State Of Maharashtra & Anr. Vs National Organic Chemical Industries Ltd. (Supreme Court of India)
This judgement will be helpful in dealing with similar issues under the new 2013 Act also and other stamp duty related matters.
An interesting question arose before the Supreme Court when the Respondent NOCIL increased its authorised capital once in the year 1992 and it paid the stamp duty as applicable. Thereafter in the year the stamp duty was capped at Rs 25 lacs. Thereafter when NOCIL again increased its authorised capital, it inadvertently deposited the stamp duty but later on claimed refund of the same in view of the capping provisions as above in the stamp act.
In SLP before Supreme Court, the Ld Judges analysed the nature of Form No 5 by holding that the same cannot be said to be an instrument under the stamp act as the purpose of Form No 5 was only to give information to ROC about the increase in authorised capital having already taken place by virtue of the resolutions passed as per the Act. The Instrument was Articles of Association and on such instrument the stamp as per the maximum limit had already been paid, no further duty could be demanded.
It is a settled position of law that in case of conflict between two laws, the general law must give way to the special law. A conjoined reading of the Stamp Act and the Companies Act would show that while the former governs the payment of stamp duty for all manner of instruments, the latter deals with all aspects relating to companies and other similar associations.
In the case at hand, we are concerned with an instrument which is chargeable to Stamp Duty and finds its origin in the Companies Act. The various provisions of the Companies Act provide the purpose and scope of the instrument. Thus, it has to be said that the Companies Act is the special law and the Stamp Act is the general law with regards to Articles of Association, and the special will override the general.
It is true that the amendment does not have retrospective effect, however since the instrument ‘Articles of Association’ remains the same and the increase was initiated by the respondent after the cap was introduced, the duty already paid on the same very instrument will have to be considered. It is not a fresh instrument which has been brought to be stamped, but only the increase in share capital in the original document, which has been specifically made chargeable by the Legislation.
If there is no specific provision for charging the increase, then no stamp duty is payable for any increase in the share capital of a company. In order to clarify, we may refer to a decision of the Delhi High Court in S.E. Investments Ltd. v. Union of India, 2011 SCC OnLine Del 1867.
The effect of adding “increased share capital” is that stamp duty will be charged on subsequent increases in the authorised share capital, subject to the maximum cap. In other words, the ceiling of Rs. 25 lakhs in Column 2 is applicable on Articles of Association and the increased share capital therein, not on every increase individually. In case stamp duty equivalent to or more than the cap has already been paid, no further stamp duty can be levied.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. The State of Maharashtra is in appeal before us challenging the order of the Division Bench of Bombay High Court dated 18.08.2009, which has allowed the writ petition of the respondent, while setting aside the order of the Deputy Superintendent of Stamps, Maharashtra (appellant no.2).
We have heard learned counsel Mr. Aniruddha Joshi for the appellants and learned senior counsel Ms. Madhavi Divan for the respondents.
2. National Organic Chemical India Ltd. (respondent) was incorporated with an initial share capital of Rs.36 crores. In 1992 it increased its share capital to Rs. 600 crores and accordingly paid a stamp duty of Rs.1,12,80,000/- as per Article 10 of Schedule-I of the Bombay Stamp Act, 1958 (hereinafter “Stamp Act”). At that time, the provision read as under:
