Back
2025 MarsdenLR 5433
FEDERAL COURT PUTRAJAYA
HAVI LOGISTICS (M) SDN BHD – Appellant
Versus
PEMUNGUT DUTI SETEM – Respondent
[Civil Appeal No: 01(f)-5-02-2024(W)]
The Agreement constituted a conveyance on sale under the Stamp Act 1949, rendering it subject to ad valorem duty despite exemptions for 'goods'.
Headnote:(A) Stamp Act 1949 - Sections 2, 21(1), and Item 32(a) - Issue concerning the stamp duty on an Asset Purchase Agreement - Court affirmed that the Agreement is a conveyance on sale, thus chargeable with ad valorem duty under Item 32(a) - It was held that the exclusion of 'goods' under s 21(1) does not apply to capital assets, thus reasserting that ad valorem duty applies here. (Paras 36, 56, 80)
(B) Legal principles regarding stamp duty applicability - Duty is imposed on instruments, not transactions; legislative intent must be discerned from the Act’s language, framed under statutory interpretation and legislative intent. (Paras 31, 32, 54)
Facts of the case:
The appellant entered an Asset Purchase Agreement with exclusions noted, leading to a dispute over whether the applicable stamp duty was fixed or ad valorem. An assessment of RM399,196.00 was made, which the appellant contested as erroneous, suggesting only a fixed RM10.00 was payable. (Paras 2, 8, 9)
Findings of Court:
The Agreement constituted a conveyance on sale and did not qualify for exclusions under section 21(1); thus, ad valorem duty as per Item 32(a) is applicable. (Paras 81)
Issues: The court focused on whether the Agreement was a conveyance, the effect of stipulations regarding asset transfer, and the applicability of fixed versus ad valorem duty. (Paras 12, 24, 35)
Ratio Decidendi: The court concluded that the asset purchase agreement served as the instrument for transferring title to assets, confirming its classification as a conveyance on sale with ad valorem duty owed on consideration paid. (Paras 29, 48, 56)
Result: Appeal dismissed; the order of the Court of Appeal affirmed, confirming that the Agreement is chargeable with ad valorem duty. (Paras 82)
| Table of Content |
|---|
| 1. nature of the agreement and background facts (Para 1 , 2 , 3 , 4 , 5 , 6 , 8 , 9 , 10 , 12) |
| 2. court's reasoning on legal definitions and instruments (Para 13 , 14 , 15 , 16 , 18 , 19 , 20 , 21 , 23) |
| 3. dispute on nature of duty assessment (Para 17 , 25 , 27 , 35 , 36 , 60) |
| 4. final determination of the court on duty assessment (Para 29 , 39 , 40 , 41 , 42) |
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 ad valorem duty on the instrument.
[10] Aggrieved by the respondent's decision, the appellant appealed to the High Court by way of a Case Stated pursuant to s 39
