Circular No.49282/P1/2018 dated 20.11.2018
The Office of the Inspector General of Registration, Chennai, issued Circular No.49282/P1/2018 dated 20.11.2018 to clarify stamp duty on property transfers that happen through company merger, amalgamation or reconstruction schemes under company law. It says that court orders or approved schemes that transfer property between companies are treated as conveyance instruments under the Indian Stamp Act, 1899, and registering officers must not register them unless it is clearly shown that the original instrument has been duly stamped.
What this circular is about
The Office of the Inspector General of Registration, Chennai, issued Circular No.49282/P1/2018 dated 20.11.2018 on stamp duty for transfer of property taking place under the Companies Act. It was issued because registering officers had doubts about whether schemes sanctioned by the High Court, or filed with competent authorities under the Companies Act, attract stamp duty when they are presented for registration.
What transactions it covers
Circular No.49282/P1/2018 dated 20.11.2018 covers schemes for merger, amalgamation or reconstruction of companies that provide for transfer of property from one company to another company.
It refers to two situations:
- schemes previously sanctioned by the High Court under the Companies Act, 1956
- schemes filed with competent authorities under the Companies Act, 2013
- documents presented before the concerned Sub Registrar for registration
Main clarification given
The Office of the Inspector General of Registration, Chennai, says judicial decisions make the legal position clear.
Key conclusions stated in Circular No.49282/P1/2018 dated 20.11.2018 are:
- a scheme of arrangement submitted by companies and sanctioned by the High Court, or registered by competent authorities, which evidences transfer of property, is classifiable under Article 23 of the Indian Stamp Act, 1899
- such a court order or scheme is treated as an instrument and as a conveyance for stamp duty purposes
- this applies where property is transferred between two companies under company law
Cases relied on
Circular No.49282/P1/2018 dated 20.11.2018 cites judgments of the Hon'ble Supreme Court of India, the High Court of Calcutta and the High Court of Delhi.
The points drawn from those judgments include:
- an order of court that transfers property is an instrument
- it can be liable to stamp duty because it conveys title in property
- it is not necessary that the decree or order must be based on consent for it to be treated as an instrument
- transfer between companies can still be treated as transfer of property between living persons because a company is included within that meaning
Who this affects
Circular No.49282/P1/2018 dated 20.11.2018 mainly affects:
- companies involved in merger, amalgamation or reconstruction
- people presenting such documents for registration
- Sub Registrars and other registering officers
Practical effect at registration
The Office of the Inspector General of Registration, Chennai, directs that:
- an instrument, or a copy of the instrument, presented for registration must not be registered unless it is unequivocally evident that the original instrument is duly stamped
- if the instrument is not duly stamped, it must be returned to the presentant
- the return must clearly explain the legal position through a check slip
- the presentant must be required to produce evidence that the original instrument has been duly stamped
This summary is generated from the source document to help you find what is relevant. The PDF above is authoritative. For advice on your own property, use LandLens One or speak to a qualified professional.
Common questions
If a company merger scheme transfers land or building, can it attract stamp duty?
Yes. Circular No.49282/P1/2018 dated 20.11.2018 says schemes under company law that evidence transfer of property between companies are classifiable as conveyance under the Indian Stamp Act, 1899 and are liable to stamp duty.
Will the Sub Registrar register a copy of a court approved company scheme without proof of stamping?
No. The Office of the Inspector General of Registration, Chennai, says such an instrument or copy must not be registered unless it is unequivocally evident that the original instrument is duly stamped.
What happens if the document presented for registration is not duly stamped?
Circular No.49282/P1/2018 dated 20.11.2018 says the instrument must be returned to the presentant with a check slip explaining the legal position, and the presentant must be asked to produce evidence that the original instrument has been duly stamped.
Does this apply only to old High Court sanctioned schemes, or also to schemes under the Companies Act, 2013?
It applies to both. The circular refers to schemes previously sanctioned by the High Court under the Companies Act, 1956 and schemes filed with competent authorities under the Companies Act, 2013.
