Amarjeet Singh Serjit Singh J:

Introduction

[1] In this judgment, the sections or schedules mentioned refer to the Stamp Act 1949.

[2] The issue in this case was whether the Novation Agreement ("the Agreement") dated 1 January 2022 is to be assessed for nominal duty under Item 4 or ad valorem duty under Item 32 of the First Schedule.

[3] On 25 September 2025, I allowed the plaintiff's, Mesra Retail & Cafe Sdn Bhd, stamp duty appeal under s 39(4) allowing a declaration that the Notice of Stamp Duty Assessment (ad valorem duty) dated 14 September 2023 (the Notice") is null and void and an order that RM7,468.00 being the excess stamp duty paid to the defendant, the Collector of Stamp Duties ("Collector"), is refunded with interest at the rate of 3% on the said sum from the date the payment was made to the Collector. I held that the applicable stamp duty is RM10.00 under item 4 of the First Schedule.

[4] My reasons for the decision are as stated below.

Background

[5] The facts are not in dispute and are as follows:

(a) Petronas Dagangan Berhad ("PDB") is the owner of the petrol station building, structures, equipment, and other ancillary facilities. PDB had entered into 4 operating agreements with Golden Scoop Sdn Bhd ("Golden Scoop"). Golden Scoop as operator is the authorised licensee of the Baskin-Robbins brand for Malaysia and is involved in selling, amongst others, Baskin-Robbins ice cream. The operating agreements are for - Petronas Bukit Jelutong, Petronas Station Bandar Setia Alam, Petronas Station Jalan Tan Swee Hoe, and Petronas Station Sri Okid.

(b) Under the operating agreements, PDB granted Golden Scoop a licence to use and occupy a certain area of the petrol stations for operating a Baskin-Robbins Restaurant. In consideration, Golden Scoop would pay PDB a sum of money each month.

(c) On 8 July 2021, PDB incorporated the plaintiff, a wholly owned subsidiary of PDB, for the purpose of focussing on the non-fuel business arm of PDB.

(d) PDB then entered into a Master Novation Agreement dated 1 January 2022 with the plaintiff and Golden Scoop whereby PDB novates and transfers all rights, interests, obligations, and liabilities under the operating agreements to the plaintiff. Under the novation agreement, Golden Scoop agreed to release and discharge PDB from the operating agreements in consideration of the plaintiff undertaking to perform the obligations under the said operating agreements.

(e) On 14 September 2023, the Collector issued the Notice and took the position that the Novation Agreement is subject to stamp duty at a rate of RM7,478.00. On 16 October 2023, the plaintiff paid the stamp duty under protest and submitted an application objecting to the assessment raised in the Notice. On 23 October 2023, the Collector rejected the objection, maintaining the stamp duty.

(f) Hence, this appeal.

Analysis And Decision

[6] The concept of novation is described in the oft-quoted case of Lyl Hooker Sdn Bhd v. Tevanaigam Savisthri Kt Chitty & Anor; [1987] 2 MLJ 52; [1987] CLJ (Rep) 179 as follows:

Novation is a new contract. It extinguishes rights and obligations under the old contract for which the new contract is made. Being a new contract, there must be consent by all parties, and there must be consideration, and rights and obligations under it are not those transferred from the old contract, which is already extinguished. (See Chitty on Contract, Vol 1, 1983 edn at paras 1315 and 1316).

[7] It is trite that stamp duty is chargeable on an instrument and not on the transaction. The law is instructively stated by the Federal Court in Basf Services (M) Sdn Bhd v. Pemungut Duti Setem; [2010] 4 MLJ 596; [2010] 5 CLJ 109, adopting C.C. Gallager Highmore's Stamp Laws 4th edn at p 7, where the learned author said:

In order to determine whether any, and if any what, stamp duty is chargeable upon an instrument, the legal rule is that the real and true meaning of the instrument is to be ascertained; that the description of it given in the ins