Gujarat High Court
Unique Mercantile India Limited vs The Chief Controling Revenue ... on 6 March, 2023
Bench: Biren Vaishnav
C/LPA/125/2020 JUDGMENT DATED: 06/03/2023
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/LETTERS PATENT APPEAL NO. 125 of 2020
In
R/SPECIAL CIVIL APPLICATION NO. 14597 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 13274 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 6890 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 7433 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 8098 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 11318 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 18387 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE ACTING CHIEF JUSTICE MR. JUSTICE
A.J.DESAI
and
HONOURABLE MR. JUSTICE BIREN VAISHNAV
==================================================
1 Whether Reporters of Local Papers may be allowed to No
see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law No
as to the interpretation of the Constitution of India or
any order made thereunder ?
==================================================
UNIQUE MERCANTILE INDIA LIMITED
Versus
THE CHIEF CONTROLING REVENUE AUTHORITY
==================================================
Page 1 of 12
Downloaded on : Tue Mar 07 20:40:21 IST 2023
C/LPA/125/2020 JUDGMENT DATED: 06/03/2023
Appearance:
MR SAURABH SOPARKAR, SENIOR ADVOCATE WITH
MR AMAR N BHATT(160) for the Appellant(s) No. 1,2
TIRTH NAYAK(8563) for the Appellant(s) No. 1,2
MS MANISHA LAVKUMAR SHAH, GOVERNMENT PLEADER WITH
MR CHINTAN DAVE, AGP for the Respondent(s) No. 1,2
MR DEVANG VYAS(2794) for the Respondent(s) No. 3
MR ANUJ K. TRIVEDI, ADVOCATE for the petitioner in SCA Nos.
6890/2022, 7433/2021 and 18387/2018
MR HARDIK P. MODH, ADVOCATE WITH
MR AMIT LADDHA, ADVOCATE for the petitioner in SCA No.13274/2022
MR NILAY H. PATEL, ADVOCATE for the petitioner in SCA No.8098/2021
==================================================
CORAM:HONOURABLE THE ACTING CHIEF JUSTICE MR.
JUSTICE A.J.DESAI
and
HONOURABLE MR. JUSTICE BIREN VAISHNAV
Date : 06/03/2023
ORAL JUDGMENT
(PER : HONOURABLE THE ACTING CHIEF JUSTICE MR. JUSTICE
A.J.DESAI)
1. By way of present appeal under Clause 15 of the Letters
dated 20.12.2019 passed by the learned Single Judge in Special
Civil Application No.14597 of 2019, by which the challenge to
two orders dated 13.7.2018 passed by the Collector & Deputy
Superintendent of Stamps as well as an order dated 29.6.2019
passed by respondent No.1 Appellate Authority, by which the
respondent authority held that the petitioners would be liable to
pay stamp duty on the price of share on the date of
amalgamation treating the face value of the share including the
C/LPA/125/2020 JUDGMENT DATED: 06/03/2023
premium price of the share decided by the companies who
sought amalgamation, came to be dismissed.
2. The appeal came to be admitted by the Coordinate Bench
of this Court and the implementation of the impugned judgment
came to be stayed.
3. Several writ petitions were filed involving the same issue
before the learned Single Judge and were pending for hearing.
The Division Bench, therefore, directed to tag all the writ
petitions along with the present appeal and accordingly the
group of matters have been finally decided today.
4. At the outset, Mr. Saurabh Soparkar, learned Senior
Advocate appearing for the appellant has placed the Common
CAV Judgment dated 10.2.2023 passed by the Full Bench of this
Court (Coram: Hon'ble the Chief Justice Mr. Aravind Kumar,
Hon'ble Mr. Justice Ashutosh Shastri and Hon'ble Ms. Justice
Nisha M. Thakore) in Stamp Reference No.1 of 2020 and allied
references and would submit that the issue involved in the
present group of matters have already been settled against the
State authority and has held that the stamp duty would be
C/LPA/125/2020 JUDGMENT DATED: 06/03/2023
levied only upon face value of a share and cannot be levied on
premium price of the share on the date of amalgamation. He has
taken us to the judgments and discussion about the issues
decided by the Full Bench of this Court. By taking us through
paragraphs 87 and 91, he would submit that the case in each
matter including the writ petitions is squarely covered and,
therefore, the appeal is required to be allowed and the
judgment passed by the learned Single Judge is required to be
quashed and set aside, whereas the writ petitions which are
tagged with the present appeal are required to be allowed and
the order passed by the authority asking the petitioner to pay
the stamp duty treating the share price including the premium
as a face value is required to be quashed and set aside and if
any amount is paid towards demand shall be refunded.
