Adjudication in case of Stamp duty not paid on Share Certificate in Mumbai, Maharashtra

Adjudication in case of Stamp duty not paid on the Share Certificate in Mumbai, Maharashtra

Background

A company (Private as well as Public) is required to issue Share Certificates to it subscribers to memorandum in case of incorporation and to its shareholders in case of further allotment of shares within the given time line. However, there are many instances where a company fails to pay stamp duty within the given time line and faces difficulty to prove its authenticity this where the process of adjudication comes into the picture.

This article is to discuss about the process of adjudication to be followed by a company to pay stamp duty through adjudication.

Relevant Provisions

Section 3 of Indian Stamps Act 1899

As per Section 3 of Indian Stamps Act 1899, Share Certificate shall be chargeable with the specified amount of duty.

Section 17 of Maharashtra Stamp Act

There are certain presumptions which say that Stamp Duty shall be paid within 30 days of execution of the Instrument which is incorrect because as per Section 17 of Maharashtra Stamp Act “All instruments chargeable with duty and executed by any person in this State shall be stamped before or at the time of execution [or immediately thereafter] [on the next working day following the day of execution]”

This presumption possibly could also be a reason of not paying the stamp duty within the prescribed time limit.

Section 56(4) of the companies Act, 2013

Every Private and Public Company is required to issue Share Certificate to its Shareholder as per the time lines stated in the provisions of Section 56 (4) of the Companies Act, 2013:

1. within a period of two months from the date of incorporation, in the case of subscribers to the memorandum;

2. within a period of two months from the date of allotment, in the case of any allotment of any of its shares;

3. within a period of one month from the date of receipt by the company of the instrument of transfer or intimation of transmission in the case of a transfer or transmission of securities;

4. within a period of six months from the date of allotment in the case of any allotment of debenture.

Adjudication Process:

Whenever a company fails to pay stamp duty on the Share Certificate in the prescribed time limit it is required to make an offline application along with requisite documents to Collector of Stamps office based on the jurisdiction (as sated below) under which the registered office is situated for adjudication procedure.

Adjudication office in Mumbai

Keys Documents

• Application for Adjudication in given format;
• Application with court fee stamp of Rs. 5;
• Affidavit;
• Authority Letter;
• Original along with duplicate copy of the document which is the subject of adjudication;
• Copy of Resolution for allotment of shares;
• Copy of Resolution Authorizing person to make application of adjudication.

Fee Payable for Adjudication procedure

Fee of Rs. 100/- shall be paid as per Article 31 of Maharashtra Stamp Act through online GRAS portal.

Timeline for adjudication of stamp duty

Adjudication order to pay stamp duty normally comes in maximum of 45 days from the date of submitting of application along with fees and requisites documents.

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CS Isha J. Riwal – Mayank Padiya & Associates – Company Secretary in Practice based out at Mumbai.