TaxTMI 
TaxTMI 
TaxTMI 
2024 (11) TMI 299
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....wn and quashing the Impugned Order bearing reference No. F.10/Misc(Merger)/COS(HQ)/CD/183 and dated 07.08.2014 passed by the Respondent in the matter of Show Cause Notice bearing No. F.10/COS/HQ/CD/Merger/12556 dated 20.03.2014, and any proceedings initiated, or contemplated to be initiated, by the Respondent pursuant to, or in furtherance of, the Impugned Order, as against the Petitioner, its Directors, officials, representatives etc.; b) Issue a writ of mandamus or any other appropriate writ, border, or direction in the nature thereof restraining the Respondent from taking any further coercive action(s) or initiating any proceedings pursuant to, or in furtherance of, the Impugned Order against the Petitioner, its Directors, officials, representatives etc.; c) Issue any other appropriate writ, order or directions as the facts and circumstances of the present case may require; and d) Grant costs. 2. The factual background of the case is that Holcim (India) Private Limited (hereinafter referred to as "the petitioner") is a private limited company incorporated under the Companies Act, 1956 and is a wholly owned subsidiary of Holderind Investments Ltd., Mauritius (hereinafter r....
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.... order and was directed to furnish proof of payment of stamp duty on the conveyance as per the Act, failing which, non-payment of stamp duty within prescribed time would be considered as an act of evasion of stamp duty and would attract heavy penalty and prosecution of Directors and officers in default. The show-cause notice also specified that it was being issued in view of the judgment passed by this Court in Delhi Towers Ltd. V G.N.C.T. of Delhi, 2009 SCC OnLine Del 3959 (hereinafter referred to as "Delhi Towers Ltd."). The show-cause notice directed the Director or Authorized Representative of the petitioner to appear before the respondent on 27.03.2014 along with supporting documents. The petitioner submitted a preliminary reply dated 06.05.2014 and detailed reply dated 21.05.2014 wherein it was stated that no stamp duty was payable on the merger order under the head 'conveyance' and the transfer of shares of ACC and ACL from ACIPL to the petitioner in dematerialized form did not attract any stamp duty. The respondent issued another notice to the petitioner on 28.05.2014 stating that the petitioner has submitted an application for adjudication of stamp duty on merger and the p....
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....ent erred in treating the merger order as exigible to stamp duty as a conveyance. The respondent did not appreciate the settled position of law that in order to determine whether or not an instrument is exigible to stamp duty, it is mandatory to consider the terms of the said instrument and not merely the label of the said instrument. A merger order could be stamped as a conveyance only if it results in transfer of an asset/property which is not provided elsewhere in Schedule IA of the Act. The merger order to be chargeable as a conveyance, the merger order must be covered under Article 23 of Schedule IA of the Act which does not apply to transfer of shares exempted under Article 62 of Schedule IA of the Act. The transfer of shares of ACC and ACL held by ACIPL in dematerialized form was not liable to attract stamp duty as per section 8A of the Act. The impugned order is erroneous in concluding that the merger order is an instrument of conveyance chargeable under Article 23 of Schedule IA of the Act. 2.3 The respondent has exceeded his jurisdiction by requiring the petitioner to produce documents or information which is not provided for under either section 31 or 33 of the Act. The....
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....er approving the scheme of amalgamation passed by the company court in exercise of jurisdiction under section 394 (2) of the Companies Act which has the effect of transferring all assets and liabilities including the property of the transferor company to the transferee company would be exigible to stamp duty under the Act. The scheme of amalgamation/merger involves transfer of a business including transfer of assets and liabilities and consideration of which is the allotment of shares of the transferee company to the shareholders of the transferor company. The transfer of property upon sanction of scheme has all the ingredients of sale and that the orders sanctioning the scheme would be instruments for the purpose of the Act and would attract stamp duty. 3.1 The petitioner has mixed the issue of chargeability of the order approving a scheme with the chargeability of shares issued in pursuance of such scheme. The stamp duty is chargeable on scheme and not on transfer of shares and the scheme is chargeable to stamp duty in terms of Article 23 of Schedule IA. The exemption granted under section 8A of the Act is for securities dealt in a depository and shares would not qualify as secu....
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....edule IA of the Act. Section 8A of the Act applies to securities dealt in a depository which is not the case of the petitioner. 3.4 The respondent did not carry out any roving enquiry beyond the powers provided under the Act. There was no occasion for the respondent to carry out any enquiry when the fact of merger by scheme of amalgamation is not disputed. The information, if any, sought by the respondent was only to ensure correct chargeability of stamp duty. The power of the respondent to recover stamp duty is not controlled by section 31 or 33 of the Act. Section 48 of the Act is an enabling provision independent of sections 31, 35, 38 or 40 of the Act and as such, it is not necessary that unless the original instrument is produced, duty cannot be recovered. The case of the petitioner is not covered by the 1937 Notification as neither the 1937 Notification is applicable in case of Schedule IA of the Act, nor the petitioner satisfies the condition of at least 90% holding of shares of the subsidiary company by the holding or the parent company. The petitioner is also liable to pay the stamp duty on the issue of share certificate. It is stated that the present petition is not main....
