Citation Codes

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Case Number

W.P No. 3864 of 1996

Advocates

Mr. M.S Krishnan, Advocate for M/s. Sarvabhavman Associates, Advocates for Petitioner.
Mrs. V. Velumani, Assistant Government Pleader for Respondent Nos. 1 to 4; Mr. S. Sathiamurthi, Advocate for Respondent No. 4.

Judges

K.P Sivasubramaniam, J.

Acts

SECTION 9 INDIAN STAMP ACT 1899
Nadu Co-operative Societies Act, 1983 (Tamil Nadu Act 30 of 1983)
Companies Act, 1956 (Central Act 1 of 1956),
SECTION 81 C INCOME TAX ACT
GOVERNMENT GRANTS ACT 1895
COMPANIES ACT 1956
Section 80-E

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Smart Summary

Structured Summary of the Provided Legal Opinion

Factual and Procedural Background

The petitioner, described as a tourist bus service, purchased land and structures (an extent of 2283 sq. mts.; an AC sheet roofed building of 1012.31 sq. mts.; and an AC sheet roofed shed of 221.18 sq. mts.) in Thiru Vi. Ka. Industrial Estate, Guindy from the fourth respondent, Tamil Nadu Small Industries Corporation Limited (TANSI), under a sale deed dated 25.4.1994. The total sale consideration was Rs. 56,65,194. The petitioner sought exemption from stamp duty on the basis of a Government Order (G.O.Ms No. 169, Commercial Taxes and Religious Endowment Department dated 7.6.1993) that, in terms, granted remission of stamp duty for certain institutions and "industrial estates formed with the assistance of the Government and registered under the Companies Act, 1956" for a specified period (coming into force 25.1.1993 and remaining in force up to 24.1.1996).

The Sub-Registrar (third respondent) refused to grant the exemption, impounded the document and allotted pending No. 375/94, directing the petitioner to pay alleged deficit stamp duty of Rs. 7,62,466 and levying a penalty of Rs. 250. The petitioner preferred a revision before the second respondent, which was dismissed. The petitioner then filed this writ petition seeking certiorari and mandamus to call for the records of the impugned order (dated 30.6.1995) and to direct registration of the sale deed with exemption of stamp duty.

In its counter, TANSI explained that it had restructured staff and some units were under closure, stated that an agreement of sale had been executed and that Income-Tax authorities had issued the required certificate; TANSI disclaimed responsibility for determining exemption of stamp duty, stating that such a decision was for the Government.

Legal Issues Presented

Whether the petitioner is entitled to exemption from stamp duty under G.O.Ms No. 169 dated 7.6.1993 in respect of the sale deed dated 25.4.1994 executed by TANSI in favour of the petitioner.
Whether TANSI falls within the expression "Industrial Estates formed with the assistance of the Government and registered under the Companies Act, 1956" used in the Government Order, despite TANSI not being specifically named in that Order.
Whether provisions granting fiscal concessions (here, exemption/remission of stamp duty) should be interpreted so as to include an institution not explicitly named when that institution otherwise fits the residual description used in the Government Order.

Arguments of the Parties

Petitioner's Arguments

The sale from TANSI falls within the class of transactions exempted by G.O.Ms No. 169 dated 7.6.1993 because TANSI is an undertaking of the Government and is registered under the Companies Act and therefore is included in the phrase "Industrial Estates formed with the assistance of the Government and registered under the Companies Act, 1956".
Although TANSI is not specifically named in the G.O., other government-owned industrial development corporations (e.g., SIDCO, SIPCOT, TACIID) are included by name and the residuary phrase ought to include TANSI.
Clauses 6, 12 and 20 of TANSI's Memorandum/Articles of Association show that TANSI's objects include aiding, promoting and assisting industries and that it is involved in promotion and operation of schemes for development of industries—so it falls within the Government Order's description.
Reliance on Supreme Court authorities that provisions conferring concessional tax treatment or exemptions should be liberally construed in favour of those intended to benefit from them.

