Stamp duty on scheme orders turns on receipt in Madhya Pradesh; later cap cannot undo an already attracted liability.

A scheme of arrangement order transferring property can be treated as an instrument chargeable to stamp duty when received in Madhya Pradesh, and chargeability arises on the date of receipt in the State for instruments executed outside the State. A later notification introducing a Rs. 25 crores cap does not retrospectively defeat a liability already attracted. The charging provision was held not to authorise stamp duty on movable assets in the manner adopted by the Collector, so that levy was set aside. Upkar Cess was upheld at 10% on stamp duty, while Janpad Cess was sustained on the value of immovable property. Penalty required fresh computation by excluding cess amounts from the duty base.

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Issues: (i) Whether the objection of alternative remedy could be re-agitated despite the earlier order overruling it; (ii) whether the NCLT order sanctioning the scheme of arrangement was an instrument chargeable to stamp duty and, if so, the relevant date for chargeability in Madhya Pradesh; (iii) whether the cap of Rs. 25 crores introduced by the notification dated 3-7-2017 applied; (iv) whether stamp duty could be levied on movable assets and whether Janpad Cess and Upkar Cess were leviable in the manner adopted by the Collector; and (v) whether the penalty required interference and recalculation.

Issue (i): Whether the objection of alternative remedy could be re-agitated despite the earlier order overruling it.

Analysis: The earlier interlocutory order rejecting the preliminary objection had attained finality in the same proceedings and could not be reopened at a later stage. The principle governing finality between stages of the same litigation barred the respondents from re-agitating the same objection.

Conclusion: The objection of alternative remedy was rejected.

Issue (ii): Whether the NCLT order sanctioning the scheme of arrangement was an instrument chargeable to stamp duty and, if so, the relevant date for chargeability in Madhya Pradesh.

Analysis: An order effecting transfer of property pursuant to a scheme of arrangement is an instrument within the Indian Stamp Act. Under Section 3(bb) and Section 19-A of the Indian Stamp Act, where an instrument executed outside Madhya Pradesh relates to property in Madhya Pradesh and is received in Madhya Pradesh, the chargeability is attracted when it is received in the State. On the facts, the instrument was held to have been received in Madhya Pradesh on 29-6-2017, when the scheme was acted upon and related mining lease transfer deeds were registered.

Conclusion: The NCLT order was an instrument, and the relevant date for chargeability in Madhya Pradesh was 29-6-2017.

Issue (iii): Whether the cap of Rs. 25 crores introduced by the notification dated 3-7-2017 applied.

Analysis: Since the instrument was received in Madhya Pradesh on 29-6-2017, the law prevailing on that date governed the charge. The subsequent notification dated 3-7-2017 introducing the cap had no retrospective operation and could not govern a liability already attracted.

Conclusion: The cap of Rs. 25 crores was not available to the petitioners.

Issue (iv): Whether stamp duty could be levied on movable assets and whether Janpad Cess and Upkar Cess were leviable in the manner adopted by the Collector.

Analysis: The relevant proviso to Article 25 of Schedule 1-A authorised duty on immovable property transferred in a merger or amalgamation, but did not authorise stamp duty on movable assets in the manner adopted by the Collector. Accordingly, the levy on movable assets could not stand. Upkar Cess was accepted as chargeable at 10% on stamp duty. As to Janpad Cess, the subsequent notifications relied upon by the petitioners were held inapplicable on the relevant date, and the cess was upheld on the value of immovable properties as levied by the Collector.

Conclusion: The levy on movable assets was quashed, Upkar Cess was upheld, and Janpad Cess was upheld.

Issue (v): Whether the penalty required interference and recalculation.

Analysis: Though the complaint of lack of separate notice on penalty did not warrant interference in view of the absence of prejudice, penalty could not be computed by including cess amounts which were not part of stamp duty. The penalty therefore required fresh computation by excluding Upkar Cess and Janpad Cess.

Conclusion: The penalty was remanded for reassessment on the limited question of exclusion of cess amounts.

Final Conclusion: The impugned demand was sustained in substantial part, but the levy on movable assets was set aside and the penalty component was sent back for fresh determination on a limited basis.

Ratio Decidendi: For a document executed outside Madhya Pradesh, stamp duty under the Madhya Pradesh stamp law becomes chargeable when the instrument is received in the State, and a later remission or cap cannot retrospectively affect a liability already attracted; however, duty cannot be imposed on movable assets unless the charging provision clearly authorises it.

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