Back
2025 MarsdenLR 3526
FEDERAL COURT PUTRAJAYA
VAZEER ALAM MYDIN MEERA, FCJ
HAVI LOGISTICS (M) SDN BHD – Appellant
Versus
PEMUNGUT DUTI SETEM – Respondent
[Civil Appeal No: 01(f)-5-02-2024(W)]
The Asset Purchase Agreement constituted a conveyance on sale under the Stamp Act 1949, subject to ad valorem duty, irrespective of any deeming provisions.
Headnote:(A) Stamp Act 1949 - Section 21(1) and Item 32(a) of the First Schedule - Appeal concerning stamp duty assessment on an Asset Purchase Agreement - The court found that the Agreement constituted a conveyance on sale and was subject to ad valorem duty under Item 32(a) - The deeming provision in the Agreement does not alter its classification as a conveyance on sale. (Paras 1, 10, 81)
(B) Legal Principles - The court reiterated that stamp duty is chargeable on the instrument and not the transaction itself - The intention of the parties to pass title to the assets is crucial in determining the nature of the Agreement. (Paras 31, 35)
Facts of the case:
The appellant entered into an Asset Purchase Agreement with the respondent to purchase certain assets and liabilities, with a consideration of USD2,491,491.55. The respondent assessed the Agreement with ad valorem duty, which the appellant contested, arguing it should be assessed under Item 4 for a fixed duty of RM10.00. (Paras 2-10)
Findings of Court:
The court upheld the Court of Appeal's decision that the Agreement was a conveyance on sale and subject to ad valorem duty under Item 32(a) of the First Schedule of the Stamp Act 1949. (Paras 81)
Issues: The main issues were whether the Agreement was a conveyance on sale under s 21(1) of the Stamp Act and whether it fell under any exceptions in the same section. (Paras 12, 81)
Ratio Decidendi: The court concluded that the Agreement was indeed a conveyance on sale, irrespective of the deeming provision, and that the fixed assets sold under the Agreement were not exempt from ad valorem duty. (Paras 39, 81)
Result: Appeal dismissed with costs; the Court of Appeal's order affirmed.
Key Points: - The Agreement constitutes a conveyance on sale under s 21(1) of the Stamp Act 1949, irrespective of any deeming provision (!) (!) . - The fixed assets transferred are within the meaning of "goods" under s 21(1) and are not exempt from ad valorem duty (!) (!) . - The timing of title passing and the presence of a deeming provision do not alter the classification of the Agreement as a conveyance on sale (!) (!) .
What is the nature of an Asset Purchase Agreement for stamp duty purposes?
Does the Asset Purchase Agreement fall within the exception for "goods" under the Stamp Act?
What is the effect of a contractual deeming provision on whether an instrument is a conveyance on sale?
| Table of Content |
|---|
| 1. asset purchase agreement details (Para 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30) |
| 2. court's interpretation of the act (Para 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56) |
| 3. agreement as conveyance (Para 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64 , 65 , 66 , 67 , 68 , 70 , 71 , 72 , 73 , 74 , 75 , 76 , 77 , 78 , 79 , 80 , 81) |
| 4. appeal outcome (Para 82) |
Introduction
[1] This appeal concerns the issue of whether fixed or ad valorem stamp duty is payable under the Stamp Duty 1949 ("Act") on a commercial contract, namely, an Asset Purchase Agreement.
Background Facts
[2] On 6 February 2020, the appellant, Havi Logistics (M) Sdn Bhd, entered into an Asset Purchase Agreement ("the Agreement") with Martin-Brower Malaysia Co Sdn Bhd ("MB Malaysia") to purchase certain assets and liabilities.
[3] The principal operative clauses in the Agreement were cls 2.1(a) to (c). They read as follows:
2.1 Acquired Assets and Assumed Liabilities.
(a) Subject to and in accordance with the terms of this Agreement, the Seller hereby sells, transfers, conveys, assigns and delivers to the Purchaser, and the Purchaser hereby purchases from the Seller at the Closing, all of the Seller's right, title and interest in and to the Acquired Assets.
(b) Subject to and in accordance with the terms of this Agreement, the Purchaser hereby assumes as of and following the Closing, all of the Assumed Liabilities.
(c) Notwithstanding anything to the contrary herein, the Excluded Assets are excluded from the sale and purchase herein and shall be retained by the Seller.
[4] The details of the assets and liabilities acquired were set out in Schedule 1 and Schedule 3 of the Agreement. Schedule 1 specifies a listing of fixed assets (such as computer software, computer hardware, fittings, renovation, plant, machinery and equipment) and the inventory of the seller (which was to be determined as of the date of completion of the Agreement). Schedule 3 lists out a number of business contracts, the liabilities of which the appellant had agreed to assume under cl 2.1 (b) of the Agreement.
[5] There were some assets excluded from the sale transaction and these were listed under Schedule 2 of the Agreement. Among others, the "goodwill of the Malaysia Business" of MB Malaysia was excluded.
[6] The consideration payable for the transaction was specified under cl 2.2(a) of the Agreement, which reads as follows:
The purchase price for the Acquired Assets (save for Inventory which shall be dealt with in cl 2.2(c)) of this Agreement and Assumed Liabilities is USD2,491,491.55 ("Purchase Price") payable in cash by the Purchaser on Closing to the Seller or as directed by the Seller.
The USD2,491,491.55 was equivalent to RM10,378,806.35 at the then-prevailing exchange rate.
[7] According to cl 1 of the Agreement, the Closing Date shall mean 31 March 2020 or such other date for the Closing of the Transaction as agreed in writing by the parties.
[8] The appellant through their solicitors applied to the respondent on 5 March 2020 for assessment of stamp duty payable on the Agreement. The respondent assessed the Agreement with ad valorem duty of RM399,196.00 on the basis that the Agreement fell within the ambit of s 21(1) of the Act, and Item 32 of the First Schedule to the Act ("Assessment"). The appellant made a payment of RM399,196.00 to the respondent under protest with a notice of objection as required under s 38A of the Act.
[9] On 11 April 2020, the appellant lodged an appeal against the Assessment on grounds that the Agreement should be assessed based on Item 4, First Schedule of the Act, wherein only a fixed stamp duty of RM10.00 was payable. The respondent rejected the appellant's appeal via letter dated 13 April 2020 and maintained the earlier decision dated 15 March 2020 to impose
