Stamp duty on company share-capital changes: Form No. 5 not separately taxable, and the Article 10 cap applies once.

Stamp duty was held to apply only to a legally chargeable instrument under the Bombay Stamp Act, so Form No. 5 filed after an increase in share capital was not separately taxable because it merely recorded the company's resolution and did not itself create, transfer or extinguish rights. The Court also treated the Article 10 ceiling on stamp duty for the Articles of Association as a one-time cap on the instrument itself, not a fresh levy on each later increase in share capital. On that basis, later collections were held refundable with interest and the refund direction was sustained.

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Issues: (i) Whether the notice filed in Form No. 5 under Section 97 of the Companies Act, 1956 is an "instrument" chargeable to stamp duty under the Bombay Stamp Act, 1958. (ii) Whether the maximum stamp duty cap under Article 10 of Schedule-I applies only once to the Articles of Association or on every subsequent increase in share capital.

Issue (i): Whether the notice filed in Form No. 5 under Section 97 of the Companies Act, 1956 is an "instrument" chargeable to stamp duty under the Bombay Stamp Act, 1958.

Analysis: Stamp duty is attracted only on instruments within the meaning of Section 2(l). Form No. 5 is only the statutory notice filed with the Registrar after a resolution increasing share capital; it records the increase for administrative purposes and does not itself create, transfer, or extinguish any right. The charge under Article 10 is directed at the Articles of Association, not at the filing form. The analogy of a court-sanctioned amalgamation order was inapposite, because such an order itself effects legal consequences, whereas Form No. 5 merely communicates a company resolution.

Conclusion: Form No. 5 is not the chargeable instrument, and no separate stamp duty is payable on it.

Issue (ii): Whether the maximum stamp duty cap under Article 10 of Schedule-I applies only once to the Articles of Association or on every subsequent increase in share capital.

Analysis: Article 10 charges the Articles of Association, including where the company has increased share capital. Section 31(2) of the Companies Act, 1956 validates alterations as if originally contained in the articles, and Section 14A of the Stamp Act does not create a fresh charge merely because the share capital changes. As a fiscal charging provision, Article 10 had to be construed strictly. The ceiling of Rs. 25 lakhs was attached to the instrument itself and not to each later increase separately. Once the cap was reached on the same instrument, no further levy could be imposed on later increases under the pre-2015 wording.

Conclusion: The cap operated as a one-time ceiling on the Articles of Association, and no further stamp duty was leviable once the maximum had already been paid.

Final Conclusion: The civil appeal failed, the High Court's refund direction was sustained, and the amounts collected on the subsequent increase in share capital were held to be refundable with interest.

Ratio Decidendi: For stamp duty purposes, only the legally chargeable instrument can be taxed, and where a statute fixes a ceiling on that instrument, later alterations of the same instrument do not attract a fresh levy unless the charging provision expressly so provides.

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