NEUTRAL CITATION
C/SCA/17138/2019 ORDER DATED: 18/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17138 of 2019
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M/S HINDPRAKASH TRADELINK PRIVATE LIMITED
Versus
CHIEF CONTROLLING REVENUE AUTHORITY
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Appearance:
MR. ASHOK SHAH, ADV WITH ADITYA A GUPTA(7875) for the Petitioner(s)
No. 1
MOHIT A GUPTA(8967) for the Petitioner(s) No. 1
MR. AYAAN PATEL, AGP for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 18/08/2023
ORAL ORDER
1. The petitioner is a Company incorporated under the provisions of the Indian Companies Act, 1956. The petitioner is challenging the order dated 29.6.2019 (received on 6.7.2019) passed by the respondent No.1 as well as order dated 19.5.2018 passed by the Respondent No.2 under the provisions of Gujarat Stamp Act, 1958.
2. The facts germane for adjudication of present dispute read thus:
2.1 It is the case of the petitioner that a joint petition was filed by two Companies under Section 230 and 232 of the Companies Act, 2013 seeking sanction of the Hon'ble NCLT to a scheme or arrangement involving amalgamation of Hindprakash Tradelink Private Limited ("Transferor Company") with Ahmedabad Chemicals Private Limited ("Transferee Company") with effect from 1.4.2016. The aforesaid Modified Composite Scheme of Arrangement Page 1 of 11 Downloaded on : Sun Sep 17 01:43:47 IST 2023 NEUTRAL CITATION C/SCA/17138/2019 ORDER DATED: 18/08/2023 undefined received sanction from the Hon'ble NCLT vide order dated 11.10.2017 passed in CP(CAA) No. 103/NCLT/AHM/2017 with CA (CAA) No. 77/NCLT/AHM/2017. As per the said Scheme, the Company changed its name to "Hindprakash Tradelink Private Limited", which is the petitioner herein. The Certificate of the ROC regarding the change of name of "Ahmedabad Chemicals Private Limited" to "Hindprakash Tradelink Private Limited" dated 13.10.2017 is duly produced at Annexure "C"..
2.2 The petitioner preferred an application on 13.11.2017 to the respondent No.2 for adjudication of stamp duty over the order dated 11.10.2017, sanctioning the Scheme, along with requisite documents. The said application is duly produced at Annnexure "D".
2.3 The respondent No.2 called upon the Petitioner to make a suitable representation for the purpose of adjudication of stamp duty vide letter dated 29.1.2018 and letter dated 26.2.2019, the same are duly produced at Annexure "E".
2.4 On 26.3.2018, the petitioner herein made a representation to the respondent No.2. The petitioner highlighted that the proposal to levy a sum of Rs.79,33,995/- as stamp duty payable on the above referred order passed by the Hon'ble NCLT was not in accordance with the provisions of law. It was contended by the petitioner that correct adjudication of the stamp duty would be only to the extent of Rs.17,07,095/-. The respondent No.2 passed the impugned order dated 19.5.2018 bearing No. Stamp/ Page 2 of 11 Downloaded on : Sun Sep 17 01:43:47 IST 2023 NEUTRAL CITATION C/SCA/17138/2019 ORDER DATED: 18/08/2023 undefined Ashan/223/2017/8495 wherein the stamp duty came to be assessed at Rs.79,33,995/- . The said order was subject matter of challenge by the petitioner herein by filing Appeal under Section 53(1) of the Gujarat Stamp Act, 1958 before the respondent No.1, wherein the order passed by the respondent No.2 came to be partly allowed by the impugned order dated 29.6.2018 bearing No. Ijar/Legal/File No.71/2018 (received on 6.7.2019) directing the petitioner to pay stamp duty to the tune of Rs. 77,38,314/- instead of Rs.79,33,995/- adjudicated by the respondent No.2.
3. Being aggrieved by the impugned order passed by the respondent authority, the petitioner herein has approached this Court seeking following reliefs:
"17 (a) YOUR LORDSHIPS BE PLEASED to a writ of certiorari, order or any appropriate writ, order or direction to quash and set aside the impugned order dated 29.06.2019 (received on 06.07.2019) bearing No. No. Ijar/Legal/File No. 71/2018 passed by the Respondent No. 1 Chief Controlling Revenue Authority at Annexure J to this petition in the interest of justice.
