2004 Supreme(MP) 891

High Court Of Madhya Pradesh
Honble Judges: Rajendra Menon, J.
SRF LIMITED - Appellant
Versus
STATE OF MADHYA PRADESH - Respondents
W. P. 21 Of 2002
Decided On : 11/29/2004

Stamp duty is payable on the instrument and not on the transaction entered into between the parties.

Headnote:

STAMP DUTY - CONVEYANCE - ASSESSMENT - MOVABLE AND IMMOVABLE PROPERTY - INSTRUMENT - TRANSACTION - TRANSFER OF UNDERTAKING - GOING CONCERN - VALUATION - PENALTY - INDIAN STAMP ACT, 1899, SECTIONS 2(10), 2(14), 10, 33, 47-A, SCHEDULE 1, ARTICLE 20.

Fact of the Case:

Petitioner, a registered company, purchased the Tyre Cord Division of respondent No. 4 as a going concern for a consideration of Rs. 325 crores. A joint declaration was made by the parties to the effect that respondent No. 4 had sold the Tyre Cord Division as a going concern and that the properties, licenses, benefits of contracts and various other tangible rights relating to the business of the undertaking stand vested with the petitioner w.e.f. 8-2-1996. The deed of conveyance executed in favor of the petitioner mentioned 48 items of immovable plant and machinery transferred by respondent No. 4 to the petitioner. The Collector of Stamps assessed stamp duty of Rs. 2.03 crores on the conveyance/instruments treating the valuation of the property to Rs. 303 crores. On revision, the Board of Revenue remanded the matter to the Collector with a direction to conduct spot inspection, issue notice under Section 47-A and after considering the guidelines/orders of the Inspector General of Registration, give opportunity of hearing to the petitioner and thereafter pass fresh orders. The Collector passed the impugned order assessing the valuation of the property on the basis of the transfer being made of a going concern and valuing the transfer to be one for the entire undertaking valued at Rs. 325 crores. Accordingly, petitioner/company were directed to pay additional stamp duty and penalty as indicated in the order. Revision petition was filed by the petitioner before the Board of Revenue under Section 56(4) of the Indian Stamp Act, 1899, which was rejected by the Board. The petitioner challenged the tenability of the aforesaid orders and actions.

Finding of the Court:

1. Stamp duty is payable on the instrument and not on the transaction entered into between the parties. 2. The instrument in question is a conveyance deed for transfer by sale of certain property entered into on the 13th of June, 1996 between respondent No. 4, Ceat Ltd. v. Public Limited Company incorporated under the Companies Act and S.R.F. Ltd., petitioners. 3. The purpose of executing this deed was only to transfer the "superstructure" mentioned in First Schedule to the conveyance and the joint declaration and resolution were only annexed to the document for the purpose of, showing the source on the basis of which the conveyance was being executed and they only form the foundation for executing the deed. 4. The Collector of Stamps has conducted the enquiry on the basis of the guidelines provided to him by the Inspector General of Stamps on 24-10-1996 vide Annexure-K wherein the Inspector General has clearly indicated in paras 3 and 4 of the order to obtain evidence and information from various sources. 5. The findings recorded by the authorities is therefore based not only on a scrutiny of the instruments in question but also on other collateral material and evidence collected by them as indicated hereinabove and in that view of the matter there is much force in the contention advanced by learned Sr. Counsel appearing for the petitioner that the authorities have misdirected themselves and have in fact conducted an enquiry as contemplated Under Section 47-A which was not permissible.

Issues: 1. Whether stamp duty is payable on the instrument or on the transaction entered into between the parties? 2. Whether the instrument in question is a conveyance deed for transfer by sale of certain property? 3. Whether the purpose of executing this deed was only to transfer the "superstructure" mentioned in First Schedule to the conveyance? 4. Whether the Collector of Stamps has conducted the enquiry on the basis of the guidelines provided to him by the Inspector General of Stamps? 5. Whether the findings recorded by the authorities is based not only on a scrutiny of the instruments in question but also on other collateral material and evidence collected by them?

Ratio Decidendi: 1. Stamp duty is payable on the instrument and not on the transaction entered into between the parties. 2. The instrument in question is a conveyance deed for transfer by sale of certain property. 3. The purpose of executing this deed was only to transfer the "superstructure" mentioned in First Schedule to the conveyance. 4. The Collector of Stamps has conducted the enquiry on the basis of the guidelines provided to him by the Inspector General of Stamps. 5. The findings recorded by the authorities is based not only on a scrutiny of the instruments in question but also on other collateral material and evidence collected by them.

Final Decision: The petition is allowed. The order impugned orders dated 7-11-2001 (Annexure-Q), Annexure-T dated 3-1-2002 and the demand notices (Annexures-R and S) dated 12-11-2001 and 22-12-2001 respectively are hereby quashed. Parties to bear their own costs.