1. Asset purchase agreement for telecommunication towers — dispute over stamp duty assessment under Section 21(1) and Item 32(a) versus Item 4 of the Stamp Act 1949. (Para 1 , 3 , 4 , 6 , 8 , 10 )
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2026 MarsdenLR 2947
COURT OF APPEAL, PUTRAJAYA
MOHD FIRUZ JAFFRIL, J
PEMUNGUT DUTI SETEM – Appellant
Versus
GTP NETWORK SDN BHD – Respondent
[CIVIL APPEAL NO: B-01(NCvC)(A)-687-11-2024]
An asset purchase agreement for capital assets is a 'conveyance on sale' under section 21(1) of the Stamp Act 1949, attracting ad valorem duty regardless of whether the transfer of title is deferred to a future date.
Headnote:(A) Stamp Act 1949 - Sections 2, 4(1), 21(1) and 39 - First Schedule Items 4 and 32(a) - Asset Purchase Agreement - Conveyance on sale - Ad valorem duty vs nominal duty - Whether an agreement for the sale of capital assets, where completion is deferred to a future date, constitutes a conveyance on sale - The timing of closing or when title passes is immaterial to the classification of the instrument as a conveyance on sale under section 21(1); such instruments are chargeable with ad valorem duty as if they were actual conveyances on sale (Paras 49, 55-57).
(B) Civil Law Act 1956 - Section 11 - Rules of Court 2012 - Order 42 rule 12 - Power of court to award interest on refund of duty - Court has wide discretionary power to award interest as compensation to remedy a party whose money has been unlawfully deprived (Paras 37-41).
(C) Appeal by way of case stated - Scope of jurisdiction - Limited to answering the specific question of law posed based on the facts stated therein - Filing of affidavits in reply is not required, and failure to file such affidavits cannot be treated as a deemed admission affecting the legal classification of the instrument (Paras 30-32, 34-36).
Facts of the case:
An asset purchase agreement was entered into for the acquisition of telecommunication towers and associated equipment. The tax authority assessed ad valorem duty under item 32(a) of the First Schedule of the Stamp Act, treating the assets as capital property. The purchaser objected, contending that the assets were chattels/goods and the agreement was merely an agreement to convey rather than a conveyance itself, thus attracting only nominal duty under item 4. The High Court allowed the purchaser's appeal, declaring the agreement subject to nominal duty and ordering a refund of the ad valorem duty with interest.
Findings of Court:
The court found that the assets were capital assets and not trading stock (goods, wares, or merchandise), meaning they did not fall within the exceptions of section 21(1). It held that the timing of the transfer of title or the date of closing is not a determinant factor in construing whether an instrument is a conveyance on sale. Procedurally, the court found that in a case stated appeal, the court must solely answer the question of law posed and cannot impute burdens of proof or rely on the absence of affidavits.
Issues: (i) Whether the asset purchase agreement was a 'conveyance on sale' within the meaning of section 2 of the Act and thus chargeable with ad valorem duty; (ii) Whether the failure to file an affidavit in reply in a case stated appeal constitutes a deemed admission; (iii) Whether the court erred in awarding interest on the refund of duty.
Ratio Decidendi: An instrument is a conveyance on sale under section 21(1) of the Stamp Act if it is a contract for the sale of an estate or interest in property, provided the property is not trading stock. The requirement that an instrument must operate to transfer property immediately is superseded by section 21(1), making the future date of completion or the timing of title transfer immaterial to the imposition of ad valorem duty.
Result: Appeal allowed; decision and order of the High Court set aside.
Legal Category Hierarchy
- tax law
- practice and procedure
Table of Contents
2. Whether the agreement constitutes a conveyance on sale subject to ad valorem duty or a mere agreement to convey chattels subject to nominal duty. (Para 11 , 12 , 14 , 15 , 23 , 24 )
3. Analysis of the nature of capital assets versus trading goods and the irrelevance of completion dates in determining whether an instrument is a conveyance on sale. (Para 26 , 27 , 30 , 32 , 33 , 34 , 36 , 37 , 38 , 39 , 40 , 41 , 45 , 47 , 49 , 50 , 51 , 52 , 54 , 55 , 56 , 57 )
4. An agreement for the sale of capital assets is a conveyance on sale under Section 21(1) of the Stamp Act 1949, regardless of future completion dates. (Para 55 , 56 , 57 )
5. Appeal allowed — High Court decision set aside — ad valorem duty imposed. (Para 58 )
6. Does the timing of completion affect whether an agreement is a conveyance on sale under Section 21(1) of the Stamp Act 1949?