Respondents' / Government Pleader's Arguments

Exemption of stamp duty cannot be presumed or inferred; it applies only to transactions with institutions specifically mentioned in the Government Order.
TANSI is not named in the Government Order; therefore transactions involving TANSI are not entitled to the exemption.
TANSI's activities, the Government Pleader submitted, were limited to manufacturing and did not extend to promotion of industrial estates (thereby excluding it from the residuary description relied upon by the petitioner).

Fourth Respondent (TANSI) — Position in Counter

TANSI stated it was undergoing restructuring, some units were under closure, and that as to the transaction with the petitioner, an agreement of sale had been entered into and the Income-Tax authority had issued the required certificate.
TANSI asserted that it had no role in deciding exemption of stamp duty and that such a determination was for the Government.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
The Broach Distt. Co-operative Cotton Sales Ginning and Pressing Society Ltd. v. The Commissioner of Income Tax, A.I.R. 1989 SC 1493	That while interpreting taxing statutes, exemption clauses intended to encourage certain activities (here co-operative activities in that case) must be liberally construed.	The court relied on this authority to support the proposition that provisions conferring concessions or exemptions should be liberally construed in favour of those intended to benefit; this aided the court's view that the Government Order's residuary category should be given liberal interpretation to include TANSI.
Commissioner of Income Tax, Amritsar v. Straw Board Manufacturing Co. Ltd., 1989 Supp (2) S.C.C. 523	That provisions prescribing concessional rates of tax (or similar fiscal concessions) must be liberally construed, particularly where the object is to encourage development or provide relief.	The court cited this decision for the settled principle of liberal interpretation of concessionary fiscal provisions, using it as a basis to interpret the Government Order so as to include institutions that fit the residuary description, such as TANSI.

Court's Reasoning and Analysis

The court proceeded by textual and purposive interpretation of the Government Order (G.O.Ms No. 169 dated 7.6.1993). The Order expressly named SIDCO, SIPCOT and TACIID and then used a residuary expression: "and the Industrial Estates formed with the assistance of the Government and registered under the Companies Act, 1956." The central analytical steps taken by the court were:

Textual reading: The court observed that TANSI is not specifically named in the G.O., but noted the residuary phrase that could cover other institutions fitting that description.
Context and administrative history: The court reviewed a departmental file and a letter from the Inspector General of Registration dated 21.12.1992 indicating that multiple institutions (including government-owned industrial corporations and private institutions) had requested exemption and that the recommendation to grant benefits was made on that basis. This showed the administrative backdrop to the G.O.
Factual inquiry into TANSI's nature and objects: The court examined clauses 6, 12 and 20 of TANSI's Articles of Association (referred to in the petition) which contemplated aiding, assisting, financing, promoting and operating schemes for development of industries, and assisting companies for setting up industries or acquiring property. The court also noted that the land in question had been transferred to TANSI under the Government Grants Act, 1895.
Legal principle on interpretation of fiscal concessions: The court acknowledged the general rule that fiscal liabilities are to be strictly construed in favour of the revenue, but contrasted this with the settled tax law principle (as reflected in the cited Supreme Court authorities) that provisions granting concessions or reliefs should be liberally construed to effectuate the object of the concession.
Application of principle to facts: Applying the liberal construction principle and having found that TANSI is fully owned by the State Government and engaged in promotion/assistance of industries (per its Memorandum/Articles and the nature of the land transfer), the court concluded that TANSI falls within the residuary description "Industrial Estates formed with the assistance of the Government and registered under the Companies Act, 1956."
Conclusion and relief: On that basis, the court found the impugned administrative action (refusal to grant exemption, impounding the document and direction to pay deficit stamp duty plus penalty) unsustainable and allowed the writ petition.

Holding and Implications

Holding:

The writ petition is allowed.

The court held that TANSI falls within the residuary expression in G.O.Ms No. 169 dated 7.6.1993—namely, "Industrial Estates formed with the assistance of the Government and registered under the Companies Act, 1956"—and therefore the petitioner was entitled to the exemption/remission of stamp duty claimed in respect of the sale deed dated 25.4.1994. The court was unable to sustain the respondents' order rejecting the petitioner's request to apply the benefit of the Government Order, and the impugned order was set aside. The court awarded no costs.

