Section 3C's non-obstante clause does not prevent additional stamp duty under Section 3B; appeal dismissed, costs Rs.25,000

HC upheld that Section 3C's non-obstante clause does not curtail additional stamp duty levied under Section 3B; Section 3C only limits duties imposed by other laws to the maximum chargeable under the Act and does not reduce duties chargeable under Section 3B. The appellant's contention to the contrary was rejected and the appeal was dismissed. Costs awarded to the respondent quantified at Rs. 25,000.

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1. ISSUES PRESENTED AND CONSIDERED

1. Whether an order of an appropriate tribunal approving a scheme of arrangement under Sections 230-232 of the Companies Act constitutes a "conveyance" within the meaning of the Stamp Act for the purposes of Article 20(4) of the Schedule.

2. Whether the additional duty/cess levied under Section 3B of the Stamp Act at 10% is exigible in respect of an instrument characterised as a conveyance under Article 20(4), and whether such additional duty is subsumed within the maximum cap of Rs. 25 crores specified in Article 20(4).

3. Whether Section 3C (non-obstante clause) operates to limit any additional stamp duty levied under other laws to the maximum amount payable under the Stamp Act, and if so, whether it curtails the additional duty under Section 3B.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Characterisation of NCLT approval order as a "conveyance"

Legal framework: Article 20(4) of the Schedule prescribes stamp duty for instruments "relating to an order made by the High Court [or appropriate Tribunals or appropriate Authorities under the Companies Act, 2013]" in respect of amalgamation, reconstruction or demerger. Section 2(d) defines "conveyance". Section 3 charges instruments indicated in the Schedule.

Interpretation and reasoning: The Court accepted (no dispute between parties) that the NCLT order approving the Scheme of Arrangement falls within the scope of Article 20(4) and is a conveyance for stamp duty purposes. The admitted declaration of asset values and the filing before the NCLT and Registrar underpin this characterisation.

Precedent treatment: Not disputed or distinguished; treated as applicable factually.

Ratio vs. Obiter: Ratio - the order of approval qualifies as a conveyance under the Schedule and attracts duty under Article 20(4).

Conclusion: The instrument (NCLT approval order) is chargeable under Article 20(4) and the basic stamp duty prescribed by that Article is payable.

Issue 2 - Applicability and scope of additional duty under Section 3B vis-à-vis Article 20(4) cap

Legal framework: Section 3 charges instruments as per Schedule; Section 3B(1) imposes an additional duty of 10% "on such duty chargeable on such instrument of conveyance, exchange, gift, settlement and lease in perpetuity" for specified State funds; Section 3B(2) expressly states the additional duty "shall be in addition to any duty chargeable under Section 3." Article 20(4) prescribes a capped rate (five percent subject to a maximum of Rs. 25 crores) for tribunal-approved schemes.

Interpretation and reasoning: The statutory text of Section 3B(2) is decisive - it expressly makes the 10% additional duty distinct from and in addition to the duty charged under Section 3 (i.e., the Schedule). The Schedule itself does not record the 3B additional duty; therefore the Article 20(4) maximum pertains to the duty under the Schedule and does not, by its terms, include the separate 10% cess under Section 3B. The Court rejected the appellant's contention that the Article 20(4) cap subsumes Section 3B by noting the plain language of Section 3B(2) and the separate legislative scheme for funding infrastructure and other projects identified in Section 3B(1).

Precedent treatment: No binding precedent altering statutory construction was necessary; statutory text controlled. The Court did not overrule or distinguish prior authority on this point.

Ratio vs. Obiter: Ratio - Section 3B additional duty is payable in addition to the capped duty under Article 20(4); the Article 20(4) maximum does not subsume or negate the separate 10% cess.

Conclusion: The additional 10% cess under Section 3B is exigible on the duty computed under Article 20(4) and may result in aggregate stamp liability exceeding the Rs. 25 crore cap applicable to the Schedule duty alone; the adjudicating authority correctly levied Rs. 2.5 crores as additional duty over and above Rs. 25 crores.

Issue 3 - Effect and scope of Section 3C non-obstante clause

Legal framework: Section 3C begins with a non-obstante clause: "Notwithstanding anything contained in any other law for the time being in force, no instrument shall be charged with any duty in the form of additional stamp duty under such other law, exceeding the maximum amount of duty with which such instrument is chargeable under this Act." The provision must be read against Sections 3 and 3B and the Schedule.

Interpretation and reasoning: The Court analysed the non-obstante purpose and emphasised that the clause limits the ability of other laws to impose additional stamp duty in excess of the maximum chargeable under the Stamp Act. Crucially, the Court construed "the maximum amount of duty with which such instrument is chargeable under this Act" to include both the duty under Section 3 (Schedule) and the additional duty under Section 3B. Thus Section 3C does not operate to curtail or negate the Section 3B additional duty; rather it prevents other statutes from imposing additional stamp duties beyond the total maximum chargeable under the Stamp Act (which includes 3B). The Court relied on the established interpretive principle regarding non-obstante clauses (citing a recent Supreme Court exposition) to hold that the non-obstante clause must be read to give effect to the legislative scheme and cannot be used to nullify a provision (Section 3B) enacted within the same statute.

Precedent treatment: The Court expressly followed the Supreme Court's explanation of non-obstante clauses to construe Section 3C's scope; no conflict with precedent was identified.

Ratio vs. Obiter: Ratio - Section 3C does not limit or curtail the additional duty under Section 3B; it only precludes other laws from levying additional stamp duty exceeding the total amount chargeable under the Stamp Act (which includes 3B).

Conclusion: Section 3C's non-obstante clause does not operate to reduce or subsume the additional duty under Section 3B into the Article 20(4) cap; the additional duty remains lawfully leviable and the adjudication imposing both the Schedule duty and the Section 3B cess was proper.

Final disposition and consequential observations

The Court dismissed the challenge to the adjudication that imposed both the Article 20(4) duty (capped at Rs. 25 crores) and the 10% additional cess under Section 3B, holding the additional cess is payable in addition to the Schedule duty and that Section 3C does not curtail the statutory reach of Section 3B. The Court awarded costs against the appellant.

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