Refund of Stamp Duty: Delay Beyond Control — Court Upholds Equity over Technicality.


03-September-2025 Civil Writ Petition >> Civil & Consumer Law   |   Taxation and Duty >> Property & Real Estate  

The matter originated from a Share Purchase Agreement (SPA) dated 13 July 2021 between the Petitioner and M/s. Dematic Holdings UK Limited, for transfer of shares worth over Rs. 585 crore. In compliance with the law, the Petitioner purchased e-Stamp papers and paid Rs. 1.17 crore as stamp duty to facilitate execution of the SPA.

Before this transaction, the Ministry of Commerce and Industry had issued Press Note No.3 of 2020, mandating that investments from entities of countries sharing land borders with India required prior government approval. Since the beneficial owner of Dematic Holdings UK fell under this category, the purchaser sought approval through the Foreign Direct Investment Facilitation mechanism. That application was subsequently rejected on 24 March 2022, rendering the SPA unenforceable and void-ab-initio.


 

 

Following this outcome, the Petitioner promptly filed an application for refund of the stamp duty on 22 September 2022. Nevertheless, the Inspector General of Registration and Controller of Stamps rejected the application on grounds that it was filed beyond the six-month limitation prescribed under Section 48 of the Maharashtra Stamp Act, 1958. The authority reasoned that since the Petitioner bought the stamp paper on 13 July 2021, the limitation period ended in January 2022, well before the refund request was lodged.

The Petitioner, through counsel, contended before the Court that the limitation clock could not begin from the date of stamp purchase because, until the government’s refusal on 24 March 2022, the SPA remained alive and enforceable. The cause of action for refund arose only upon rejection of approval, thus placing the delay entirely outside the Petitioner’s control. Denial of refund, it was argued, would amount to wrongful enrichment on the part of the State. Reliance was placed on multiple decisions of the Supreme Court and High Courts emphasizing equity, fairness, and the principle that the expiry of limitation may bar the remedy but not the underlying right.

On the other hand, the State argued that Section 48 prescribed a mandatory limitation period of six months, leaving no discretion for condonation, and that rights conferred by statute must be exercised strictly as per conditions attached.

The Court carefully examined Sections 47 and 48 of the Act and the precedents cited. It observed that the Stamp Act does not expressly exclude the applicability of Section 5 of the Limitation Act. More importantly, the Court noted that the Petitioner’s delay stemmed from pendency of government approval, a factor entirely beyond its control, and therefore could not justify penalization through forfeiture of duty. Reliance was placed on rulings such as Committee-GFIL v. Libra Buildtech and Rajeev Nohwar, wherein the Supreme Court held that delay occasioned by judicial or governmental processes cannot defeat a just claim of refund.

It was further held that even an incorrect reference to Section 47 by the Petitioner would not deprive it of legitimate entitlement to refund, for substance outweighs form. Technicalities of limitation cannot override principles of equity, justice, and fairness, nor can the State unjustly enrich itself by retaining duty for a failed transaction.

Consequently, the Court quashed the impugned order dated 9 October 2023 rejecting the claim. The Respondents were directed to refund Rs. 1,17,08,200/- to the Petitioner along with simple interest at 4% per annum, within a period of four weeks.

The writ petition was accordingly allowed, reaffirming the broader principle that limitation laws should not defeat substantive justice where delay is occasioned by circumstances beyond control of parties.


Section 47, BOMBAY STAMP ACT - 1958  

Section 48, BOMBAY STAMP ACT - 1958  

BOMBAY STAMP ACT, 1958  

Section 5, Limitation Act - 1963  

Limitation Act, 1963