The lack of a fixed time limit for adjudication of applications for proper stamp duty under the provisions of the Indian Stamp Act, 1899 (“Act”) often results in inordinate delays in stamping of instruments. In a judgment that will exponentially expedite the process of adjudication, the Delhi High Court (“Delhi HC”) has now opined that the Collector of Stamps shall communicate to the parties the proper stamp duty within 30 days of the date of the application.
In the matter of Uno Mida Limited v Deputy Commissioner, Revenue Department (“Uno Mida”)and Reebok India Company v Govt of NCT of Delhi & Ors (“Reebok India”), the Delhi HC observed that a reasonable period ought to be fixed for adjudication of application for proper stamp duty by the Collector of Stamps to afford individuals some certainty with respect to the payable stamp duty.
Uno Mida Ltd. (“Petitioner”) applied to the Divisional Commissioner, Revenue Department, Government of National Capital Territory of Delhi (“GNCTD”) seeking adjudication of stamp duty applicable to the composite scheme of amalgamation under the Act. The scheme of amalgamation, which had been approved by the National Company Law Tribunal on February 1, 2021, was sought to be stamped and registered by the Petitioner, in pursuance of which an application was made for the same on January 13, 2022. However, even till April 2023, the Petitioner had not been intimated regarding the amount of stamp duty payable in relation to the scheme.
In the connected matter of Reebok India, an application for issuance of stamp paper for share certificates was made on January 25, 2022, but the Deputy Commissioner had failed to issue the challans to purchase the stamp duty to be paid for the share certificates despite repeated requests. This resulted in Reebok not being able to discharge its obligation under Section 56(4) of the Companies Act, 2013 (“Companies Act”).
Observations by the Delhi HC
- In both the cases, the instruments did not have a pre-determined stamp duty, and the Collector of Stamps was approached under Section 31 of the Act for calculation of payable stamp duty on the said instruments.
- Although there is a fixed time period under Section 32 of the Act within which the documents have to be brought in for stamping, no time limit has been fixed under the Act for adjudication of stamp duty or informing the party of the stamp duty chargeable.
- However, there are statutes which lay down timelines for registration of important documents. Section 56 of the Companies Act, 2013, provides that an instrument for transfer of securities cannot be registered unless stamped, dated and executed. By virtue of Section 56(4) of the Companies Act, the said transmission is required to take place within a period of two months from the date of allotment/date of incorporation.
- Further, Entry 331 of Section 3 of the Delhi (Right of Citizen to Time Bound Delivery of Services) Act, 2011 (“Delhi Act, 2011”) provides a time limit of 15 days for registration of documents like sale deed, will, conveyance deed, etc., indicating there is expectation of time bound delivery on part of the citizens.
- Additionally, Entry 331 reflects the intention of registration of documents within a time frame of 15 days even where stamp duty has not been prescribed. Moreover, unnecessary delay in adjudication of stamp duty would also be opposed to public interest since it is an important source of revenue for the State.
- The Delhi HC observed that payment of stamp duty is also the first step towards registration of important documents upon which various individuals and companies depend. In light of the above-mentioned circumstances, a time limit for such adjudication of stamp duty was thought to be imperative.
It was held that the Collector of Stamps would be required to adjudicate on stamp duty chargeable under Section 31 of the Act within 30 days of the application. Furthermore, this period can be extended up to a maximum of three months from the date of application in case of extraordinary circumstances. Further, the HC also recommended that the Chief Secretary, GNCTD may add a specific entry in the Delhi Act, 2011 laying down a reasonable time limit for adjudication of stamp duty payable. Until such addition is made to the statute, the timeline of 30 days shall be followed.