(b) YOUR LORDSHIPS BE PLEASED to a writ of certiorari, order or any appropriate writ, order or direction to quash and set aside the impugned order dated 19.05.2018 passed by the Respondent No. 2 bearing No. Stamp/Ashan/223/2017/8495 at Annexure G in the interest of justice.
(c) YOUR LORDSHIPS BE PLEASED to direct refund of excess amount of stamp duty out of the stamp duty of Rs. 19,83,499/- deposited by the Petitioner at the time of filing of the Appeal before the Respondent No. 1 after adjusting the proper stamp duty Page 3 of 11 Downloaded on : Sun Sep 17 01:43:47 IST 2023 NEUTRAL CITATION C/SCA/17138/2019 ORDER DATED: 18/08/2023 undefined as may be determined in accordance with the judgment and order of this Hon'ble Court in the interest of justice.
(d) YOUR LORDSHIPS BE PLEASED to stay the operation and implementation of the impugned order dated 29.06.2019 (received on 06.07.2019) bearing No. No. Ijar/Legal/File No. 71/2018 passed by the Respondent No. 1 Chief Controlling Revenue Authority a Annexure J to this petition and impugned order dated 19.05.2018 passed by the Respondent No. 2 bearing No Stamp/Ashan/223/2017/8495 at Annexure G pending admission and final disposal of the petition.
(e) YOUR LORDSHIPS BE PLEASED pass such other and further orders, which may be deemed fit in the interest of justice."
4. Heard Mr. Ashok Shah, the learned counsel appearing for Mr. Aditya Gupta, the learned advocate appearing for the petitioner and Mr. Ayaan Patel, the learned AGP for the respondent State.
SUBMISSIONS ON BEHALF OF MR. ASHOK SHAH, LD. COUNSEL FOR THE PETITIONER:
4.1 Mr. Ashok Shah, the learned Counsel at the outset submitted that the issue involved in the present petition has been decided in Stamp Reference No.1 of 2020 and allied References, by CAV judgment dated 10.2.2023, wherein it is held by the Hon'ble Full Bench that Stamp Duty would be levied only upon the face value of the share and cannot be levied on the premium price of the share on the date of amalgamation. It was submitted that the said judgment has been followed by the Hon'ble Division Bench in LPA No. 125 Page 4 of 11 Downloaded on : Sun Sep 17 01:43:47 IST 2023 NEUTRAL CITATION C/SCA/17138/2019 ORDER DATED: 18/08/2023 undefined of 2020 and allied matters. Placing reliance on the aforesaid, it was submitted that the said issue is no longer res-integra and the petitioner herein being private limited Company, the case of the petitioner stands squarely covered with the aforesaid position of law.
SUBMISSIONS ON BEHALF OF MR. AYAAN PATEL, LD. AGP:
4.2 Mr. Ayaan Patel, the learned AGP appearing for the respondent State was not in a position to controvert the aforesaid position of law, as laid down by the Hon'ble Full Bench. Considering the fact that the aforesaid is no longer res-integra. This Court has taken up the present petition for final disposal with the consent of the learned advocates appearing for the respective parties.
5. Having heard the learned advocates for the respective parties, the issue in question before this Court is whether it is open for the stamp authority to levy stamp duty to the tune of Rs.77, 38,31,344/- instead of 17,07,09,480/- , which is on the basis of the "premium" on the issued share.
5.1 The aforesaid question has been answered by the Hon'ble Full Bench in Stamp Reference No.1 of 2020 and allied References by CAV Judgment dated 10.2.2023. It is apposite to refer to the relevant paras No.87, 91, 92 at page Nos. 99, 108 and 109.
"87. Turning our attention back to the article in issue viz. Article Page 5 of 11 Downloaded on : Sun Sep 17 01:43:47 IST 2023 NEUTRAL CITATION C/SCA/17138/2019 ORDER DATED: 18/08/2023 undefined 20 of the Gujarat Stamp Act, we are unable to accept the stand of the Revenue that stamp duty is required to be calculated on the aggregate face value and additional consideration received by the transferor company for transfer of its shares in favour of the transferee company nor the contention that additional amount that is received by the transferor company is the share premium. If that were to be the intention of the legislature, they would have said so expressly in Article 20(d) or explanation thereunder. This is more probable view in view of the fact that wherever the word 'premium' is to be mentioned or incorporated, same is expressly indicated in the relevant articles of the Stamp Act. A perusal of Article 18 which deals with the certificate or other document which may be charged with the stamp duty when read with the explanation provided thereunder, it would indicate that for the purpose of said article 'the value of shares, scrip or stock' would 'include the amount of premium, if any'. Thus, if there have been any intention to include the premium as a part of consideration, same would have been provided clearly under Article 20(d)(i). Clause (i) will have to be read in two compartments viz. aggregate amount consisting of either (i) market value; or (ii) face value of share, whichever is higher and the amount of consideration, if any, paid for amalgamation and as such it appears to us that the word 'premium' cannot be read or added as part of consideration as tried by the authority. It would not be out of context also to refer the definition clause of market value as defined under Section 2(n)
(a) which defines the market value as under:
"2(na) "market value", in relation to any property which is the subject matter of an instrument means the price which such property would have fetched if sold in open market on the date of execution of such instrument;"
91. In the aforesaid analysis, we are of the considered view that the word 'premium' attached to the share cannot be read as part Page 6 of 11 Downloaded on : Sun Sep 17 01:43:47 IST 2023 NEUTRAL CITATION C/SCA/17138/2019 ORDER DATED: 18/08/2023 undefined and parcel of Article 20(d)(i) as sought to be canvassed since it would be doing violence to the provisions of the Act and reading something into the provision which is not to be found in the statute and as the legislature has not contemplated of including the expression 'premium' and has restricted to the 'face value' alone as indicated in clause (c) to Explanation III of sub-article (d) of Article 20 of the Gujarat Stamp Act.
92. In view of the aforestated discussions and finding recorded by us, we proceed to answer the questions referred as under :
Sr. Stamp Question Answer
No Reference referred for
No. adjudication
1 2/2020 & Que. No.1 In view of explanation III (c) to Article
1/2021 20(d) of Schedule I of the Gujarat
Stamp Act, 1958, the face value of the shares issued is to be considered as its market value.
2 3/2020 Que. No.2 Yes, the respondents have erred in law in not giving strict and literal interpretation to the Gujarat Stamp Act, 1958 and have attempted to read words into the entry No.20(d)(1) which is not expressly found in the statute. 3 1/2021 Que. No.2 The amount of premium even if any cannot form part of face value of share in view of deeming fiction provided under clause (c) of the Explanation III to Article 20(d).
4 2/2020 & Que.Nos.2 Treating the fair value of the share of 7/2020 and 5 transferee company issued under the scheme approved by the Company Court /NCLT where neither of the companies are listed or listed but not quoted for trading on a stock exchange as consideration under Article 20(d)(1) of Schedule-I would not be ultra vires and illegal and it would be intra-vires and in consonance with Explanation-III as it would indicate recurring or calculating the market value of share for the purpose of clause (d).
5 3/2020 Que.No.1 Yes, the respondents erred in holding the share premium amount to be the part of market value of shares for the Page 7 of 11 Downloaded on : Sun Sep 17 01:43:47 IST 2023 NEUTRAL CITATION C/SCA/17138/2019 ORDER DATED: 18/08/2023 undefined purpose of computation of stamp duty under clause (c) of Explanation III to Article 20(d) of Schedule-I of the Stamp Act, 1958, as it does not provide for adding the word 'premium' into 'market value of share', which is otherwise defined in explanation to Article 18 to include the amount of premium.
6 1/2021 Que.No.3 Yes, the Chief Controlling Revenue Authority erred in placing reliance upon the judgment dated 20.12.2019 passed in Special Civil Application No.14597 of 2019 when same has been stayed by order dated 10.02.2020 passed in Letters Patent Appeal No.125 of 2017.
7 3/2020 Que.No.2 Yes, the respondents erred in not appreciating the fact that fiscal legislation like Gujarat Stamp Act, 1958, are required to give strict and literal interpretation and there being no scope of reading something into the entry which is not expressly mentioned in the statute.
