TaxTMI 
TaxTMI 
2010 (2) TMI 1326
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....3. Facts are being referred from W.P. No. 3041/2004, R.V. Infrastructure Engineers Pvt. Ltd. v. State of M.P. and Ors. The Petitioner is a Company engaged in construction of roads, etc. Respondent No. 3/M.P. Rajya Setu Nirman Nigam Ltd. (hereinafter referred to as "MPRSNN") is a Company incorporated and registered under the Companies Act. State Government has authorized MPRSNN for reconstruction, strengthening, widening and rehabilitation on Badnawar-Badnagar-Ujjain-Dewas Road project of approximately length of about 106 kms. on Build, Operate and Transfer basis vide order dated 1-2-2001. NIT was issued by MPRSNN inviting the bids, letter of acceptance was issued on 25-4-03 requiring execution of Concession Agreement within 30 days. Concession agreement dated 31-7-03 was executed. A show-cause notice was served upon the Petitioner by Revenue Officer, Collector (Stamps), Ujjain which required to produce original copy of the agreement. Petitioner had submitted that notice is vague. In order to point out the correct position, Petitioner at his own submitted reply-cum-representation (P-4). Collector thereafter passed the impugned order against the Petitioner on 31-3-2004 purporting to ....
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....ration, hence the writ applications have been preferred. 4. The Respondent Nos. 1 and 2 have filed their return in W.P. No. 3041/2004, R.V. Infrastructure Engineers Pvt. Ltd. v. State of M.P. and Ors. which has been adopted in all the petitions. In nutshell the case of Respondent Nos. 1 and 2 is that as document is an "instrument" as defined under Section 2(16) of the Indian Stamp Act. Section 3 provides that the instrument shall be chargeable with duty of the amount indicated in the Schedule. Article 33 of Schedule 1 -A has been amended in State of M.P. vide Act No. 12 of 2002. The provisions clearly specifies that duty chargeable is 2% on the amount likely to be spent on the agreement under the lease by the lessee. Any agreement by which right to collect tolls is given in lieu of amount spent by the lessee in construction of roads, bridges, etc. under BOT Scheme, it chargeable to stamp duty at the rate of 2%. Though the agreement was titled as Concession Agreement, but in fact same was an Agreement to Lease. The right was transferred to Petitioner to collect tolls for fifteen years in lieu of amount worth Rs. 49.30 crores which would be spent in construction, strengthening and....
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....itioners that on 1-7-2002 the Cabinet had taken a decision not to impose any stamp duty on such transactions, later on amendment has been brought by the Legislature, the agreements have been executed subsequently. The date for chargeability should be the date of issuance of NIT or the date of acceptance of the bid. 7. Shri R.D. Jain, learned Advocate General appearing with Shri P.K. Kaurav, learned Deputy Advocate General for Respondent Nos. 1 and 2/State has submitted that the transaction amounts to lease under Section 105 of the T.P. Act. Right to collect toll has been given for fifteen years under the agreement. Section 3(26) of the General Clauses Act is applicable for the purpose of understanding the meaning of "immovable property". He has also referred to Section 3 of the T.P. Act. Learned Advocate General has also submitted that right to realize the benefit arising out of the land has been given under the agreement. The road is "immovable property", right to enjoy the property has been given for fifteen years. He has also referred to various clauses of the agreement. Consideration has been paid in advance then right has been given to recover by collection of toll. Constru....
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....f a right to enjoy such property; (ii) it is made for a certain time, express or implied or in perpetuity, and (iii) there has to be consideration of a price paid or promised, or of money, a share of crops, service of any other things of value. 12. The Indian Stamp Act, Section 2(16) defines "lease". Section 2(16) is quoted below: (16) "Lease" means a lease of immovable property and includes also-- (a) a patta; (b) a kabuliyat or other undertaking in writing; not being a counterpart of a lease, to cultivate, occupy or pay or deliver rent for, immovable property; (c) any instrument by which tolls of any description are let; (d) any writing on an application for a lease intended to signify that the application is granted. 13. The definition is inclusive, it specifically includes, a patta, kabuliyat or other undertaking in writing, not being a counter part of a lease for the purposes enumerated in Section 2(16). Section 2(16)(c) provides that any instrument by which tolls of any description are let is a lease. Section 2(16)(d) provides any writing on an application for a lease intended to signify that the application is granted. 14....
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....oposition that recitals in a document can never be conclusive. The substance of the term agreed upon and not the nomenclature given to the deed by the parties is material. All the terms and conditions have to be looked into. In Burmah Shell Oil Storage and Distributing Co. of India Ltd., 1933 ALJ 749, the use and occupation of the land were transferred to the landlord company, they were to erect on the part of the land a building or other structure of the substantial and permanent character and when the transaction was to be terminated the Railway Administration had the right to re-enter upon, retake and absolutely retain the possession of the said land, use and occupation were certainly transferred to the Oil Company. Right of inspection was available with the Railways. It was held in the circumstances that it would not be mere licence within the scope of Section 52 of the Easement Act as a licence does not confer exclusive possession and enjoyment. The intention of the parties to an instrument must be gathered from the terms of the agreement examined in the light of the surrounding circumstances. A recital that agreement does not create a tenancy is not decisive. Crucial test is ....
