Writ Petition Seeking Exemption Of Stamp Duty On Corporate De-Merger Misconceived; Parties Must First Approach Collector Under Sections 31 & 32 Indian Stamp Act: Punjab & Haryana High Court

"From perusal of Section 31 of the ibid Act, it is clearly decipher that any person can approach the Collector concerned appointed under the ibid Act, either before execution or after the execution, to seek his opinion, as to whether, the instrument requires affixation of duty (if any) with which it is chargeable." Relegating a corporate entity to statutory remedies under revenue law, the Punjab and Haryana High Court has ruled that a writ petition seeking adjudication on the chargeability of stamp duty upon assets transferred through a corporate de-merger is misconceived at the threshold, holding that the statutory adjudication mechanism provided under Sections 31 and 32 of the Indian Stamp Act, 1899 must be invoked before the competent Collector.

The petitioner, M/s Hydel Infraprojects Pvt. Ltd., approached the High Court under Articles 226/227 of the Constitution of India challenging an administrative communication dated August 10, 2021, and a reminder dated April 1, 2022, issued by the Municipal Corporation, Chandigarh, requiring the petitioner to obtain a 'No Objection Certificate' (NOC) for the change of leasehold rights and register the sub-lease deed. The Municipal Corporation opposed the plea, contending that the instrument of de-merger under the Companies Act was undervalued and subject to stamp duty in terms of the Supreme Court's precedent in Hindustan Lever v. State of Maharashtra, while the private respondents highlighted that an earlier civil suit for recovery of stamp duty filed by the transferee had already been dismissed.

Whether stamp duty is legally leviable upon the transfer of corporate assets pursuant to a scheme of de-merger and the incorporation of a successor entity?

Whether an assessee can directly invoke the writ jurisdiction of the High Court under Article 226 of the Constitution of India to determine stamp duty liability without exhausting the statutory machinery for adjudication before the Collector under Sections 31 and 32 of the Indian Stamp Act, 1899?

Justice Kuldeep Tiwari observed that whilst the substantive legal issue concerning the exigibility of stamp duty on asset transfers pursuant to a corporate de-merger merits consideration, the invocation of extraordinary writ jurisdiction at this preliminary stage was premature.

Direct recourse to the High Court under Article 226 is misconceived when the statutory machinery for determination of stamp duty remains unexhausted.

The Court highlighted that the legislature has enacted a comprehensive statutory code under the Indian Stamp Act, 1899 to resolve questions regarding the duty chargeable on instruments. The Single Judge remarked:

"Having carefully perused the writ petition, this Court considers that although the legal question, whether stamp duty is leviable upon transfer of assets pursuant to a corporate de-merger and formation of a new entity, does call for examination, bringing this issue directly before this Court, at this juncture, is misconceived."

Sections 31 and 32 of the Indian Stamp Act empower the Collector to determine the chargeability of duty on any instrument prior to or following execution.

Upon analyzing the statutory framework governing adjudication, the Court highlighted that Section 31 of the Act creates an efficacious statutory avenue enabling any person to obtain an authoritative opinion from the Collector regarding the duty chargeable on an instrument.

"From perusal of Section 31 of the ibid Act, it is clearly decipher that any person can approach the Collector concerned appointed under the ibid Act, either before execution or after the execution, to seek his opinion, as to whether, the instrument requires affixation of duty (if any) with which it is chargeable."

The High Court refrained from expressing any opinion on the merits to preserve the independent quasi-judicial jurisdiction of the Collector.

The Court emphasized that it had intentionally avoided assessing the rival contentions on the merits of the corporate de-merger or the applicability of the Central Board of Revenue notification dated January 16, 1937, leaving all questions open for an independent quasi-judicial assessment by the revenue authority.

Disposing of the writ petition, the High Court relegated the petitioner to approach the concerned Collector under Sections 31 and 32 of the Indian Stamp Act, 1899 within one month. The Court directed the Collector to decide the matter on its own merits after providing an adequate opportunity of hearing to all stakeholders within four months from the receipt of the application.

Date of Decision: October 13, 2026.