TaxTMI 
TaxTMI 
2012 (4) TMI 256
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....h-starved State is to blame for not being alive to its interest and insisting on the payment of stamp duty on the transfer of properties pursuant to the sanction of any scheme of amalgamation or demerger under the Companies Act, 1956. There can be no suspense as to how the question should be answered and the more conventional form needs to be eschewed to pronounce, at the outset, that stamp duty would be payable on transfers effected pursuant to any scheme of amalgamation or demerger under the Companies Act since that is the law of the land as recognised by the Supreme Court in the year 2003. There is a history to the matter which requires narration. It was in 2002 that the company Judge of this court took a view that the transfer of property pursuant to any scheme of amalgamation or demerger would attract stamp duty as in any other ordinary case of transfer effected without the intervention of court. It was the court, and not the State, that took up the issue which culminated in the judgment reported at 114 Comp Cas 92 (In re: Gemini Silk Ltd) being rendered. The judgment held that an order sanctioning a scheme would amount to an instrument and conveyance that would be the subj....
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....le. The matter should have ended there and the issue taken as concluded for even an obiter of the Supreme Court would be binding. In any event, and without taking lazy refuge in the principle that any obiter dictum of the Supreme Court would conclude a legal issue unless revisited and corrected by that court itself, it is evident that the relevant question arose in that matter and the Supreme Court held that even without the special provision in the applicable Stamp Act relating to stamp duty being payable on orders sanctioning schemes of amalgamation or demerger, such orders would, in any event, be instruments within the meaning of the Stamp Act that would attract stamp duty. The ratio decidendi in the Hindustan Lever judgment, which is what is binding on all courts in the country and is the law of the land under Article 141 of the Constitution of India, implied that even in the absence of any special provision requiring stamp duty to be paid on orders sanctioning schemes under the Companies Act, stamp duty would be payable thereon as in the case of any other comparable transfer. With the State being oblivious to such law as declared by the Supreme Court, it did not make any de....
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....aning of the applicable Stamp Act. The Madras High Court also read Hindustan Lever to have held that an order sanctioning a scheme under the Companies Act would be an instrument within the meaning of the definition relating thereto in the Stamp Act. The judgment, reported at (2010) 2 MLJ 553 [In re: Automac (Madras) Pvt. Ltd], found that it was premature at the time of sanctioning a scheme of arrangement to hold as to whether the order would be exigible to stamp duty, but observed that nothing in the order should be construed as exempting the concerned company from the liability to pay stamp duty, if applicable. The petitioners canvass two principal points in support of their contention that an order sanctioning a scheme under the Companies Act would be exempted from stamp duty in this State. They contend that in view of the clear pronouncement of a Division Bench of this court in Madhu Intra, that stamp duty would not be payable on orders sanctioning schemes under the Companies Act, it is not open to the company Judge of this court to hold otherwise. They maintain that the Supreme Court judgment in Hindustan Lever should be read in the context of the issues that arose in that m....
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....partition passed by any revenue authority or any Civil Court; (ii) an award by an arbitrator directing a partition; and (iii) when any partition is effected without executing any such instrument, any instrument signed by the co-owners and recording, whether by way of declaration of such partition or otherwise, the terms of such partition amongst the co-owners." Since Section 2(14) of the Stamp Act applicable in the State of Maharashtra is the same as the definition of an instrument as relevant under the applicable law in this State, it is next necessary to discover as to what is liable to be charged with stamp duty under the statute. Section 3 of the Stamp Act, as amended in various States, is the charging provision in the statute. The operative words in such provision are "the following instruments shall be chargeable with duty ..." The word "instrument" in the Stamp Act is the genus of which, inter alia, conveyance, lease, mortgage-deed and the like as defined in Section 2 of the Act are species. The charging section operates on the instrument and instruments, as defined in the Act, can be of various kinds by which any right or liability is, or purports to be, created, t....
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....enance from the opinion in Ruby Sales and Services (P) Ltd to hold that orders sanctioning schemes of merger and demerger in this State would be exigible to stamp duty notwithstanding the clarificatory provision in the Bombay Stamp Act being absent in the statute applicable in this State. In Hindustan Lever, the judgment in Ruby Sales and Services (P) Ltd has been referred to in support of the conclusion that an order sanctioning a scheme "is based upon the compromise between two or more companies ... (and) is an instrument which transfers the properties ..." Nothing in the Stamp Act applicable in this State is at variance with the corresponding provisions of the Bombay Stamp Act for the principle as recognised in Hindustan Lever to not be applicable in this State. In Madhu Intra the primary question which fell for consideration is stated at paragraph 49 of the report: "In our view, the moot question which falls for consideration in these appeals, is not whether an order under section 394 is a "conveyance" or an "instrument", but as to whether in view of the provisions of sub-section (2) of section 394 an order under sub-section (1) sanctioning a scheme of amalgamation or arrang....
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....bles and nothing in Article 23 under Schedule IA to the Stamp Act applicable in this State makes such distinction. The State is also correct in its submission that the court is not concerned today with the manner of assessment since that is a post-sanction exercise. The Allahabad High Court was called upon to look into the manner of assessment since the orders of assessment were challenged before the Division Bench. It is true that when a bundle of properties passes from one company to another under an order sanctioning a scheme of amalgamation or demerger, the assets (or the positive value) pass along with certain liabilities (the negative value). But that is no different from, say, an immovable property being conveyed in favour of the vendee along with the liabilities (outstanding municipal rates and taxes, for example). By virtue of Article 31 of Schedule IA to the Stamp Act applicable in this State, the stamp duty on the exchange of property would be the same as a conveyance in Article 23 thereof and the quantum of stamp duty payable would be on the basis of the market value of the property of the greatest value. Again, in the context of the stage at which the matter is bein....