AMBIGUITY IN THE ADJUDICATION OF STAMP DUTY- “NO MORE A DELAYED ACT” Speedy Justice for ‘You’ - Saul Goodman, 1. The High Court of Delhi recently vide a common judgment dated April 24, 2023,1 in the case of Uno Minda Limited v. Deputy Commissioner of Revenue Department and Reebok India Company v. Government of NCT of Delhi has laid down certain key guidelines for expeditious...
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AMBIGUITY IN THE ADJUDICATION OF STAMP DUTY- “NO MORE A DELAYED ACT”
Speedy Justice for ‘You’
- Saul Goodman,
1. The High Court of Delhi recently vide a common judgment dated April 24, 2023,1 in the case of Uno Minda Limited v. Deputy Commissioner of Revenue Department and Reebok India Company v. Government of NCT of Delhi has laid down certain key guidelines for expeditious disposal of pending matters before the Collector of Stamps for adjudication of stamp duty.
2. Uno Minda (“UM”) and Reebok India (“RI”) had preferred Writ Petitions before the High Court of Delhi seeking issuance of directions to the Collector of Stamps which at the relevant time was being manned by the Principal Secretary Revenue-cum-Divisional Commissioner, GNCTD for adjudicating the stamp duty payable by the Petitioners.
3. In the first case of UM, there was a composite scheme of amalgamation between Harita Group companies with UM, which was approved by the National Company Law Tribunal (“NCLT”) on February 1, 2021.
4. In the said case, UM intended to get the scheme of amalgamation registered and duly stamped under the provisions of the Indian Stamp Act, 1899 and it applied to the Divisional Commissioner for seeking adjudication of the stamp duty for the same. UM had preferred and filled the said application on January 13, 2022, and it was aggrieved that till the date of disposal of the present petition, the stamp duty payable wasn’t communicated or the final adjudication took place in the said matter.
5. Therefore, the prayer was to direct the Divisional Commissioner to adjudicate the stamp duty payable as expeditiously as possible so that the said scheme could be duly stamped.
6. In the other case, RI had converted its debentures into shares and RI sought issuance of stamp paper for the Share Certificated as per its application dated January 25, 2022. RI stated that despite repeated reminders and requests, the Govt. of NCT of Delhi has failed to issue challan(s) owing to which RI couldn’t purchase the stamp duty to be paid on the Share Certificate. It also alleged that this delay and inaction of Govt. of NCT of Delhi has resulted in non-compliance with its statutory obligation under Section 56(4) of the Companies Act, 2013.
7. Therefore, the prayer was to direct the Govt. of NCT of Delhi to issue challan as per the RI’s application for issuance of stamp paper for the Share Certificates.
DECISION AND FINDINGS OF THE COURT
8. Considering the facts and circumstances of both matters, the High Court decided to dispose of both matters together. The High Court noted that despite the filing of applications which have been pending for more than a year, the determination of the stamp duty has not been communicated to the Petitioners. It also considered that for both of these cases i.e. scheme of amalgamation as also the instrument of conversion from debentures to shares do not have a pre-determined stamp duty that has been fixed and as a result, the Petitioners had approached the Collector of Stamps for adjudication of the stamp duty in terms of Section 31 of the Indian Stamp Act, 18992 (“Act”).
9. The Court also noted that Section 323 of the Act notes that in case of adjudication as to the proper value of the stamp, there is no prescribed time period which has been fixed under Section 31 of the Act while the Company Act, 2013 like in the case of Section 56 which states, that the company cannot register the transfer of securities unless the instrument of transfer is duly stamped, dated, and executed. Section 56(4) specifically requires the said transmission to take place within two months from the date of allotment or the date of incorporation while in the case of allotment of debentures, the time limit fixed is six months.
10. The Court also looked at the provisions of the Delhi (Right of Citizen to Time Bound Delivery of Services) Act, 2011 (“Delhi Act, 2011”) which recognizes the need for registration of Documents, grant of licenses etc. within prescribed periods in Delhi4 and stated that the Delhi Act, 2011 must be implemented in letter and spirit in the National Capital Territory of Delhi.
11. The High Court, therefore, held and directed that the Collector of Stamps shall usually adjudicate the stamp duty payable and communicate the same to parties within 30 (Thirty) days. However, if the same involves any complexity/ extraordinary circumstances, the adjudication of stamp duty can be extended for a maximum period of 3 (Three) months from the date of application and disposed of the matter.
This case is extremely important on two counts:
• The Court has directed a time-bound disposal mechanism of 30 days / 3 months; as the case may be, which will surely expedite similar cases and will also hold persuasive value before the other courts, subject to the state amendments.
• This will also help and otherwise be a boon to those matters where composite schemes of amalgamation and arrangements are subjected to unnecessary scrutiny even years after the arrangements are acted upon.