Introduction

A firm (Private or Public) is required to provide Share Certificates to its shareholders in the event that additional shares are allotted within the specified time frame and to its subscribers to the memorandum in the case of formation. However, there are several circumstances where a business misses the deadline for paying stamp duty and finds it difficult to demonstrate the document’s legitimacy. In these cases, adjudication becomes important.

Relevant Section

The stipulated amount of duty must be paid on Share Certificates in accordance with Section 3 of the Indian Stamps Act of 1899. According to Section 17 of the Maharashtra Stamp Act, “All instruments chargeable with duty and executed by any person in this State shall be stamped before or at the time of execution [or immediately thereafter] [on the next working day following the day of execution],” there are some presumptions that state that stamp duty must be paid within 30 days of the instrument’s execution. This is incorrect. This inference can also serve as an excuse for failing to pay the required amount of stamp duty by the deadline. Article 56(4) of the 2013 Companies Act Every private and public company must provide its shareholders with Share Certificates within the time frames outlined in Section 56(4) of the Companies Act, 2013: For subscribers to the memorandum, this means within two months of the date of incorporation; and for any allocation of shares, within two months of the date of allocation and within a period of one month from the date of receipt by the company of the instrument of transfer or intimation of transmission in the case of a transfer or transmission of securities.

Section 31: Adjudication as to proper stamp.

(1) When any document, whether executed or not, previously stamped or not, is brought to the Collector and the person bringing it requests the office’s opinion regarding the duty (if any), and pays [a fee of one hundred rupees], the Collector will decide the duty (if any), in his opinion, with which the document is chargeable.

(2) In order to prove that all the facts and circumstances affecting the chargeability of the instrument with duty, or the amount of the duty with which it is chargeable, are fully and accurately set forth therein, the Collector may require to be furnished with an abstract of the instrument, as well as with any affidavit or other evidence that he may deem necessary. The Collector may refuse to proceed with any such application until such an abstract and evidence have been furnished in accordance with his requirements.

(3) The Collector shall, for the purposes of assessing proper stamp duty payable thereon, determine the market value of such property by adhering to the procedure as prescribed by rules made by the Government of the Union territory of Jammu and Kashmir] in this regard when an instrument so brought to the Collector under subsection (1) relates to a transaction of immovable property on which stamp duty is chargeable on the basis of the market value of the subject of property.

(4)] The person responsible for paying the stamp duty [under Section 29] when an instrument is brought to the Collector for adjudication shall do so within sixty days of the date on which the demand in respect of the stamp duty adjudged by the Collector is served. If that individual doesn’t pay the required stamp duty within the allotted time, he will be required to pay a penalty equal to two times the amount of the deficient stamp duty, starting from the date the instrument was executed. 

(a) No evidence provided in accordance with this section may be used against anybody in any civil case, with the exception of a request for information about the duty to which the instrument to which it pertains;

(b) Every person by whom any such evidence is furnished shall, upon payment of the full duty with which the instrument to which it relates is chargeable, be relieved from any penalty which he may have incurred under this Act by reason of the omission to state truly in such instrument any of the foregoing facts or circumstances.

Adjudication Procedure 

If a company does not pay the required amount of stamp duty on a share certificate within the allotted time period, it must submit an offline application to the Collector of Stamps office in the jurisdiction (as listed below) in which the registered office is located for adjudication.

Fee Payable for Adjudication

Fee for the Adjudication Process According to Article 31 of the Maharashtra Stamp Act, a fee of Rs. 100/- must be paid via the GRAS website. Timetable for deciding on stamp duty Ordinarily, an adjudication order to pay stamp duty arrives 45 days or less after the application, fees, and necessary papers are submitted. Stamp duty must be paid in full and on schedule. Penalty might be a fee or even jail time. Delay in paying property stamp duty will result in a penalty of up to 200 percent of the deficit amount of the Stamp Duty, calculated at a rate of 2 percent per month on the deficit amount.

Case laws 

In the case of Hindustan Steel Ltd. v. Dilip Construction Company, the court determined that the Stamp Act was implemented as a fiscal tool to ensure revenue for the State on specific types of instruments. It is not intended to give a litigant a technical defence against the case of his adversary. The strict guidelines in the statute were designed with revenue in mind. The person staking his claim on the instrument will not be defeated on the basis of the initial flaw in the instrument once that object has been secured in accordance with the law.

In Javer Chand and Ors. v. Pukhraj Surana, the court decided that the first thing that needs to be done whenever an objection is made about the admission of a document as evidence on the grounds that it is not lawfully stamped is to address the objection. Therefore, stamping is critical to the effective execution of a contract or agreement, making it essential to pay the appropriate stamp duty on an instrument. In order to minimise long-term issues, both the state and the litigant benefit from paying the proper stamp duty. 

A document or tool’s incorrect stamping can have serious consequences. A document must be appropriately stamped in order to prevent unneeded delays. Since stamp duty is already required to be paid in addition to the price of the property and any changes to the rate, duty, or charges have an impact on the decision, there is significant discussion about reducing the costs.States make a sizable portion of their revenue from the stamp fee, thus efforts should be made to lower the costs so that more people and businesses may come in and have their documents legally witnessed. It is imperative for experts and practitioners to be aware of the stamp duty that is due and/or applicable in the states where the document is performed.

References

https://www.casemine.com/search/in/adjudication%2Bto%2Bproper%2Bstamp

https://www.doingbusinessinmaharashtra.org/Stamp_Duty_on_Transfer_Assets.aspx

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