No. The timing of closing or when title passes is immaterial. An instrument is a conveyance on sale if the intention is to transfer property, preventing the avoidance of ad valorem duty by simply stating that title passes at a future date. (Para 55 , 56 , 57 )
7. Does the exception for goods, wares or merchandise in Section 21(1) of the Stamp Act 1949 apply to capital assets?
No. The exception applies only to trading goods, inventory, or stock-in-trade. Fixed or capital assets, such as telecommunication towers, are considered property and are not excluded from ad valorem duty under Item 32(a). (Para 49 , 56 )
8. Can a court award interest on the refund of excess stamp duty?
Yes. Courts have discretion under Section 11 of the Civil Law Act 1956 and Order 42 rule 12 of the Rules of Court 2012 to award interest as compensation for money unlawfully deprived. (Para 37 , 38 , 39 , 40 , 41 )
9. Is the filing of affidavits necessary in an appeal by way of case stated under Section 39 of the Stamp Act 1949?
No. An appeal by way of case stated is limited to the facts stated in the case; therefore, the failure to file an affidavit in reply does not constitute a deemed admission. (Para 30 , 31 , 32 )
Mohd Firuz Jaffril JCA:
Introduction
[1] This appeal involves a significant question of law, ie, on the interpretation of s. 21(1) of the Stamp Act 1949, as to whether the instrument in question, being an agreement for sale and purchase of assets, would fall within the ambit of s. 21(1) of the Stamp Act 1949, and thereby subjected to ad valorem duty under item 32(a) of the First Schedule of the Stamp Act 1949.
[2] The facts of this appeal are gathered from the case stated filed by the Pemungut Duti Setem ("PDS"), the judgment of the learned High Court Judge ('HCJ') and the submission of parties. We respectfully adopt them subject to some modification. For purposes of convenience, the parties will be referred to in their original capacities at the High Court.
Background
[3] On 1 August 2023, the respondent ("GTP") entered into an asset purchase agreement ('the APA') with MEBA Holdings Sdn Bhd ("MEBA") under which it acquired, among others, 16 telecommunication towers (the assets) from MEBA for RM15,000,000.
[4] Under the APA, the word 'towers' was defined as "16 telecommunications towers owned by the vendor as set out in Schedule 1 together with all assets, equipment and fixtures associated with and/or are required for the proper functioning and operations of the said telecommunications towers including but not limited to power supply modules, cabins, full tank, security fencing, generator sets, cabling and dark fibre, all of which are strictly chattels, movable assets and equipment (and all of which are transferred via delivery by hand), constructed, operated and leased to customers".
[5] As of 1 August 2023, legal ownership of the assets had not been transferred to GTP.
[6] On 30 August 2023, GTP through its solicitors, Messrs Zul Rafique & Partners, submitted the application for stamp duty for the APA under s. 26 of the Stamp Actvia STAMPS's online portal.
[7] On 5 September 2023, the PDS office informed Messrs Zul Rafique & Partners via a telephone call that the information in the adjudication was wrong and that GTP should state that the application is for a novation agreement.
[8] In addition, the PDS, through the STAMPS portal, also informed GTP that the assessment is to be made under s. 21 of the Stamp Act, and the stamp duty is subject to item 32(a) of the First Schedule of the Stamp Act as the PDS did not categorise the assets as inventory.
[9] Based on the above information, Messrs Zul Rafique & Partners resubmitted the adjudication application on behalf of GTP to facilitate the adjudication.
[10] On 11 September 2023, the PDS issued a notis taksiran sekuriti (duti ad valorem) and imposed a stamp duty of RM584,020 on the APA.
[11] This led to Messrs Zul Rafique & Partners submitting a notice of objection under s. 38A(1) of the Stamp Actvia the STAMPS portal based on the following reasons, among others:
(i) the APA is for purchasing telecommunication towers and basic telecommunication infrastructures, which are chattels. The agreement should therefore come under item 4 of the First Schedule of the Stamp Act, and the nominal stamp duty to be imposed is RM10;
(ii) in the case of BASF Services (M) Sdn Bhd v. Pemungut Duti Setem [2010] 5 CLJ 109, the Federal Court held that the transfer of a chattel by way of physical delivery, unless disallowed by some law, is itself not chargeable to any duty; and
(iii) MEBA only sold certain assets to the appellant, not the whole business.
[12] The basis of the assessment in the case stated can be summarised as follows:
(i) the assessment is based on the consideration for the sale of property of RM15,000,000 as stated in the APA. Hence, ad valorem duty under item 32(a) is the correct charge. Once s. 21(1) of the Stamp Act 1949 applies, item 32(a) of the First Schedule of the Stamp Act 1949, governs exclusively; item 4 (nominal duty for simple agreements) cannot apply;
(ii) section 21(1) of the Stamp Act 1949 expressly provides that any contract or agreement made in Malaysia for the sale of any estate or i
