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Hanuman Vitamin Foods Pvt. Ltd. & Ors Vs. The State of Maharashtra & ANR [2000] INSC 372 (20 July 2000)

M.B. Shah & S.N. Variava.

S. N. VARIAVA,J.

L.I.T.J This 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) whethe r 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 premi es 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 fo a consideration of Rs. 9,46,900/-. The 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 hold ng 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 Da amal 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 transfer es and that the transferees accepted the said shares.

By a 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 t e 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 r garding premises No. 904 in Dalamal Tower and also called for a valuation report and other relevant documents.

The 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 fr m 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 instrum nt 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 exclu ively 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 Co stitution of India.

By the 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.

The 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 Maharashtr a 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 h ld 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 d emed to be a Conveyance. It is fairly conceded that this Judgment fully covers question (a) set out hereinabove.

As 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 be ing 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 n 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.

In this view of the matter, the Appeal does not survive.

The same stands dismissed. There will be no order as to costs.

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