The Supreme Court in view of the facts of the matter analyzed the Sale of Goods Act, 1930 [SGA] and ISA and held that, the true and real meaning of a document needs to be ascertained to answer whether a contract for sale of movable property amounts to conveyance, and if yes, whether stamp duty is chargeable.
The Supreme Court held that the essence of sale is the transfer of the property in a thing from one person to another for a price. As per Section 4 of the SGA, the contract of sale includes an agreement to sell and it may be absolute or conditional. The essential feature that distinguishes a contract of sale from an agreement to sell is that in a contract of sale the property in the goods is transferred from the seller to the buyer immediately whereas in an agreement to sell, the property is transferred at a future date. Further, an agreement to sell becomes a sale on fulfillment of the conditions of the agreement or when the time provided lapses.
Under Sec. 2(10) of ISA, inter alia, every document by which movable property is transferred is ‘conveyance’. In a contract, if all the essential conditions of transfer of movable property are transferred, and it amounts to conveyance within the meaning of the said Sec 2(10) it is chargeable to stamp duty under Article 23 if there is no exemption from payment of stamp duty under Article 62 of ISA.
