TMI Blog2004 (8) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... of one fully paid Equity Share of the Company of the face value of Rs. 10 each at a price of Rs. 40 per share (including the premium of Rs. 30 per share) without any payment in cash 12 months after the date of allotment of Debentures." "Allotment Letters for the Debentures or Letters of Regret together with Refund Cheques or Pay Orders, if any, will be despatched at the Applicant s sole risk by Registered Post within Six Weeks from the last date stipulated for submission of Application(s) or within such further time as may be extended by the Stock Exchange at Bombay." "The Debenture Certificates will be ready for delivery within three months from the date of allotment or such other extended time as may be permitted by the Company Law Board, in exchange for allotment letters issued." It appears that the petitioner-company had received applications for 38,58,029 Fully Convertible Debentures aggregating to Rs. 15,43,21,160 which included the over-subscription amount. Finally, on 1-7-1991 the petitioner-company issued Letters of Allotment for 38,58,029 Fully Convertible Debentures. On 27-9-1991 the petitioner made an application to the Company Law Board for extension of time for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which the requisite stamp duty has already been paid. Mr. Toor contended that even the provisions of the Companies Act do not contemplate that if an allotment of a Fully Convertible Debenture is made, the company must necessarily issue a Fully Convertible Debenture Certificate. In this behalf, he has referred to the decision of a learned Single Judge of this Court (Bharucha, J.) (as His Lordship then was) in Om Prakash Berlia v. Unit Trust of India [1983] 54 Comp. Cas. 469 wherein the learned Judge has categorically held that there is no provision in the Companies Act contemplating that the company must necessarily issue a Fully Convertible Debenture Certificate which argument was rejected categorically. 5. Mr. Toor thereafter brought to our notice the provisions of the Bombay Stamp Act, 1958, especially section 2( d ) which defines the word "chargeable" which means, as applied to an instrument, executed or first executed after the commencement of the said Act, chargeable under the said Act, and as applied to any other instruments, chargeable under the law in force in the State when such instrument was executed or, where several persons executed the instrument at differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same view has been reiterated. If there is no instrument or document, then there is no question of levy of any stamp duty. Therefore, the contention of the learned counsel for the petitioner is that the duty is leviable only upon an instrument or a document and not on a transaction. On similar lines, even a Full Bench of the Andhra Pradesh High Court in A. Bapiraju v. District Registrar, Registration and Stamps, Srikakulam AIR 1968 AP 142 has also held clearly that the duty is liable to be paid on an instrument and not on a transaction. In these circumstances, the learned counsel for the petitioner has strongly contended that the demand raised by the respondents in their letter dated 2-6-1992 demanding Rs. 15,43,212 with regard to the purported Fully Convertible Debentures is totally unsustainable in law, inasmuch as no such Fully Convertible Debenture Certificates had ever been issued by the petitioner-company. In fact, on the expiry of 12 months, the company had converted the aforesaid Fully Convertible Debentures into shares and had issued the necessary Share Certificates and the petitioner had paid fully the requisite stamp duty payable thereon. 10. Mr. Belosey, lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner had calculated the duty payable at Rs. 6,01,594. However, respondent No. 2, Superintendent of Stamps, pointed out that the duty payable would be Rs. 7,13,000 and not Rs. 6,01,594. The difference of Rs. 1,11,406 was demanded by the respondent Superintendent by letter dated 5-2-1992. The petitioner had duly paid the aforesaid amount of Rs. 1,11,406 with regard to the same. There is also no dispute that the petitioner has fully paid the stamp duty with regard to the Share Certificates issued regarding Partly Convertible Debentures and also there is no dispute that as far as the balance Non-Convertible Debenture part is concerned, the same works out to Rs. 7,13,000 which duty was also duly paid. However, the respondents are demanding a sum of Rs. 6,23,875 being the duty payable with regard to the Partly Convertible Debentures. Mr. Mehta, learned counsel for the petitioner, pointed out that as far as the Non-Convertible Debentures are concerned, i.e. , part B being the Non-Convertible part of the face value of Rs. 45, the entire stamp duty of Rs. 7,13,000 has already been paid. As far as the Partly Convertible Debentures of the face value of Rs. 45 each is concerned, the requisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed. It is not the transaction of purchase and sale which is struck at; it is the instrument whereby the purchase and sale are effected which is struck at. And if anyone can carry through a purchase and sale without an instrument, then the legislature have not reached that transaction. The next thing is that it as not every instrument which may be brought into being in the course of a transaction of purchase and sale which is struck at. It is the instrument "whereby any property upon the sale thereof is legally or equitably transferred". The taxation is confined to the instrument whereby the property is transferred. The transfer must be made by the instrument. If a transfer requires something more than an instrument to carry it through, then the transaction is not struck at, and the instrument is not struck at because the property is not transferred by it." Mr. Mehta, therefore, contended that the above judgment makes it abundantly clear that stamp duty is leviable only upon an "instrument" and not on a "transaction". 12. Mr. Mehta, thereafter, pointed out that the Supreme Court has very recently in Hindustan Lever v. State of Maharashtra [2004] 9 SCC 438 1. has referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Partly Convertible Debentures." Mr. Nair contended that this would indicate that the company has contemplated to issue Partly Convertible Debentures. However, Mr. Nair fairly conceded that the company has actually not issued any Partly Convertible Debenture Certificates. Mr. Nair s contention is that this indicates the intention of the petitioner-company to issue Partly Convertible Debenture Certificates for which they are liable to pay separate stamp duty, in addition to the stamp duty already paid on the Equity Share Certificates which were converted. 14. Having considered all the submissions of the learned counsel for the petitioners as well as the learned counsel appearing for the respondents in both the above matters, the basic issue involved in the above petitions is that whether the respondent-State could demand stamp duty de hors an instrument and only out of a transaction. After having perused the relevant provisions of law as mentioned hereinabove, it is abundantly clear that the State of Maharashtra is entitled to levy stamp duty only on the instrument and not on the transaction. It is also clear that there is no law which compels the petitioners to issue a Debent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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