2022 (4) TMI 1480 - HC - Companies Law

Court quashes stamp duty for company name change, citing no property transfer.

The court allowed the writ petition, quashing the order imposing stamp duty and registration fee on the change of company name. It was held that the ... Change of name of a company does not constitute transfer of leasehold right or other assets - chargeability of stamp duty and registration fee on recordal of corporate name-change - statutory vesting of property on conversion/amalgamation versus transfer by instrument - distinction between mere change of corporate name and transfer/merger requiring registration - Instructions dated 16.2.2012 of the Revenue Department - permission under Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act, 1972 for recording change in revenue recordChange of name of a company does not constitute transfer of leasehold right or other assets - chargeability of stamp duty and registration fee on recordal of corporate name-change - Instructions dated 16.2.2012 of the Revenue Department - Whether imposition of condition to pay stamp duty and registration fee for effecting change of company name in revenue records was legally sustainable. - HELD THAT: - The court held that where only the corporate name is changed with the approval of the Registrar of Companies and there is no instrument effecting transfer of the company's property, such change does not amount to transfer of the leasehold right or other assets of the company and therefore does not attract stamp duty or registration fee. The Revenue Department's instructions dated 16.2.2012, which recognise that a mere change of name of an existing company (where the old name ceases to exist and the new name is not that of a pre-existing company) does not constitute a transaction attracting stamp duty, were treated as correctly reflecting the legal position. The court applied settled principles from earlier decisions (including those which distinguish statutory vesting on conversion or sanctioned amalgamation from transfers by instrument) and held that acquisition of shares or internal change in shareholding or mere change of corporate name does not operate as conveyance of the company's assets. Analogous precedents were relied upon to reject the contention that change in management or shareholding converts the event into a transfer of property for purposes of stamp duty, and to distinguish cases of amalgamation or statutory vesting where different rules apply. On that basis the condition imposed by the Revenue Secretary that stamp duty and registration fee be paid on the value of assets as a precondition for effecting the name-change in revenue records was held to be erroneous.Impugned order directing deposit of stamp duty and registration fee for recording change of company name quashed; permission to record name-change in revenue records to be given without imposing payment of stamp duty and registration fee.Final Conclusion: Writ petition allowed; the order of 18.12.2020 imposing stamp duty and registration fee as a condition for recording the change of the company's name in revenue records is quashed and set aside. Issues Involved:1. Whether the change in the name of the company requires payment of stamp duty and registration fee.2. Interpretation of the instructions issued by the Revenue Department, Government of Himachal Pradesh.3. Precedents regarding the change of name and its implications on stamp duty and registration fees.4. The legal distinction between change of name and transfer of property.Issue-Wise Detailed Analysis:1. Whether the change in the name of the company requires payment of stamp duty and registration fee:The petitioner argued that no sale transaction or conveyance took place between two parties, and the property did not change hands. The only effect was the exit of the minority shareholder, resulting in the total shareholding being vested in the petitioner. The respondents contended that the change was not merely a name change but involved the exit of a shareholder, thereby implying a transfer that necessitates the payment of stamp duty and registration fees.2. Interpretation of the instructions issued by the Revenue Department, Government of Himachal Pradesh:The instructions dated 16.2.2012 clarify that no stamp duty is chargeable where merely the name of the company is changed with the approval of the Registrar of Companies. The court emphasized that the instructions clearly state that no transaction or sale of property takes place in such scenarios, and only the change in the name of the company is sought to be recorded in the revenue record.3. Precedents regarding the change of name and its implications on stamp duty and registration fees:The petitioner relied on several judgments, including M/s Fresenius Kabi Oncology Limited v. H.P. State Industrial Development Corporation Limited, Reckitt Benckiser (India) Private Limited v. State of H.P., and M/s Sozin Flora Pharma LLP v. State of Himachal Pradesh. These cases established that the mere change of name does not constitute a transfer of property and thus does not attract stamp duty or registration fees. The court reiterated these precedents, emphasizing that the change in the name of the company does not amount to a transfer of assets.4. The legal distinction between change of name and transfer of property:The court examined various case laws, including the High Court of Calcutta's decision in M/s Fresenius Kabi Oncology Limited v. The State of West Bengal, which held that change of name does not constitute a transfer of leasehold rights or assets of the company. The court also referred to the Supreme Court's judgment in Bacha F. Guzdar v. Commissioner of Income Tax, which clarified that a shareholder does not acquire any interest in the company's assets. The court concluded that the change of name does not imply a transfer of property, and therefore, no stamp duty or registration fee is chargeable.Conclusion:The court allowed the writ petition, quashing the impugned order dated 18.12.2020, which imposed the condition of payment of stamp duty and registration fee on the value of assets upon the change of name. The court directed the respondents to enter the petitioner's new name in the revenue record without requiring the payment of stamp duty and registration fees. All pending applications were disposed of.