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....n 3(26) of General Clauses Act and not Section 3 of the T.P. Act will apply for interpretation of the expression "right to enjoy immovable property" used in Section 105 of the T.P. Act. Immovable property, thus, includes interest in our benefits arising out of immovable property. Grant of khas possession of the land for a certain period and for a fixed price payable on yearly basis or for raising and taking minerals from inside the land is a lease not a licence. 23. When we consider the agreement in question, it is apparent that Concessionaire/Petitioner is entitled to make reconstruction, strengthening, widening and rehabilitation of a section of Road Project of considerable length and its operation and maintenance to be executed through a Concession on Build, Operate and Transfer (BOT) basis. Clause 2 of the Concession Agreement entered into on 31st July, 2003 provides that Concessionaire or Company include its successor and permitted substitutes whereas license is personal in nature. In Clause 2(a) the aforesaid works of reconstruction, strengthening, widening and rehabilitation Road Project and its operation and maintenance to be executed through a Concession of Build, Opera....
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....0.1 of the tender document. It has required to hand over the physical possession of the Project Site and enable access to the Site, free from Encumbrances, in accordance with this agreement. 25. The agreement is for fifteen years. "Toll date" has been defined in Clause 1.1.103. The "toll date" means the Commercial Operations Date of the Project Highway from which date the Concessionaire is entitled to collect the toll/fee. 26. The agreement for collection of toll is for fifteen years is not disputed. It has to commence from the date of completion of the contract and that right has been given in the document itself, no separate agreement on a future date is required to be executed. On completion of construction of road, the document in question itself authorizes the Concessionaire to collect the toll of a period of fifteen years. The transaction is that of lease. In Juthika Mulick (Smt.) and Anr. v. Dr. Mahendra Yashwant Bal and Ors. (1995) 1 SCC 560, the Apex Court has laid down that one of the essential attributes of a lease is that transfer must be made for a certain time expressed or implied or in perpetuity. What is the meaning of "fixed period" has also been discussed by....
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....f tolls is specifically provided to be a "lease" under Section 2(16) of the Indian Stamp Act. There is right to enjoy the property conferred on Concessionaire, consequently, document cannot be said to be a "license" at all but it is that of "lease". 29. When we consider the definition of lease given under Section 2(16) of the Indian Stamp Act, the definition is inclusive. The collection of tolls is clearly provided to be a lease, thus, the agreement fulfills the (sic) of Section 2(16) also and it has to be treated as lease not as a (sic) word "include" is very generally used in interpretation clauses in order (sic) the meaning of words or phrases. The words or phrases comprehend not only natural import but also the things which the interpretation clause declares that they shall include. Clause 1.1.45 provides that tolls has to be collected as prescribed under the Indian Tolls (MP) Amendment Act, 1932. Under Section 2 of Indian tolls (MP) Amendment Act, 1932 toll collection is also a lease. Section 2 of Indian Tolls (MP) Amendment Act, 1932 is quoted below: Power of State Government to lease levy of tolls.-- It shall be lawful for the State Government to lease the levy o....
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....n or not can be looked into by the Respondents. Conferral of such right indicates transaction is that of lease. 33. In the instant case, it is not the case of license but it is a lease, as clearly an interest in the property has been created. There is right of enjoyment of the immovable property given to Concessionaire in the manner in which the public road is capable of being possessed since it is used by the public at large, the total control of entry on the road after payment of toll will be with the Concessionaire, it can safely be concluded that he is given the lease not the license. In license normally the right to use is given and possession continues with the owner which is absent in the instant case. Possession has to be given to Concessionaire, the possession will be retransferred back as provided in Clause 9.1(xxv), Clause 10.1(i) and (ii) and Clause 33.1(a) and (b) which are quoted below: 1. (xxv) after receiving vacant possession of the Site or part thereof, ensure that such Site remains free from all encroachments and take all steps necessary to remove encroachments, if any. 1. MPRSNN agrees to observe, comply and perform in addition to and not in....
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....t is uncertain whether Concessionaire would be entitled to collect the toll as such as per definition of "toll date" given in Clause 1.1.103, hence, the Concessionaire cannot be asked to make payment of stamp duty on the fee. He has relied upon Clause 1.1.103, Clauses 2 and 6.5 which read thus: 1.103. "Toll date" means the Commercial Operations Date (COD) of the Project Highway from which date the Concessionaire is entitled to collect the toll/fee under the toll/fee notification and shall be the date notified so by MPRSNN upon completion of full/substantial completion of works of the Project Highway in accordance with this Agreement. Scope of Project.-- The project shall be executed on the Site, described in this document. The scope of the Project shall include performance and execution by the Concessionaire of all detailed design, engineering, financing, procurement, construction, completion, operation, maintenance and transfer of the Project Highway of this Agreement. It shall include reconstruction, strengthening and widening of the existing lane in accordance with the Specifications and Standards for the same and also operation and maintenance as per the Speci....