6. Considering the undisputed facts involved in the petition, as stated above, and the position of law, as referred above, Article 20 Schedule-1 of the Gujarat Stamp Act read thus:
Article Description of instrument Proper stamp duty 20 (d) CONVEYANCE [Subject to maximum twenty five crores [so far as it relates to the scheme, rupees] -
for reconstruction of the company or companies involving merger or (i) an amount equal the amalgamation of any two or to [one per cent] of more companies by an order of the aggregate the National Company Law amount comprising Tribunal under section 232 of the of the market value Companies Act, 2013 (18 of 2013) of share issued or or for amalgamation or dissolution allotted in exchange of Banking Companies by an order of or otherwise, or of the Reserve Bank of India under the face value of section 44A of the Banking such shares, Regulation Act, 1949 (10 of 1949)] whichever is higher and the amount of Page 8 of 11 Downloaded on : Sun Sep 17 01:43:47 IST 2023 NEUTRAL CITATION C/SCA/17138/2019 ORDER DATED: 18/08/2023 undefined [Explanation I - For the purpose of consideration, if any, this Article [and subject to sub- paid for such item (a) of item (ii) of clause (f) of amalgamation, or article 45], an agreements to sell an immovable property or an (ii) an amount equal irrevocable power of attorney to [one percent] of shall, in case of transfer of the the true market possession of such property value of the before, at the time of, or after the immovable property execution of such agreement or situated in the State power of attorney, be deemed to of Gujarat of the be a conveyance and the stamp transferor company duty thereon shall be chargeable whichever is higher.] accordingly:
Provided that the provisions of section 32 - A shall apply mutatis mutandis to such agreement or power of attorney as are applicable to a conveyance:
Provided further that where subsequently a conveyance is executed in pursuance of such agreement of sale, or an irrevocable power of Attorney, the stamp duty, if any, already paid and recovered on the agreement of sale or an irrevocable power of Attorney which is deemed to be a conveyance, shall be adjusted towards the total duty leviable on the conveyance.] [Explanation II] - For the purposes of this Article, the expression "premises" means any land or building or part of a building including any flat, apartment, tenement, shop or warehouse therein and includes:-
(i) gardens, grounds and out houses, if any, appertaining to such building or part of a building, and
(ii) any fittings affixed to such building or part of a building for the more beneficial enjoyment thereof] Page 9 of 11 Downloaded on : Sun Sep 17 01:43:47 IST 2023 NEUTRAL CITATION C/SCA/17138/2019 ORDER DATED: 18/08/2023 undefined [Explanation III - for the purpose of clause (d), the market value of share-
(a) in relation of the transferee company whose shares are listed and quoted for trading on a stock exchange, means the market value of share as on the appointed date mentioned in the scheme of amalgamation or when appointed date is not so fixed, the date of [order of the National Company Law Tribunal or, as the case may be, the order of the Reserve Bank of India].
(b) In relation to the transferee company, whose shares are not listed or listed but not quoted for trading on a stock exchange means the market value of the share issued or allotted with reference to the market value of share of the transferor company.
(c) Where the transferee company and transferor company, whose shares are not listed or listed but not quoted for trading on stock exchange means the face value of the share issued or allotted with reference to the face value of share of the transferee company.
The case of the present petitioner is governed by Article 20(d)(c).
7. In the opinion of this Court, it is undisputed that the petitioner is a Private Limited Company and in view thereof, considering that Article 20(d)(c) would come into force and the same would be applicable in the facts of the present case.
Page 10 of 11 Downloaded on : Sun Sep 17 01:43:47 IST 2023NEUTRAL CITATION C/SCA/17138/2019 ORDER DATED: 18/08/2023 undefined
8. Considering the aforesaid and considering the ratio as laid down, as referred above, the statute does not provide for any expressed provision with regard to the word "premium". The Stamp duty would be leviable on the face value of the share of the transferee company.
9. For the foregoing reasons, in view of the findings arrived at by the Hon'ble Full Bench and Hon'ble Division Bench, the present petition requires to be allowed, quashing and setting aside the order impugned passed by the respondent authorities. The petitioner has already deposited Rs.19,83,499/- at the time of filing of the Appeal and, therefore, the excess stamp duty of Rs.2,76,404/2 be refunded to the petitioner within a period of 8 weeks from the receipt of this order.
The petition is allowed accordingly. Direct service is permitted.
(VAIBHAVI D. NANAVATI,J) SAJ GEORGE Page 11 of 11 Downloaded on : Sun Sep 17 01:43:47 IST 2023