A company is a distinct legal entity, and changing its directors does not constitute a transfer of property, thus invalidating the stamp duty demand.

Order :

AVNEESH JHINGAN, J

1. This petition is filed seeking quashing of order dated 03.08.2015 passed by the Collector (Stamps), Alwar (for short ‘the Collector’).

2. The relevant facts are that the petitioner is a private limited company (hereinafter referred to as ‘company’) registered under the Companies Act, 1956 . The company purchased an agriculture land bearing Khasra Nos. 171, 212, 212/870, 212/871, 214, 215, and 212/869 situated in village Liwari, District Alwar (hereinafter referred to as ‘property’). After following the procedure under Section 90B of the Land Revenue Act, 1956 (for short ‘the Act of 1956’) and Section 60 of Urban Improvement Trust Act, 1959 (for short ‘the Act of 1959’), the Urban Improvement Trust, Alwar (hereinafter referred to as ‘UIT’) issued allotment letter dated 25.01.2023 in the name of the company. On 05.04.2003 the lease deed of the property for ninety nine years was executed by the UIT in favour of the company. The allotment to the company was through directors Mr. Mahavir Prasad Katta, Mr. Pradeep Kumar Katta, Mr. Prem Narain Gupta and Mr. Yogesh Chand Gupta. The directors of the company transferred their shares and new directors were appointed.

2.1 The Collector on 24.05.2004 issued notices to the erstwhile directors to show cause that loss of stamp duty was caused by transfer of property of company by transferring the shareholding. Reply was filed that there was no transfer of property, sale of shares had nothing to do with the property owned by the company and the details of the current directors was provided. Notices dated 21.10.2014 were issued to the new directors alleging that transfer of property falls in the category of lease by way of assignment. Notices were responded on 24.12.2014. The collector after getting valuation of the property passed the impugned order dated 03.08.2015 creating a demand of Rs.7,62,73,440/-.

3. Learned senior counsel for the petitioner submits that UIT executed lease deed of the property in favour of the company. Share holdings of the directors were transferred to the new directors but the property was of the company and remained of the company. The contention is that in absence of transfer of property the stamp duty could not have been levied. Submission is that the impugned order is without jurisdiction and the writ petition be allowed.

4. As per contra, the petitioner has a remedy of revision under Section 65 of the Act of 1998 and writ be dismissed on this ground alone. Reliance is placed upon the decisions of Supreme Court in Hardev Asnani v. State of Rajasthan AIR 2011 SC 3748 Ansal Housing v. State of UP (2016) 13 SCC 305; Genpact (India) (P) Ltd. v. CIT (2019) 419 ITR 440 and decision of this Court dated 01.08.2022 in DBSAW No. 619/2022 titled as Param Prasad Charitable Trust v. State of Rajasthan & Ors. and decision dated 02.02.2024 in DBCWP No. 3730/2015 titled as Manoj Kumar Gupta v. State of Rajasthan

4.1 Further, that the complete structure of the company was changed with the transfer of shares by the previous directors to the new directors. Submission is that directors were changed with the object to transfer the property of the company by evading stamp duty and it is a case for lifting of corporate veil. Reliance is placed upon the decisions of Supreme Court in State of Rajasthan v. Gotan Khanij Udyog reported in (2016) 4 SCC 469; State of Karnataka v. J. Jayalalitha & Ors reported in (2017) 6 SCC 263

4.2 Circular No.6 of 2009 issued by the State Government is relied to submit that on transfer of property by change of legal character of the company falls under the head lease by way of assignment and stamp duty is payable.

5. The issue involved in the present petition is:-

“whether changing of the directors tentamounts to transfer of the property of the company?”

6. The law is well settled that the company is a juristic person and has independent entity distinct from shareholders. Reference in this regard be made to the decisions of the Supreme Cou