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....pen to ask for stamp duty even before execution of formal document, in the instant case, document has been executed. When we consider scope of project, as mentioned in Clause 2 quoted above, it becomes clear that reconstruction, strengthening, widening, and maintenance, financing, engineering and transfer of the Project Highway is involved, thus, scope of project makes it clear that it is a lease. Toll has to be deposited in "Toll Escrow Account" as provided in Clause 6.5 of the tender document and as provided in Clause 25.4.1(i) to (x), the toll has to be utilized for the purposes enumerated in the aforesaid clause first and then remainder has to be retained by the Concessionaire. The liabilities have to be cleared by the Petitioner as per the agreement, thus, the remainder of the toll has to reach to him does not change the nature of the document. It cannot be said that he would not recover the toll and the part of same has to be utilized in the mode prescribed to meet expenditure part as agreed. Profit part has to be retained by the Concessionaire. 22. In W.P. No. 10366/07, Jaora-Nayagaon Toll Road Co. Pvt. Ltd. v. State of M.P. and Ors., Shri Kishore Shrivastava, learned Senior....
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....encumbered site during the concession period. Clause 9.2 provides for grant of vacant access and right of way. Reliance has also been placed on Clause 13.6 contained in Chapter XIII which provides that if the toll date does not occur within 12 months from the Scheduled Project Completion Date for any reason other than occurrence of Force Majeure or for reasons attributable to MPRDC or any Governmental Agency, MPRDC shall be entitled to terminate this Agreement in accordance with the provisions of Clause 29.3.4. 39. Learned Counsel has emphasized that word "license" has been used on several places in the aforesaid clauses. In our opinion, the use of the word "license" is not determinative of the nature of the agreement. License which has been granted for various purposes, the word has different connotation at different places. Considering the other terms and conditions being similar in the instant case with the other clauses which we have referred to in various other writ petitions, merely, use of the word "license" at different places would not change the nature of the agreement. Even if word "lease" is mentioned or word "license" is mentioned is not determinative of the nature ....
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.... L. Rs. v. Shree Jagadguru Tontadrya and Ors. (1999) 6 SCC 15, wherein the Apex Court has laid down that agreement to lease under Section 2(7) of the Registration Act must be a document which effects an actual demise and operates as a lease. An agreement between two parties which entitles one of them merely to claim the execution of a lease from the other without creating a present and immediate demise in his favour is not an agreement to lease within the meaning of Section 2(7) of the Act. In the instant case, there is actual demise and the Agreement (P-1) operates as a lease. Learned Senior Counsel has also placed reliance on a decision in State of Maharashtra and Ors. v. Atur India Pvt. Ltd. (1994) 2 SCC 497, wherein the Apex Court, in the context of Bombay Stamp Act, 1956, has laid down that lease does not include agreement to lease executable at a future date without immediately bringing into effect a lessor-lessee relationship and actual demise. In case offer is accepted without effecting actual demise, it was an "agreement to lease" not "an agreement of lease". The stipulation debarring transfer or assignment of lease rights was not enforced, it was held that transaction is ....
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....: Provided that where the lease purports to be for a term exceeding thirty years or in perpetuity or does not purport to the for a definite period, the duty on such lease shall be chargeable as a conveyance (No. 22) on the market value of the property leased Provided also that-- (a) *** *** *** (b) *** *** *** (c) an agreement to lease where the right to collect tolls is given in lieu of the amount spent by the lessee in construction of roads, bridge etc. under the Build, Operate and Transfer (BOT) Scheme, shall be chargeable at the rate of two per cent on the amount likely to be spent under the agreement by the lessee 45. The aforesaid entry is inserted by the Indian Stamp (Madhya Pradesh Amendment) Act, 2002 as per Petitioners is ultra vires. We are unable to accept the submissions as firstly we have held that transaction is a lease as contemplated under Section 105 of T.P. Act read with Section 2(16)(c) of the Indian Stamp Act, question of applying the aforesaid entry so as to constitute transaction as a lease does not arise. Purpose of aforesaid entry in Schedule 1 -A is to provide the Stamp Duty which is chargeable on a particular transaction, under the afore....
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....nact a law with respect to tax on sale of goods. Considering what is the extent of that authority ?, there must be in fact a sale as recognized by law, it is only then that a tax could be imposed. But, if the transaction sought to be taxed is not a sale, a law which seeks to tax it, treating it as a sale will be ultra vires. There is no dispute with the aforesaid proposition. In the instant case, the transaction has been found to be a lease, thus, there is no question of Schedule 1-A Entry 33 as amended in M.P. being ultra vires as the transaction is covered within the ambit of lease as defined in Section 105 of T.P. Act read with Section 2(16)(c) of Indian Stamp Act. 48. Shri Kishore Shrivastava, learned Senior Counsel has also relied upon decision of Apex Court in Bhopal Sugar Industries Ltd., M.P. and Anr. v. D.P. Dube, Sales Tax Officer, Bhopal Region, Bhopal and Anr. AIR 1964 SC 1037, wherein the Apex Court considered the meaning of "retail sale". It has been laid down that consumption by retail dealer himself for his own use falls within definition of "retail sale". By extending the meaning, the transaction cannot be taxed. Clause including the transaction by extending the....