What is the timeline for Revenue Department to determine stamp duty on mergers and debenture conversions in Delhi?

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Shubham Budhiraja[1]

In case-1, Scheme of amalgamation approved by the NCLT. Thereafter, application was made to Divisional commissioner, Revenue Department, GNCTD seeking adjudication of stamp duty but till date stamp duty payable has not been adjudicated. Hence, writ petition filed seeking directions to the commissioner for adjudication of stamp duty.

In case-2, company has converted debentures into shares. It seeks issuance of stamp paper for share certificate. But despite requests, the commissioner till date has not issued any challan for purchase of stamp paper. Because of this, company is unable to comply section 56(4) of the companies act, 2013. i.e. delivery of share certificate within prescribed time. 

Because in both case-1 & case-2, the scheme of stamp duty & debenture conversion deed, there is no pre-determined stamp duty, therefore application was filed under section 31 of Indian stamp act, 1899 for adjudication of proper stamp duty.

Hon’ble Delhi High Court held that[2]:

(i)                 If an instrument has been executed in India, the same would have to be brought for stamping within one month and in case the document is executed abroad, the same have to be brought for stamping within three months. However, insofar as adjudication as to proper stamp is concerned, there is no time limit which has been fixed under Section 31 of the Indian Stamp Act, 1899.

 

(ii)                Under Section 56 of the Companies Act, 2013 the company cannot register the transfer of securities unless the instrument of transfer is duly stamped, dated, and executed. Section 56(4) requires the said transmission to take place within a period of two months from the date of allotment or from the date of incorporation. In the case of allotment of debentures the time limit fixed is six months.

 

(iii)              Delhi (Right of Citizen to Time Bound Delivery of Services) Act, 2011 (hereinafter, ‘Delhi Act, 2011’) also recognizes the need for registration of documents, granting of licenses, etc., within prescribed time periods in the National Capital Territory of Delhi. Entry 331 of the schedule to the Delhi Act, 2011, has fixed a time limit under Section 3 for registration of documents.

 

(iv)              Entry 331 clearly gives the intention of registering documents within 15 days even in case of documents where stamp duty is not prescribed. The Delhi Act, 2011 must be implemented in letter and spirit in the National Capital Territory of Delhi. Moreover, stamp duty is also an important source of revenue for the State Government unnecessary delay in the adjudication of the proper stamp duty would also not be in public interest.

 

(v)                Since the activities of individuals and companies would be depended upon various documents, instruments of transfer, etc., and the first step would be to seek adjudication of the stamp duty under Section 31 of the Indian Stamps Act, 1899, a time limit would be required to be followed by the Collector of Stamps for the said adjudication.

 

(vi)              Thus, reasonable time ought to be fixed in order to enable the parties to have some certainty as to the stamp duty payable. Accordingly, it is directed that the Collector of Stamps shall usually adjudicate the stamp duty payable and communicate the same to parties within 30 days.

 

(vii)             However, if the same involves any complexity/ extraordinary circumstances, the adjudication of stamp duty can be extended for a maximum period of three months from the date of application.


[1] Advocate, Delhi High Court [LLB, ACS, BCOM(H)], Budhirajalawchambers@gmail.com , +91-9654055315

[2] Neutral citation - 2023: DHC:3094

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