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....oneously averred that Delhi Towers Ltd. is applicable to the present case on the ground that every scheme of amalgamation sanctioned by the Court is an instrument exigible to stamp duty. This Court in Delhi Towers Ltd. while examining the issue of exigibility of amalgamation order to stamp duty, considered several aspects including transfer of movable/immovable properties and assets/liabilities of the company but in the present case, the transferor company i.e. ACIPL did not hold any property, assets or employees. Delhi Towers Ltd. is not applicable to the present case as the transfer of shares does not come under the definition of conveyance. The respondent has wrongly created a distinction between shares and securities. The respondent never raised issue of stamp duty payable on the shares issued in pursuance of the scheme of amalgamation either in the show-cause notice or at the time of hearing. The petitioner prayed that the present petition be allowed in terms of the prayer clause of the petition. 5. Sh. Sudhanshu Batra, the learned Senior Counsel for the petitioner advanced oral arguments and written submissions are also filed on behalf of the petitioner. It is argued that th....
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....r the Registration Act, 1908, hence section 47A is ex facie inapplicable. The fact of registration of an instrument but omission to refer it to the Collector for determination of duty is a condition precedent for the exercise of suo motu power under section 47A (3) of the Act, therefore, suo motu power can only be exercised in respect of registered instruments which is not the case in the present matter. Sh. Batra further argued that even if it is assumed that section 47A is applicable to the present case, the petitioner filed Form 21 with the Registrar of Companies on 07.12.2011 and as per section 47A (3), the respondent could have exercised suo motu power within two years from the date of registration i.e. till 06.12.2013. However, the show-cause notice was issued on 20.03.2014 which is beyond the period of limitation provided under section 47A. Section 47A was enacted to remedy the mischief of undervaluation of immovable properties and is not applicable to the present case. The learned Senior Counsel cited V.N. Devadoss V Chief Revenue Control Officer-cum-Inspector and Others, (2009) 7 SCC 438. 5.2 Sh. Batra primarily and forcefully argued that the scheme of amalgamation is exe....
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....ority under section 56 has limited power to intervene only in matters under Chapters IV and V, clause (a) of first proviso to section 26, sections 31, 40 or 41 of the Act and such limited powers cannot be construed to be powers of revision or appeal. He further argued that even if it is assumed that section 56 provides for an appeal or revision before the Chief Controlling Revenue Authority, the impugned order has not been passed under Chapter IV or V of the Act and therefore, the said remedy is not available to the petitioner. Sh. Batra stated that it is a settled position of law that availability of alternative remedy does not per se bar an aggrieved party from invoking the writ jurisdiction of this Court. The learned Senior Counsel placed reliance in this regard on Whirlpool Corporation V Registrar of Trademarks, (1998) 8 SCC 1 and State of Uttar Pradesh V Mohammad Nooh, 1957 SCC OnLine SC 21. 5.5 Sh. Batra argued that present case is covered under section 8A of the Act as it stood prior to the amendment made in the year 2019. The 'Depository' is defined under section 2 (1) (e) of the Depositories Act, 1996 which means a company which has been granted a certificate of registrat....
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....fit of the 1937 Notification cannot be given to the petitioner. 6.1 Sh. Tripathi stated that remission in stamp duty was extended in respect of instrument evidencing transfer of property between principal and subsidiary company or between the two subsidiary companies etc. where holding is 90% or above. It was further stated that the 1937 Notification stood repealed when the Central Government vide GSR 1958 extended Schedule IA of the Stamp Act of Punjab to the Union Territory of Delhi. Section 3 of the Act provides that stamp duty shall be payable as per Schedule I subject to the exemptions contained therein and since Schedule IA was extended to Delhi, the stamp duty in Delhi is payable only as per Schedule IA which does not contain any Article remitting the stamp duty in terms of the 1937 Notification. Schedule IA was comprehensively amended by the Delhi Assembly in 2001 therefore, the 1937 Notification is not applicable. 6.2 Sh. Tripathi also referred that the petitioner has contended that orders under section 394 of the Companies Act have not been specifically included within the definition of 'conveyance' by the Delhi Assembly. However this Court in Delhi Towers Ltd. has held....
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.... has sufficient power under section 47A (3) read with section 47A (2) to call for and examine any instrument to satisfy himself as to correctness of its value or consideration and determine the duty payable thereon including deficiency which the person shall be liable to pay. He further referred explanation to section 47A of the Act provides that the value of any property shall be estimated to be the price which such property may have fetched, if sold in the open market on the date of execution of the instrument relating to transfer of such property. The directions issued by the respondent to produce the document are necessary and incidental steps in the exercise of his statutory powers and it is settled law that the power to do a thing also carries the power to regulate the manner in which it may be done as held by the Supreme Court in State of Uttar Pradesh V Batuk Deo Tripathi, (1978) 2 SCC 102. The petitioner has not availed the statutory remedy of appeal before the District Court provided under section 47A (4) of the Act and cannot be allowed to invoke the extraordinary writ jurisdiction of this Court. 6.5 Sh. Tripathi also addressed issue i.e. value at which stamp duty is to....
