The Kerala High Court (Ernakulam Bench) has held that for deciding stamp duty liability in relation to amalgamation or de-merger, the relevant date is the date of the instrument or transaction, not the later date on which copies of court orders are sent to local authorities. Since the merger and de-merger in this case related to 2009 and 2012, and the amendments to the Kerala Stamp Act in 2016 and 2020 were not retrospective, those amendments could not be used to impose stamp duty on the petitioner’s past transactions.
In simple terms, the Court said the State cannot create a stamp duty liability for an old amalgamation or de-merger by relying on later amendments, especially when the law at the time of the transaction did not impose such duty. The Court accepted the petitioner’s case that the demand had been raised without considering the crucial dates and the non-retrospective nature of the amendments.
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A Single Judge Bench of Justice Harisankar V. Menon identified the core issue as whether the stamp duty demand raised was legally sustainable. The petitioner argued that stamp duty on amalgamation or reconstruction was brought into the Kerala Stamp Act only later and could operate only prospectively, whereas the relevant merger and de-merger had taken place in 2009 and 2012. The petitioner also contended that the crucial date is the date of execution of the instrument in question.
The Government Pleader argued that the definition of “conveyance” in Section 2(d) of the Kerala Stamp Act had been amended to include a deed of amalgamation. However, the Court noted that even this amendment came into force only on 13 November 2016, and the later amendment relied on by the petitioner came into force only from 1 April 2020. The Court clearly recorded that neither the 2016 amendment nor the 2020 amendment had retrospective operation.
The Court observed that the amalgamation and reconstruction in this case had already taken place and been approved by the Bombay High Court long before these amendments came into force. It also noticed that when mutation was first sought, the authorities themselves had not demanded stamp duty because the law at that time did not cover such transactions. According to the Court, the later transmission of the Bombay High Court orders to Kerala authorities could not itself become the basis for levying stamp duty, because the statute does not treat court orders as instruments attracting stamp duty in that manner.
Briefly, Zuri Hotels and Resorts challenged two orders issued by the Principal Sub-Registrar, Kottayam, which demanded stamp duty under the Kerala Stamp Act, 1959 on a merger and a de-merger involving the company, and also challenged the connected recovery proceedings initiated under the Kerala Revenue Recovery Act, 1968. The property originally belonged to Laguna Kumarakam Resorts Pvt Ltd., which had purchased about 6 hectares and 89.22 acres of land. In 2009, that company was amalgamated with Zuri Hospitality Pvt Ltd. under an order dated 31 March 2010 passed by the Bombay High Court, Goa Bench. Later, Zuri Hospitality Pvt Ltd. underwent a de-merger in relation to its Kerala business under another order dated 16 August 2012, through which the petitioner company came into the picture and sought fresh mutation of the property.
When mutation was sought earlier, the revenue authorities refused it on the ground that the merger and de-merger orders had to be registered under the Registration Act, 1908. That refusal was challenged before the Kerala High Court, and the Court had already held in earlier proceedings that such registration was not required, though the petitioner had to comply with the procedural requirement under Section 89(5) of the Registration Act. After the Bombay High Court directed that copies of the merger and de-merger orders be sent to the registering authorities in Kerala, the Sub-Registrar issued the impugned stamp duty demand of over Rs.2.01 crores.
