Amendments To Maharashtra Stamp Act: An Effort To Improve Income – Finance and Banking

Amendments To Maharashtra Stamp Act: An Effort To Increase Revenue - Finance and Banking


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Amendments To Maharashtra Stamp Act: An Effort To Improve Income


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The Authorities of Maharashtra (GoM) has by the Maharashtra Stamp
(Modification and Validation) Ordinance 2021 (Ordinance) amended
Part 5 (Devices Referring to Distinct Issues), Article 6
(Settlement Referring to Deposit of Title Deeds, Pawn, Pledge or
Hypothecation) and Article 40 (Mortgage Deed) of Schedule I of the
Maharashtra Stamp Act, 1958 (Maharashtra Stamp Act). The Ordinance
has been particularly promulgated to make clear and reinforce the
judgment of the Hon’ble Supreme Court docket of India within the matter
of Chief Controlling Income Authority v Coastal Gujarat Energy
Restricted
(Civil Attraction No. 6054 of 2015) dated 11
August 2015 (Coastal Gujarat Judgment) and is in continuation of
the round issued by the Workplace of the Inspector Basic of
Registration and Controller of Stamps of the Authorities of
Maharashtra dated 28 September 2015 (GoM Round).

To reiterate, within the Coastal Gujarat Judgment, the Hon’ble
Supreme Court docket of India interpreted the expressions ‘distinct
issues’ and ‘distinct transactions’ as showing
in Article 5 of the Gujarat Stamp Act, 1958 (Gujarat Stamp Act) and
had successfully laid down the precept to look by way of the
underlying transactions to find out the stamp obligation incidence.

The GoM Round was issued to the related registration
authorities within the state of Maharashtra to tell them of the
Coastal Gujarat Judgment and advise them to gather applicable
stamp obligation in circumstances the place beneficiaries are consortium of banks
underneath a mortgage deed.

The important thing amendments to the Maharashtra Stamp Act caused by
the Ordinance are as follows:

  • Modification to Part 5: The
    Ordinance has inserted the expression ‘or transactions’
    after ‘a number of distinct issues’ as showing in
    Part 5 of the Maharashtra Stamp Act. The Bombay Excessive Court docket in
    the matter of Navi Mumbai SEZ Non-public Restricted v The State of
    Maharashtra & Ors
    (Writ Petition No. 8014 of
    2019)
    held that the phrase ‘distinct issues’ is
    equal to the phrase ‘distinct transactions’. The
    amendments caused by the Ordinance are clarificatory in
    nature however deliver to finality the GoM Round which was being
    applied in an advert hoc method throughout the state. This modification is
    relevant with retrospective impact and is deemed to be efficient
    since 11 August 2015 (the date of the Coastal Gujarat Judgment).
    With this modification, Part 5 of the Maharashtra Stamp Act is in
    line with Part 5 of the Gujarat Stamp Act – each states
    at the moment are trying to stamp the underlying transactions as an alternative of the
    instrument particularly within the case of mortgage for a number of
    beneficiaries.

  • Modification to Article 6 of
    Schedule I
    : The Ordinance has elevated the stamp obligation payable
    on an settlement regarding deposit of title deeds, pawn, pledge or
    hypothecation the place the quantity secured exceeds INR 5 lakh from
    ‘0.2%’ to ‘0.3%’ topic to the present
    cap of INR 10 lakhs. This has been finished by amending column (2) of
    Article 6(1)(b) and Article 6(2)(b). The slight enhance within the
    proportion could not have any materials affect for securing quantities of
    increased loans, because the stamp obligation is anyway capped at INR 10
    lakhs. Additional, sub-clause (3) has been inserted to Article 6 to
    present for a stamp obligation of INR 500 for an instrument of further
    safety if executed underneath Article 6 and if full stamp obligation has
    been paid on the first safety. Accordingly, any instrument
    offering for added safety within the type of hypothecation or
    equitable mortgage shall be stamped for nominal quantity of INR 500
    if full stamp obligation i.e., upto INR 10 lakhs has been paid on the
    principal instrument. This modification has successfully aligned
    Article 6(3) of the Maharashtra Stamp Act to Article 40(c) of the
    Maharashtra Stamp Act, which stipulated nominal stamp obligation for
    mortgage deed for added safety or collateral.

  • Modification to Article 40(b) of
    Schedule I:
      The Ordinance has decreased the stamp obligation on
    a mortgage deed (not being, inter alia, an settlement
    regarding deposit of title deeds, pawn, pledge or hypothecation
    (underneath Article 6)), the place possession of the topic property is just not
    given or agreed to be given from ‘0.5%’ to
    ‘0.3%’ topic to the present cap of INR 10 lakhs.
    Once more, the slight lower within the proportion could not have any
    materials affect for securing quantities of upper loans, because the
    stamp obligation is anyway capped at INR 10 lakhs.

  • Validation of Proceedings:
    Clause 4 of the Ordinance particularly validates any actions
    initiated underneath the present Part 5 and Articles 6 and 40 in
    Schedule I of the Maharashtra Stamp Act. Additional, no swimsuit is
    maintainable for refund of the stamp obligation levied or
    collected. 

Conclusion

The GoM Round which directed the registration authorities to
implement the Coastal Gujarat Judgment within the state of Maharashtra
was being applied in an advert hoc method within the state and was additionally
challenged within the Navi Mumbai SEZ Non-public Restricted v The State
of Maharashtra & Ors
(Writ Petition No. 8014 of
2019)
. The Ordinance has eliminated all confusion, if any, on the
applicability of the Coastal Gujarat Judgment within the state of
Maharashtra. Nonetheless, because the Ordinance has been launched with
retrospective impact courting way back to 11 August 2015 (the date
of the Coastal Gujarat Judgment), it’s now to be seen how the GoM
will apply the Ordinance and whether or not the previous transactions coated
by the Ordinance would even be re-examined particularly the place the
mortgage paperwork have been adjudicated in compliance with
relevant regulation. The Ordinance and particularly the modification to
Part 5 of the Maharashtra Act could also be seen as a step taken by
GoM to extend the income of the state which already has a few of
highest stamp obligation charges within the nation.  

Initially Revealed by Khaitan & Co, February
2021

The content material of this doc don’t essentially mirror the
views/place of Khaitan & Co however stay solely these of the
writer(s). For any additional queries or observe up please contact
Khaitan & Co at legalalerts@khaitanco.com

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