Bombay High Court | Refund Of Stamp Duty Cannot Be Denied Solely On Limitation | Sections 47 & 48 Maharashtra Stamp Act
Safiya Malik
The High Court of Bombay Single Bench of Justice Milind N. Jadhav held that the State cannot deny refund of stamp duty merely on the ground of limitation when the underlying transaction has failed due to reasons beyond the control of the parties. The Court quashed the order of the Inspector General of Registration and Controller of Stamps, Pune, which had rejected an application for refund of ₹1,17,08,200/– paid as stamp duty. The Court directed the State to refund the amount along with interest at 4% per annum within four weeks.
The matter arose out of a Share Purchase Agreement (SPA) dated 13 July 2021 executed between the petitioner company and M/s. Dematic Holdings UK Limited for transfer of equity shares worth ₹585,37,92,000/–. In compliance with Article 5(h-A)(iv) of the Maharashtra Stamp Act, 1958, the petitioner purchased e-stamp paper through an e-SBTR challan bearing GRN No. MH003566080202122S and paid ₹1,17,08,200/– as stamp duty.
On 17 April 2020, prior to the execution of the SPA, the Ministry of Commerce and Industry, Department for Promotion of Industry and Internal Trade, issued Press Note No. 3 (2020 series). This mandated that any investment by non-resident entities from countries sharing a land border with India, or where the beneficial owner of such investment is a citizen of such country, could only proceed through the Government approval route. As the ultimate beneficial owner of Dematic Holdings UK Limited fell within this category, the purchaser applied for approval under the Foreign Investment Facilitation mechanism by submitting Application No. 5825.
On 24 March 2022, the Ministry of Commerce and Industry rejected the application, rendering the SPA void ab initio and unenforceable. Subsequently, on 22 September 2022, the petitioner filed an application under Section 47(c)(1) of the Maharashtra Stamp Act seeking refund of the stamp duty.
The Inspector General of Registration and Controller of Stamps rejected the application on 9 October 2023, citing limitation under Section 48 of the Act. It was noted that the application was filed one year, two months, and nine days after purchase of the stamp paper, whereas Section 48 prescribes a limitation of six months.
Before the High Court, the petitioner contended that the application could not have been filed earlier as the SPA was rendered void only upon the rejection of approval on 24 March 2022. Counsel for the petitioner submitted that the rejection was beyond the petitioner’s control and delay in filing the refund application was caused by the Government process. It was argued that denial of refund would result in unjust enrichment by the State. Reliance was placed on several Supreme Court and High Court precedents including Committee – GFIL v. Libra Buildtech Pvt. Ltd. (2015) 16 SCC 31, Rajeev Nohwar v. Chief Controlling Revenue Authority, Maharashtra (2021) 13 SCC 754, and Bano Saiyed Parwaz v. Chief Controlling Revenue Authority (2024 SCC OnLine SC 979).
Conversely, the State submitted that the refund application was hopelessly barred by limitation under Section 48. It was argued that the statutory right of refund was subject to restrictions and conditions prescribed by law, including limitation. Reliance was placed on decisions such as Burmah Constructions Company v. State of Orissa (1961 SCC OnLine SC 26), Union of India v. VKC Footsteps (India) (P) Ltd. (2022) 2 SCC 603, and District Registrar and Collector, Hyderabad v. Canara Bank (2005) 1 SCC 312. The State contended that the SPA was not void ab initio but became unenforceable only upon rejection of Government approval, thereby excluding the applicability of Section 47(c)(1).
Justice Milind N. Jadhav recorded that the petitioner had indeed paid stamp duty in July 2021 but the SPA did not fructify due to Government rejection on 24 March 2022. The Court noted: “This rejection led to the SPA becoming unenforceable. The underlying transaction between parties did not go through and fructify. Hence the Refund Application could not have been filed within limitation of six months as prescribed under Section 48(3) of the said Act… This delay was beyond the control of Petitioner.”
The Court referred to Mool Chandra v. Union of India (2024 SCC OnLine SC 1878), stating: “It is not the length of delay that would be required to be considered while examining the plea for condonation of delay, it is the cause for delay which has been propounded which will have to be examined.”
Further citing Bano Saiyed Parwaz, the Court recorded: “When State deals with a citizen it should not ordinarily rely on technicalities and if the State is satisfied that the case of citizen is a just one, even though legal defences may be open to it, it must act as an honest person.”
Examining Sections 47 and 48 of the Maharashtra Stamp Act, the Court observed that although Section 48 prescribes a six-month period, the Act does not expressly exclude the application of Section 5 of the Limitation Act, 1963. The Court stated: “There is no provision conferring power of condonation to the Authority under the Act or any provision which states that power of condonation cannot be exercised after the extended period of limitation.”
The Court noted that the petitioner’s application, though styled under Section 47, substantively sought refund for a transaction rendered void beyond its control. It was observed: “Mere reference to an incorrect statutory provision cannot disentitle a citizen from a legitimate claim for refund, if otherwise such entitlement flows from the statute.”
Relying on Committee – GFIL v. Libra Buildtech Pvt. Ltd., the Court stated: “Even if we find that applications for claiming refund of stamp duty amount were rightly dismissed by the SDM on the ground of limitation… the expiry of period of limitation prescribed under any law may bar the remedy but not the right.”
The Court also referred to Rajeev Nohwar, noting: “It is well settled that a reference of a wrong statutory provision cannot oust the citizen of an entitlement to refund which otherwise follows in terms of a statutory provision.”
The Court quashed the order dated 9 October 2023 of the Inspector General of Registration and Controller of Stamps. The Court held: “Respondents are directed to refund the Stamp Duty amount of Rs.1,17,08,200/- to the Petitioner alongwith simple interest at the rate of 4% p.a. within a period of 4 weeks from today.”
The writ petition was accordingly allowed and disposed in these terms.
Advocates Representing the Parties
For the Petitioners: Mr. Mutahhar Khan a/w Ms. Kavisha Shah, Advocates i/by India Law Alliance
For the Respondents: Mr. Jay Sanklecha Advocate alongwith Ms. M.S. Srivastava, AGP
Case Title: Armstrong Machine Builders Private Limited v. State of Maharashtra through the Secretary, Ministry of Revenue and Anr.
Neutral Citation: 2025: BHC-AS:36925
Case Number: Writ Petition No. 8750 of 2024
Bench: Justice Milind N. Jadhav
