Ambiguity in The Adjudication of Stamp Duty- “No More a Delayed Act”
AMBIGUITY IN THE ADJUDICATION OF STAMP DUTY- “NO MORE A DELAYED ACT” Speedy Justice for ‘You’ - Saul Goodman, 1. The High Court of Delhi recently vide a common judgment dated April 24, 2023,1 in the case of Uno Minda Limited v. Deputy Commissioner of Revenue Department and Reebok India Company v. Government of NCT of Delhi has laid down certain key guidelines for expeditious...
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AMBIGUITY IN THE ADJUDICATION OF STAMP DUTY- “NO MORE A DELAYED ACT”
Speedy Justice for ‘You’
- Saul Goodman,
1. The High Court of Delhi recently vide a common judgment dated April 24, 2023,1 in the case of Uno Minda Limited v. Deputy Commissioner of Revenue Department and Reebok India Company v. Government of NCT of Delhi has laid down certain key guidelines for expeditious disposal of pending matters before the Collector of Stamps for adjudication of stamp duty.
BACKGROUND
2. Uno Minda (“UM”) and Reebok India (“RI”) had preferred Writ Petitions before the High Court of Delhi seeking issuance of directions to the Collector of Stamps which at the relevant time was being manned by the Principal Secretary Revenue-cum-Divisional Commissioner, GNCTD for adjudicating the stamp duty payable by the Petitioners.
3. In the first case of UM, there was a composite scheme of amalgamation between Harita Group companies with UM, which was approved by the National Company Law Tribunal (“NCLT”) on February 1, 2021.
4. In the said case, UM intended to get the scheme of amalgamation registered and duly stamped under the provisions of the Indian Stamp Act, 1899 and it applied to the Divisional Commissioner for seeking adjudication of the stamp duty for the same. UM had preferred and filled the said application on January 13, 2022, and it was aggrieved that till the date of disposal of the present petition, the stamp duty payable wasn’t communicated or the final adjudication took place in the said matter.
5. Therefore, the prayer was to direct the Divisional Commissioner to adjudicate the stamp duty payable as expeditiously as possible so that the said scheme could be duly stamped.
6. In the other case, RI had converted its debentures into shares and RI sought issuance of stamp paper for the Share Certificated as per its application dated January 25, 2022. RI stated that despite repeated reminders and requests, the Govt. of NCT of Delhi has failed to issue challan(s) owing to which RI couldn’t purchase the stamp duty to be paid on the Share Certificate. It also alleged that this delay and inaction of Govt. of NCT of Delhi has resulted in non-compliance with its statutory obligation under Section 56(4) of the Companies Act, 2013.
7. Therefore, the prayer was to direct the Govt. of NCT of Delhi to issue challan as per the RI’s application for issuance of stamp paper for the Share Certificates.
DECISION AND FINDINGS OF THE COURT
8. Considering the facts and circumstances of both matters, the High Court decided to dispose of both matters together. The High Court noted that despite the filing of applications which have been pending for more than a year, the determination of the stamp duty has not been communicated to the Petitioners. It also considered that for both of these cases i.e. scheme of amalgamation as also the instrument of conversion from debentures to shares do not have a pre-determined stamp duty that has been fixed and as a result, the Petitioners had approached the Collector of Stamps for adjudication of the stamp duty in terms of Section 31 of the Indian Stamp Act, 18992 (“Act”).
9. The Court also noted that Section 323 of the Act notes that in case of adjudication as to the proper value of the stamp, there is no prescribed time period which has been fixed under Section 31 of the Act while the Company Act, 2013 like in the case of Section 56 which states, that the company cannot register the transfer of securities unless the instrument of transfer is duly stamped, dated, and executed. Section 56(4) specifically requires the said transmission to take place within two months from the date of allotment or the date of incorporation while in the case of allotment of debentures, the time limit fixed is six months.
10. The Court also looked at the provisions of the Delhi (Right of Citizen to Time Bound Delivery of Services) Act, 2011 (“Delhi Act, 2011”) which recognizes the need for registration of Documents, grant of licenses etc. within prescribed periods in Delhi4 and stated that the Delhi Act, 2011 must be implemented in letter and spirit in the National Capital Territory of Delhi.
CONCLUSION
11. The High Court, therefore, held and directed that the Collector of Stamps shall usually adjudicate the stamp duty payable and communicate the same to parties within 30 (Thirty) days. However, if the same involves any complexity/ extraordinary circumstances, the adjudication of stamp duty can be extended for a maximum period of 3 (Three) months from the date of application and disposed of the matter.
KEY TAKEAWAYS
This case is extremely important on two counts:
• The Court has directed a time-bound disposal mechanism of 30 days / 3 months; as the case may be, which will surely expedite similar cases and will also hold persuasive value before the other courts, subject to the state amendments.
• This will also help and otherwise be a boon to those matters where composite schemes of amalgamation and arrangements are subjected to unnecessary scrutiny even years after the arrangements are acted upon.
2. Section 31. Adjudication as to proper stamp.
(1) When any instrument, whether executed or not and whether previously stamped or not, is brought to the Collector, and the person bringing it applies to have the opinion of that officer as to the duty (if any) with which it is chargeable, and pays a fee of such amount (not exceeding five rupees and not less than [fifty naye paise]) as the Collector may in each case direct, the Collector shall determine the duty (if any) with which, in his judgment the instrument is chargeable.
(2) For this purpose the Collector may require to be furnished with an abstract of the instrument, and also with such affidavit or other evidence as he may deem necessary to prove that all the facts and circumstances affecting the chargeability of the instrument with duty, or the amount of the duty with which it is chargeable, are fully and truly set forth therein, and may refuse to proceed upon any such application until such abstract and evidence have been furnished accordingly: Provided that—
(a) no evidence furnished in pursuance of this section shall be used against any person in any civil proceeding, except in an enquiry as to the duty with which the instrument to which it relates is chargeable; and
(b) every person by whom any such evidence is furnished, shall, on payment of the full duty with which the instrument to which it relates, is chargeable, be relieved from any penalty which he may have incurred under this Act by reason of the omission to state truly in such instrument any of the facts or circumstances aforesaid.
3. Section 32. Certificate by Collector
(3) Any instrument upon which an endorsement has been made under this section, shall be deemed to be duly stamped or not chargeable with duty, as the case may be; and, if chargeable with duty, shall be receivable in evidence or otherwise, and may be acted upon and registered as if it had been originally duly stamped: Provided that nothing in this section shall authorise the Collector to endorse—
(a) any instrument executed or first executed in [India] and brought to him after the expiration of one month from the date of its execution or first execution, as the case may be;
(b) any instrument executed or first executed out of [India] and brought to him after the expiration of three months after it has been first received in [India]; or
(c) any instrument chargeable [with a duty not exceeding ten naye paise], or any bill of exchange or promissory note, when brought to him, after the drawing or execution thereof, on paper not duly stamped.”
4. Section 3- Right of citizen to obtain time bound delivery of services.
Every citizen shall have the right to obtain the citizen related services in Delhi in accordance with this Act within the time bound period as stipulated in the Schedule.
Provided that the Government shall be entitled to amend and revise the Schedule from time to time by notification; read with
Entry 331 of the schedule to the Delhi Act, 2011 which requires Registration of Documents (Sale Deed/ GPA/SPA /WILL/conveyance Deed/Gift Deed etc.) within 15 days.
