Full Judgment Text
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CASE NO.:
Appeal (civil) 3707 of 1990
PETITIONER:
HANUMAN VITAMIN FOODS PVT. LTD. & ORS.
Vs.
RESPONDENT:
THE STATE OF MAHARASHTRA & ANR.
DATE OF JUDGMENT: 20/07/2000
BENCH:
M.B. Shah & S.N. Variava.
JUDGMENT:
S. N. VARIAVA,J.
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This Civil Appeal is against the Judgment dated 16/17th
February, 1989. The questions raised in this Appeal are:-
(a) whether transfer of shares in a Co-operative Society is
subject to levy of stamp duty under the Bombay Stamp Act,
1958 and (b) whethe r the State Legislature has legislative
competence to levy stamp duty on transfer of shares.
Briefly stated the facts are as follows: The 1st
Appellant was a member of Dalamal Tower Promises
Co-operative Society Ltd. As such member the 1st Appellant
was the holder of 5 shares each bearing distinctive Nos.
711 to 715. As such member the 1st Appellant was in
occupation of office premi es No. 904 on the 9th floor of
the building known as Dalamal Tower situated at 211, Nariman
Point, Bombay 400 021. By an Instrument dated 31st March,
1986 the 1st Appellant transferred in favour of Appellants
Nos. 2, 3, 4, 5 and 6 the said 5 shares fo a consideration
of Rs. 9,46,900/-. The said Instrument of Transfer, inter
alia, set out that the Dalamal Tower Premises Co-operative
Society Ltd. was the owner of the building Dalamal Tower;
that the 1st Appellant was a member of the said society hold
ng the said 5 shares; that one of the incidents of
membership was that the member had a right to occupy
specific Office premises in the building Dalamal Tower and
as such the 1st Appellant had a right to occupy premises No.
904 on the 9th floor of the Da amal Tower, which Office
premises admeasured 557 Sq. ft. of built up area. The
Instrument went on to state that for a consideration of Rs.
9,46,900/- paid by the transferees to the transferor, the
transferor transferred the said 5 shares to the transfer es
and that the transferees accepted the said shares.
By a letter dated 23rd April, 1986 the Advocates of the
1st Appellant forwarded the instrument of transfer to the
Superintendent of Stamps for adjudication under the
provisions of Bombay Stamp Act, 1958. In the said letter
the Advocates stated that, in their opinion, the instrument
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of transfer was wholly exempted from duty, but that it was
sent for adjudication by way of abundant caution. By a
reply dated 22nd May, 1986 the Superintendent of Stamps
informed the Advocates for the 1st Appellant that t e
document for adjudication was a conveyance of property
chargeable with stamp duty under Article 25(b)(i) of the
Bombay Stamp Act on the present market value of the said
property. By the said Letter the Superintendent of Stamps
requested for details r garding premises No. 904 in Dalamal
Tower and also called for a valuation report and other
relevant documents.
The Appellants, therefore, filed Writ Petition 1820 of
1986 in the High Court of Judicature at Bombay to have the
said letter quashed. They also sought directions against
the Superintendent of Stamps and the State of Maharashtra to
desist and forbear fr m charging, demanding or recovering
stamp duty on the said form of Transfer of shares, or from
proceeding on the basis that the form of Transfer of shares
was not duly stamped and, thus, liable to be impounded. The
Appellants contended that the instrum nt of transfer was a
document transferring the shares held in a body corporate
and was thus not within the purview of the Bombay Stamp Act,
1958. They also contended that the levy of stamp duty on
transfer of shares in a co-operative society fell exclu
ively within Entry 91 of List I of the Seventh Schedule to
the Constitution of India. The Appellants contended that it
was beyond the legislative competence of the State as it did
not fall within Entry No. 63 of List II of the Seventh
Schedule to the Co stitution of India.
By the impugned Judgment dated 16/17th February, 1989,
the Petition was dismissed on the ground that the instrument
of transfer amounted to a conveyance of property and was
chargeable with stamp duty under Article 25(b)(i) of the
Bombay Stamp Act, 1958. By the said Judgment the argument
regarding lack of legislative competence was also rejected.
The question whether or not a transfer of shares in a
Co-operative Society is subject to levy of stamp duty on the
basis that it is a conveyance has already been answered by
this Court in the case of Veena Hasmukh Jain and Another v.
State of Maharashtr a and Ors., reported in (1999) 5 SCC
725. In this case it has already been held that such
agreements would be covered by Article 25 of the Bombay
Stamp Act, 1958. It is held that stamp duty would be
leviable as if it is a conveyance. This Court has h ld that
these are in effect agreements to sell immovable property as
the possession of such property is transferred to the
purchaser before or at the time of or subsequent to the
execution of the agreement. It is held such an agreement to
sell must be d emed to be a Conveyance. It is fairly
conceded that this Judgment fully covers question (a) set
out hereinabove.
As question (a) is already answered by the above
mentioned Judgment in Veena’s case, in our view, question
(b) does not survive. As seen above stamp duty is sought to
be levied under Article 25, Schedule I of the Bombay Stamp
Act. The stamp duty is be ing levied not on transfer of
shares but on the basis that the agreement is a conveyance.
There is no dispute that there is legislative competence in
the State Government to levy stamp duty on a conveyance of
property. Question No. (b) has been raised n the footing
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that the instrument of transfer is a form of transfer of
shares. Now that it is held that such an instrument is not
an instrument of transfer of shares, but it is, in fact, a
conveyance question (b) no longer survives.
In this view of the matter, the Appeal does not survive.
The same stands dismissed. There will be no order as to
costs.