner (transferee company) are wholly owned subsidiary companies of a common parent company i.e. Holderind and the merger/amalgamation had taken place between two subsidiary companies of each of which not less than 90% of the share capital was in the beneficial ownership of a common parent company i.e. Holderind. 10.1 It is necessary to refer to the relevant portion of the Notification no. 13 dated 25.12.1937 issued by the Central Government, which is reproduced as under: In exercise of the powers conferred by clause (a) of section 9 of the Indian Stamp Act, 1899 (II of 1899), and in supersession of all previous notifications issued from time to time under the said clause of the said section in so far as they relate to the Province of Delhi (hereinafter referred to as the said Province) except the notification of the Government of India in the Finance Department (Central Revenue) No.6 - Stamps, dated the 14th August, 1937, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Delhi) wherein the question was whether stamp duty is leviable on a transfer of assets by a scheme of amalgamation proposed between a hundred percent owned subsidiary company with its parent company. Reliance was placed on Notification dated 16th January 1937. It was held in said case that no stamp duty would be leviable in any case to the transfer of assets between the transferor and transferee companies when the transferor company is a 100 per cent subsidiary of the transferee company which is the parent company. This Court in Delhi Towers Ltd. observed that the Notification no. 13 dated 25.12.1937 issued by the Central Government is applicable and binding. 10.4 Accordingly, the argument advanced by the Standing Counsel for the respondent that the Notification no. 13 dated 25.12.1937 has been repealed and is not applicable, does not have any legal force and is accordingly rejected. The petitioner and ACIPL were wholly owned subsidiaries of a common parent company Holderind and therefore, the scheme of amalgamation and the merger order are squarely covered under the Notification no. 13 dated 25.12.1937 which exempts the said instruments from payment of stamp duty. 11. The presen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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