5. On the other hand, Mr. Chintan Dave, learned AGP
appearing for the State tried to argued the matter and opposed
the grant of relief. However, as submitted by Mr. Dave, the
issue involved in the group of matters is already answered.
6. We have heard learned advocates appearing for the
C/LPA/125/2020 JUDGMENT DATED: 06/03/2023
respective parties.
7. The issue involved in the group of matters is whether to
levy stamp duty on the price of the share on the date of
amalgamation of the companies and what would be the face
value of a share upon which the stamp duty is required to be
paid.
8. The said levy of stamp is covered under Explanation-III (c)
of Article 20 of Schedule-I of the Gujarat Stamp Act. Article 20
is reproduced hereinbelow:
Article Description of instrument Proper stamp
duty
20 (d) CONVEYANCE [Subject to
maximum twenty
[so far as it relates to the five crores
scheme, for reconstruction of rupees] -
the company or companies
involving merger or the (i) an amount
amalgamation of any two or equal to [one per
more companies by an order cent] of the
of the National Company aggregate
Law Tribunal under section amount
232 of the Companies Act, comprising of the
2013 (18 of 2013) or for market value of
amalgamation or dissolution share issued or
of Banking Companies by an allotted in
order of the Reserve Bank of exchange of or
India under section 44A of otherwise, or the
the Banking Regulation Act, face value of
1949 (10 of 1949)] such shares,
whichever is
C/LPA/125/2020 JUDGMENT DATED: 06/03/2023
[Explanation I - For the higher and the
purpose of this Article [and amount of
subject to sub-item (a) of consideration, if
item (ii) of clause (f) of any, paid for
article 45], an agreements to such
sell an immovable property amalgamation, or
or an irrevocable power of
attorney shall, in case of (ii) an amount
transfer of the possession of equal to [one
such property before, at the percent] of the
time of, or after the true market
execution of such agreement value of the
or power of attorney, be immovable
deemed to be a conveyance property situated
and the stamp duty thereon in the State of
shall be chargeable Gujarat of the
accordingly: transferor
company
Provided that the provisions whichever is
of section 32 - A shall apply higher.]
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
C/LPA/125/2020 JUDGMENT DATED: 06/03/2023
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]
[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
C/LPA/125/2020 JUDGMENT DATED: 06/03/2023
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.
9. It is not in dispute that in each case, the transferor and the
transferee companies are not listed in any stock exchange and,
therefore, Explanation III to Sub-Article (c) of Article 20
would be applicable.
10. In paragraph 87, the Full Bench has observed as
under:
"87. Turning our attention back to the article in
issue viz. Article 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
C/LPA/125/2020 JUDGMENT DATED: 06/03/2023
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;""
11. Ultimately, it has been specifically held in paragraph
91 that when there is no express provision of word
'premium', stamp duty would be leviable excluding the
premium price of the share. Accordingly, we answered in
paragraph 92. Paragraphs 91 and 92 of the said judgment
C/LPA/125/2020 JUDGMENT DATED: 06/03/2023
read as under:
"91. In the aforesaid analysis, we are of the considered
view that the word 'premium' attached to the share cannot
be read as part 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. adjudicatio
n
1 2/2020 & Que. No.1 In view of explanation III (c) to
1/2021 Article 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
7/2020 and 5 share of transferee company
issued under the scheme
approved by the Company
C/LPA/125/2020 JUDGMENT DATED: 06/03/2023
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 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.
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.
C/LPA/125/2020 JUDGMENT DATED: 06/03/2023
12. In view of the aforesaid findings by the Full Bench of
this Court which is binding to the Division Bench, we are
of the opinion that the appeal is required to be allowed.
The judgment dated 20.12.2019 passed by the learned Single
Judge in Special Civil Application No.14597 of 2019 is
accordingly quashed and set aside. Rest of the writ petitions
which have been tagged with the appeal as per the order passed
by the earlier Full Bench are required to be considered and are
accordingly allowed. The orders challenging in each petition are
hereby quashed and set aside.
13. The amounts which have been deposited by any of the
petitioners as per the price decided by the stamp authority
established under the Stamp Act are hereby refunded within a
period of six weeks from the date of receipt of this judgment.
Appeal is allowed accordingly.
(A.J.DESAI, ACJ)
(BIREN VAISHNAV, J)
Bharat
