Vitamin Foods Pvt. Ltd. & Ors Vs. The State of Maharashtra & ANR 
INSC 367 (20 July 2000)
Shah, J. & S.N. Variava, J. S. N.
Civil Appeal is against the Judgment dated 16/17th February, 1989. The questions raised in this Appeal are:- (a)
whether transfer of shares in a Co-operative Society is subject to levy of
stamp duty under the Bombay Stamp Act, 1958 and (b) whether the State
Legislature has legislative competence to levy stamp duty on transfer of
shares. Briefly stated the facts are as follows: The 1st Appellant was a member
of Dalamal Tower Promises Co- operative Society Ltd. As such member the 1st
Appellant was the holder of 5 shares each bearing distinctive Nos. 711 to 715.
As such member the 1st Appellant was in occupation of office premises No. 904
on the 9th floor of the building known as Dalamal Tower situated at 211, Nariman
Point, Bombay 400 021. By an Instrument dated 31st March, 1986 the 1st
Appellant transferred in favour of Appellants Nos. 2, 3, 4, 5 and 6 the said 5
shares for a consideration of Rs. 9,46,900/-.
said Instrument of Transfer, inter alia, set out that the Dalamal Tower
Premises Co-operative Society Ltd. was the owner of the building Dalamal Tower;
that the 1st Appellant was a member of the said society holding the said 5
shares; that one of the incidents of membership was that the member had a right
to occupy specific Office premises in the building Dalamal Tower and as such
the 1st Appellant had a right to occupy premises No. 904 on the 9th floor of
the Dalamal Tower, which Office premises admeasured 557 Sq. ft. of built up
area. The Instrument went on to state that for a consideration of Rs.
9,46,900/- paid by the transferees to the transferor, the transferor
transferred the said 5 shares to the transferees and that the transferees
accepted the said shares.
letter dated 23rd April, 1986 the Advocates of the 1st Appellant forwarded the
instrument of transfer to the Superintendent of Stamps for adjudication under
the provisions of Bombay Stamp Act, 1958. In the said letter the Advocates
stated that, in their opinion, the instrument of transfer was wholly exempted
from duty, but that it was sent for adjudication by way of abundant caution. By
a reply dated 22nd May, 1986 the Superintendent of Stamps informed the
Advocates for the 1st Appellant that the document for adjudication was a
conveyance of property chargeable with stamp duty under Article 25(b)(i) of the
Bombay Stamp Act on the present market value of the said property. By the said
Letter the Superintendent of Stamps requested for details regarding premises
No. 904 in Dalamal Tower and also called for a valuation report and other relevant
Appellants, therefore, filed Writ Petition 1820 of 1986 in the High Court of
Judicature at Bombay to have the said letter quashed.
They also sought directions against the Superintendent of Stamps and the State
of Maharashtra to desist and forbear from charging, demanding or recovering
stamp duty on the said form of Transfer of shares, or from proceeding on the
basis that the form of Transfer of shares was not duly stamped and, thus,
liable to be impounded. The Appellants contended that the instrument of
transfer was a document transferring the shares held in a body corporate and
was thus not within the purview of the Bombay Stamp Act, 1958. They also
contended that the levy of stamp duty on transfer of shares in a co- operative
society fell exclusively within Entry 91 of List I of the Seventh Schedule to
the Constitution of India. The Appellants contended that it was beyond the
legislative competence of the State as it did not fall within Entry No. 63 of
List II of the Seventh Schedule to the Constitution of India.
impugned Judgment dated 16/17th February, 1989, the Petition was dismissed on
the ground that the instrument of transfer amounted to a conveyance of property
and was chargeable with stamp duty under Article 25(b)(i) of the Bombay Stamp
Act, 1958. By the said Judgment the argument regarding lack of legislative
competence was also rejected.
question whether or not a transfer of shares in a Co-operative Society is
subject to levy of stamp duty on the basis that it is a conveyance has already
been answered by this Court in the case of Veena Hasmukh Jain and Another v.
State of Maharashtra and Ors., reported in (1999) 5 SCC 725. In this case it
has already been held that such agreements would be covered by Article 25 of
the Bombay Stamp Act, 1958. It is held that stamp duty would be leviable as if
it is a conveyance. This Court has held that these are in effect agreements to
sell immovable property as the possession of such property is transferred to
the purchaser before or at the time of or subsequent to the execution of the
agreement. It is held such an agreement to sell must be deemed to be a
Conveyance. It is fairly conceded that this Judgment fully covers question (a)
set out hereinabove.
question (a) is already answered by the above mentioned Judgment in Veena's
case, in our view, question (b) does not survive. As seen above stamp duty is
sought to be levied under Article 25, Schedule I of the Bombay Stamp Act. The
stamp duty is being levied not on transfer of shares but on the basis that the
agreement is a conveyance. There is no dispute that there is legislative competence
in the State Government to levy stamp duty on a conveyance of property.
Question No. (b) has been raised on the footing that the instrument of transfer
is a form of transfer of shares. Now that it is held that such an instrument is
not an instrument of transfer of shares, but it is, in fact, a conveyance
question (b) no longer survives.
this view of the matter, the Appeal does not survive. The same stands
dismissed. There will be no order as to costs.