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....to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field. xxx xxx xxx 17. A specific and clear rule was laid down in State of U.P. v. Mohd. Nooh [AIR 1958 SC 86 : 1958 SCR 595] as under: "But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari ....
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....he document to the Collector and also applied for such adjudication. The document cannot be compelled to be brought before him by the Collector. Section 33 confers power of impounding a document not duly stamped subject to the document being produced before an authority competent to receive evidence or a person in charge of a public office. It is necessary that the document must have been produced or come before such authority or person in charge in performance of its functions. The document should have been voluntarily produced. At the same time, Section 36 imposes an embargo on the power to impound vesting in the authority competent to receive evidence, by providing that it cannot question the admission of document in evidence once it has been admitted. None of these provisions have been amended by the State of Andhra Pradesh. xxx xxx xxx 58. An instrument which is not duly stamped cannot be received in evidence by any person who has authority to receive evidence and it cannot be acted upon by that person or by any public officer. This is the penalty which is imposed by law on the person who may seek to claim any benefit under an instrument if it is not duly stamped. Once det....
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....December, 1987 or impounded the photocopy and passed an order directing the petitioners to pay the deficient stamp duty and penalty. Photocopy of the agreement dated 23rd December, 1987 is not an instrument, as defined in Section 2 (14) of the Act. The impugned Order dated 29th November, 2004 therefore cannot be sustained to the extent that it impounds the photocopy of the agreement dated 23rd December, 1987 and directs payment of deficient stamp duty and imposes penalty under Sections 33 and 35 of the Act. It may be appropriate to refer to the decision of three Judges' Bench of the Delhi High Court in Dayal Singh v. Collector of Stamps, AIR 1972 Del. 131, wherein it was observed: "10. Section 2 (6) of the Stamp Act defines 'chargeable' to mean 'chargeable under this Act'. Section 2 (11) of the Stamp Act defines 'duly stamped' to mean 'that such stamp has been affixed or used in accordance with the law for the time being in force in India'. Under Section 33 it is only when an instrument is 'chargeable with duty' and it 'not duly stamped' that it can be impounded. Can the sale deed in question be impounded under Section 33 because the transfer duty is either not paid or is ins....
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....eason to believe that the value or consideration has not been truly set forth in the instrument, he may determine the value or consideration and the duty aforesaid in accordance with the procedure provided under sub-section (2), and the deficient amount of duty, if any, shall be payable by the person liable to pay the duty and, on the payment of such duty, the Collector shall endorse a certificate of such payment on the instrument under his seal and signature. 8.4 The meaningful reading of section 47A reflects that it pertains to instruments which can be registered under the Registration Act, 1908. Section 47A (3) confers suo-motu power on the respondent to call for and examine any instrument to satisfy himself as to the correctness of its value or consideration and the duty payable thereon. However, such suo-motu power can only be exercised within two years from the date of registration of the instrument. In the present case, the petitioner filed Form 21 with the Registrar of Companies for registration of the merger order on 07.12.2011 and the respondent issued the show-cause notice on 20.03.2014 which is beyond the period of limitation of two years as provided under section 47A ....
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.... by this court in Delhi Towers Ltd. The factual background of the case, as appearing from the judgment, is that fifteen companies incorporated under the provisions of the Companies Act, engaged in the business of real estate, were proposed to be merged with the Delhi Towers Ltd. which was also incorporated under the Companies Act. The transferor companies were stated to be 100% subsidiaries of Delhi Towers Ltd., the transferee company. The proposed scheme of amalgamation was approved by the court after recording statutory compliance. Thereafter, an application was made to the Tehsildar having jurisdiction over the properties of the company for effecting mutation in favour of the transferee company which was not effected as the stamping authorities have not accepted the scheme of amalgamation without payment of stamp duty. The issue for consideration was that whether an order passed by the company court under section 394 of the Companies Act approving a scheme of amalgamation is covered under definition of 'conveyance' as per section 2 (10) of the Act and therefore exigible to stamp duty. It was argued before the court that by virtue of the order sanctioning the scheme for amalgamat....
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....mation. The argument so advanced by Sh. Batra is without any legal basis. 9.4 The Court in Delhi Towers Ltd. referred Li Taka Pharmaceuticals Ltd. V State of Maharashtra, 1996 SCC OnLine Bom 67 wherein it was held that document of transfer of shares was a conveyance of property chargeable with stamp duty on basis of market value of the property. It is clear that the stamp duty is chargeable on market value of the property. It is apparent that an order of amalgamation passed under section 394 of the Companies Act, 1956 is an instrument within the mandate of section 2 (10) of the Act and is chargeable to stamp duty. There is substance in arguments as detailed hereinabove advanced by Sh. Santosh Tripathi, the learned Standing Counsel for the respondent. 10. Sh. Batra, the learned Senior Counsel for the petitioner laid much emphasis and referred the 1937 Notification and argued that merger order is covered under the said notification and exempted from stamp duty. It is reflecting that both ACIPL (transferor company) and the petitioner (transferee company) are wholly owned subsidiary companies of a common parent company i.e. Holderind and the merger/amalgamation had taken place betwee....