To Compute Stamp Duty For Sale Deed, Value Of Plant & Machinery Permanently Embedded To Land Must Be Determined- SC

A Supreme Court Bench of Justice KM Joseph and Justice Hrishikesh Roy has clarified the liability of stamp duty for a sale deed conveying immovable property, especially plant, and machinery. The Court has held that the value of plant and machinery which is permanently embedded to land has to be ascertained in order to compute the stamp duty for a sale deed.

Counsel Mahfooz A Nazki appeared for the appellants. Counsel Gopal Jha for the respondent side. Senior Counsel S Niranjan Reddy was appointed as Amicus Curiae. 

In this case, the Official Liquidator had executed a sale deed, conveying various assets. The case pertained to the determination of the stamp duty liability for the sale deed, particularly with regard to plant and machinery. 

The Apex Court analyzed the relevant provisions of the Indian Stamp Act, 1899 and a catena of judgments, to conclude that "distinct matters are dealt with in one instrument, viz., the sale deed in question. If different instruments had been executed purporting to convey land, building, plant and machinery, it would be the aggregate of the value of such matters, which would have exposed them to duty. If instead of separate instruments, distinct matters are made subject matter of one instrument, then, it would hardly matter and the liability to pay duty would be still found within the four walls of Section 5 of the Act". 

Subsequently, the Court analyzed the recitals and clauses of the sale deed and held that "where the property is land, all things attached to the earth. When the property is machinery attached to the earth, the movable parts thereof also are comprehended in the transfer". In furtherance, it was held that "The mere fact that there is no express reference to plant and machinery in the Recital Clause cannot mean that the interest in the plant and machinery which stood attached to the land, which was scheduled, was not conveyed to the first respondent. The value of, what was actually purchased, has been expressly set out in the Preamble to the sale deed".

The Court also took the opinion that it was the first respondent, who was the nominee of the second respondent and the actual vendee under the sale deed, was liable to pay the stamp duty. In furtherance, the Court observed that "the absence of the second respondent, may not affect passing of an order as against the first respondent, which, as the vendee, is the entity liable to bear the liability towards stamp duty".

Allowing the appeal, the Court ordered that "The second appellant will ascertain the value of plant and machinery on the basis of it answering the description of the immovable property as understood in law. The second appellant will also go into the question, whether the first respondent would be entitled to the benefit of the exemption of stamp duty, etc., as claimed while taking a decision and make available the exemption, if entitled in law. We make it clear that the second respondent cannot be made liable under this judgment". 

Cause Title: The Sub Registrar, Amudalavalasa & Anr. v. M/s Dankuni Steels Ltd. & Ors.

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