Composite asset sale and stamp duty: authorities may assess the true transaction value, including attached plant and machinery.

In a composite auction sale of company assets, stamp duty must be assessed on the true substance of the conveyance, not by isolating the land and buildings from permanently attached plant and machinery. Where the deed shows a single transfer for a consolidated consideration on an as-is-where-is basis, the transfer extends to immovable property and its incidents, including fixtures attached to the earth. The registering authority may also examine the real nature of the transaction, inspect property and records, and apply the statutory provisions on facts affecting duty and undervalued instruments to determine correct market value and deficit duty. Current assets, however, require separate treatment, and the exemption question was left for reconsideration.

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Issues: (i) Whether, on a composite auction sale of the company's assets, a conveyance deed could be registered only for the land and buildings by excluding plant and machinery from the value for stamp duty purposes. (ii) Whether the registering authority could look beyond the recitals and schedule in the deed and determine stamp duty on the basis of the true nature and extent of the transaction, including by applying the provisions on facts affecting duty and undervalued instruments.

Issue (i): Whether, on a composite auction sale of the company's assets, a conveyance deed could be registered only for the land and buildings by excluding plant and machinery from the value for stamp duty purposes.

Analysis: The auction sale and the sale deed disclosed a single transaction for sale of the company's assets as a whole, described as being on an as-is-where-is basis and for a consolidated consideration. The deed's preamble showed that the consideration related to land, buildings, civil works, plant and machinery, and current assets. The Court held that the recital and surrounding circumstances showed an intention to convey not merely the land but also such plant and machinery as were permanently attached to the earth and formed part of the immovable property. Section 8 of the Transfer of Property Act, 1882, together with the definitions of immovable property in the Registration Act, 1908, and the General Clauses Act, 1897, supported the conclusion that the transfer carried all incidents attached to the land. The attempt to value only part of the composite transfer was held to be inconsistent with the true nature of the conveyance.

Conclusion: The exclusion of plant and machinery from the conveyance for stamp duty purposes was not permissible; the conveyance covered the attached plant and machinery also, to the extent they answered the description of immovable property.

Issue (ii): Whether the registering authority could look beyond the recitals and schedule in the deed and determine stamp duty on the basis of the true nature and extent of the transaction, including by applying the provisions on facts affecting duty and undervalued instruments.

Analysis: The Court held that the proviso added to Section 27 of the Indian Stamp Act, 1899, by the Andhra Pradesh amendment empowered the registering officer to inspect the property, make local enquiries, and examine connected records to ensure that the facts affecting duty were truly set forth. Section 47A of the Indian Stamp Act, 1899, also enabled action where market value was not truly stated. In light of these provisions, the authority was entitled to examine the substance of the transaction, determine the correct market value of the property actually conveyed, and assess deficit duty. The earlier restrictive approach under pre-amendment law did not govern the Andhra Pradesh regime after insertion of the proviso to Section 27 and Section 47A. The Court also held that the value of current assets had to be separately dealt with, and the exemption issue under the Government Order was left for reconsideration in accordance with law.

Conclusion: The registering authority was competent to examine the true transaction and determine stamp duty on the correct market value of the immovable property conveyed, including embedded plant and machinery.

Final Conclusion: The impugned judgment was set aside in part, the single judge's approach was substantially restored with modifications, and the matter was remitted for reconsideration of the value of plant and machinery and the exemption question in accordance with law.

Ratio Decidendi: In a composite conveyance of assets sold as a single transaction, stamp duty is chargeable on the true substance of the transfer and the registering authority may, where statute so permits, look beyond the form of the deed to ascertain the correct market value of the immovable property actually conveyed, including permanently attached plant and machinery.

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