Court determined penalties under Maharashtra Stamp Act are mandatory upon failure to pay duty within the specified time frame.

JUDGMENT :

(Per Jitendra Jain, J.)

1. This Petition filed under Article 226 of the Constitution of India seeks to challenge impugned demand notices dated 23 December 2013 and 31 December 2014 issued under the erstwhile Bombay Stamp Act, 1958 (now renamed as ‘the Maharashtra Stamp Act ’). The only prayer pressed and argued before this Court is prayer clause (a) which reads as under:

(a) That this Hon'ble Court may be pleased to issue a Writ of Certiorari or any other appropriate Writ, Order or direction in the nature of certiorari calling for the papers and proceedings in respect of the Impugned Notices dated 23-12-13 and 31-12- 14 (Exhibit D and Exhibit I) and, after examining the legality and validity, thereof, this Hon'ble Court be pleased to quash and set aside the same to the extent it levy's penalty.

(emphasis supplied) 

Brief facts:-

2. On 11 April 2008, an order sanctioning scheme of arrangement came to be passed, by the Company Court, under Sections 391 to 394 read with Sections 78 and 100 of the Companies Act, 1956 for the demerger of the “demerged undertaking” of the demerged company into the resulting company.

3. On 17 May 2008, the Petitioner lodged the above order of the High Court, in respect of scheme of amalgamation/ arrangement, with the Collector of Stamps for adjudication of the stamp duty on the said document under Section 31 of the Maharashtra Stamp Act .

4. The Respondents, on 16 April 2010, in connection with adjudication of the stamp duty on the above document, sought various details from the Petitioner. It is an admitted position and accepted by the learned counsel for the Petitioner in the Court at the time of the hearing that the said requisition was not replied, and there is no explanation for not replying to the same.

5. On 23 December 2013, an interim demand letter was issued to the Petitioner directing the Petitioner to make a payment of Rs.7,07,27,090/- being the stamp duty payable under clause 25 (da) of the Schedule to the Bombay Stamp Act and a penalty under Section 31 (4) of the said Act amounting to Rs.9,76,03,385/-. The period of penalty as per Section 31 (4) of the Act begins with 11 April 2008 being date of the Company Court’s order to 23 December 2013 i.e. 69 months @ 2% p.m.=138%. The said interim demand letter stated that if the demand is not acceptable then the Petitioner should file their written say within 30 days of the receipt of the said interim demand letter. There is no dispute between the parties that the penalty is under Section 31 (4) of the Maharashtra Stamp Act .

6. The Petitioner vide letter dated 15 January 2014 requested for personal hearing in connection with the above interim demand letter and same was duly granted to the Petitioner.

7. On 7 July 2014, the Petitioner filed written submissions with the Respondents. The said letter states that the submissions made are with respect to penalty of Rs.9,76,03,385/- levied by letter dated 23 December 2013. The said letter disputes the levy of penalty and consequently, the demand notice to the said extent.

8. On 19 December 2014, the Petitioner addressed a letter to the Respondents, in continuation with their letter dated 7 July 2014. In the said letter, the Petitioner accepts that they are agreeable to pay the stamp duty as per the application dated 17 May 2008 under Section 31 of the Stamp Act. However, the Petitioner disputed the levy of penalty imposed by demand notice dated 23 December 2013. In the last paragraph of the said letter, the Petitioner stated that the revised demand notice be issued without imposing the penal