Full Judgment Text
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PETITIONER:
HANUMAN VITAMIN FOODS PVT. LTD. & ORS.
Vs.
RESPONDENT:
THE STATE OF MAHARASHTRA & ANR.
DATE OF JUDGMENT: 20/07/2000
BENCH:
M B Shah, J. & S.N. Variava, J.
JUDGMENT:
S. N. VARIAVA,J.
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) whether
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 premises 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 for 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 holding 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 Dalamal 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 transferees 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 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 the 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 regarding premises No. 904 in Dalamal
Tower and also called for a valuation report and other relevant
documents.
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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 from
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 instrument 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 exclusively
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
Constitution 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
Maharashtra 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
held 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
deemed 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 being 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
on the footing 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.