BOT concession agreements may be treated as leases for stamp duty when they transfer possessory rights and toll collection benefits.
A BOT concession agreement granting possession of a project highway and the right to collect tolls for a fixed term was treated as a lease rather than a licence, because the substance of the transaction showed a transfer of the right to enjoy immovable property and not a mere personal permission. Stamp duty was therefore attracted under the Indian Stamp Act. The challenge to the amended toll-based charging entry and the related recovery provisions failed because the amendment was held only to prescribe duty for an existing category of lease, without enlarging the statutory definition or trespassing into the Union field. The writ petitions were dismissed and the stamp duty demand was sustained.
Issues: (i) whether the BOT concession agreement, under which the right to collect tolls was granted for a fixed period in return for construction and development of the road, amounted to a lease or only a licence; (ii) whether the amendment inserting the toll-based charging entry in Schedule 1-A of the Indian Stamp Act was ultra vires or beyond legislative competence, and whether the challenged recovery provisions were unconstitutional.
Issue (i): whether the BOT concession agreement, under which the right to collect tolls was granted for a fixed period in return for construction and development of the road, amounted to a lease or only a licence.
Analysis: A lease under Section 105 of the Transfer of Property Act, 1882 requires a transfer of the right to enjoy immovable property for a certain time in consideration of value, while Section 2(16) of the Indian Stamp Act, 1899 expressly includes any instrument by which tolls of any description are let. A licence under Section 52 of the Indian Easements Act, 1882 does not create an interest in property and is personal in nature. On the terms of the agreement, the concessionaire received physical possession of the site, was authorised to construct, operate and maintain the road, and was entitled to collect tolls for fifteen years without any further instrument. The arrangement was not governed by mere nomenclature, and the real substance of the transaction showed transfer of a right to enjoy the project highway and the benefit arising from it.
Conclusion: The agreement was a lease and not a licence, and the stamp duty liability was attracted on that basis in favour of the Revenue.
Issue (ii): whether the amendment inserting the toll-based charging entry in Schedule 1-A of the Indian Stamp Act was ultra vires or beyond legislative competence, and whether the challenged recovery provisions were unconstitutional.
Analysis: The amended entry in Schedule 1-A did not enlarge the meaning of lease; it merely prescribed the rate of duty for a category already falling within the statutory definition. The State was competent to legislate on stamp duty for instruments not covered by the Union field in Entry 91 of List I, and the impugned provision did not create any repugnancy with the Transfer of Property Act, 1882 or the Indian Stamp Act, 1899. Since the instrument was a lease and the charging provision applied to such a transaction, the challenge to the amendment on the ground of lack of competence or unconstitutional extension of the taxing field failed. The contention based on the recovery mechanism was also not accepted.
Conclusion: The amendment and the impugned provisions were upheld, and the constitutional challenge failed in favour of the Revenue.
Final Conclusion: The writ petitions were dismissed, and the demand of stamp duty on the concession agreement was sustained.
Ratio Decidendi: A BOT concession agreement will be treated as a lease for stamp duty purposes when its substance shows a transfer of the right to enjoy immovable property for a fixed period with entitlement to collect tolls, and a State charging entry that fixes duty for such a lease is valid if it does not enlarge the statutory definition or trench upon a reserved Union field.
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