Implications:

Direct effect: The petitioner receives the relief sought in the writ petition — i.e., the relief that the sale-deed registration proceed with the benefit of the Government Order (exemption/remission of stamp duty) by treating TANSI as within the residuary category of the G.O.
Interpretive implication: The decision applies the established principle that concessionary provisions in fiscal legislation should be liberally construed; it demonstrates that an institution not specifically named in a Government Order may nonetheless be covered if it fits the residuary description and the object of the Order supports such inclusion.
Precedential note: The opinion relies on earlier Supreme Court authorities for interpretive principle but does not purport to lay down a novel test beyond applying the established rule of liberal construction of fiscal concessions to the facts before it.

No additional facts, arguments, or precedential material have been added beyond what was present in the provided opinion.

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Kartheepan Tourist Bus Service, Rep. By Its Proprietor, 166, Broadway, Madras 108 Petitioner v. The Government Of Tamil Nadu, Rep. By Its Secretary, Commercial Taxes & Religious Endowment, Fort St. Geroge, Madras 9 And Others S

1. The petitioner, a Tourist bus service has sought for Certiorarified Mandamus to call for the records relating to the order of the second respondent dated 30.6.1995 and to direct the respondents to grant exemption of stamp duty in respect of the sale deed dated 25.4.94 bearing pending document No. 375/94 Sub-Registrar's office, Adayar, executed by the 4th respondent Tamil Nadu Small Industries Corporation Limited (TANSI) in favour of the petitioner and register the same.

2. According to the petitioner, they have purchased an extent of 2283 sq. mts. together with an AC sheet roofed building measuring 1012.31 sq. mts. and an AC sheet roofed shed measuring 221.18 sq. mts. land in Thiru Vi. Ka. Industrial Estate, Guindy from TANSI under the sale deed dated 25.4.94 The petitioner submits that TANSI is an undertaking of the Government of Tamil Nadu and a Company registered under the Companies Act. The total sale consideration for the purchase was Rs. 56,65,194. The petitioner sought for exemption of stamp duty for the said sale on the basis of the Government Order issued by the first respondent in G.O.Ms No. 169, Commercial Taxes and Religious Endowment Department dated 7.6.93 In terms of the said Government Order, a purchaser would be entitled to exemption to stamp duty for three years with effect from 25.1.1993 The purport of the Government Order was to grant to the small entrepreneurs a relief from paying heavy stamp duty so that the same can be utilized for the development of the industries.

3. The petitioner further contends that the property was purchased by the petitioner from TANSI which had been formed with the assistance of the Government and registered under the Companies Act. However, the third respondent has refused to grant exemption and kept the registration of the deed in abeyance and allotted pending No. 375/94. By a notice dated 27.5.94, the third respondent sought to impound the document and the petitioner was directed to pay the alleged deficit stamp duty of Rs. 7,62,466 apart from levying penalty of Rs. 250. The petitioner, thereupon, preferred a revision before the second respondent to set aside the said order. However, the third respondent also had confirmed the order and dismissed the revision petition. Hence, the above writ petition.

4. In the counter filed by the fourth respondent-TANSI, it is contended that the company was at present undertaking an exercise to restructure the staff pattern to make it a profitable venture and some of the units are under closure. As far as the transaction with the petitioner is concerned, an agreement for sale was entered into between both parties and the matter was referred to the appropriate authority of the Income-Tax Department for obtaining no objection certificate and the appropriate authority had issued the required certificate. The sale deed was executed on 25.4.94 with the Sub-Registrar, Adyar after receiving the full value. The respondent has nothing to do with the exemption of stamp duty and it is for the Government to decide.

5. Learned Counsel for the petitioner submits that the refusal on part of the authority to grant exemption was against the very purport of the Government Order issued in G.O.Ms No. 169 dated 7.6.93 The object of having issued such a notification was to encourage the industrial entrepreneurs. Though it is true that TANSI has not been specifically named in the Government Order, TANSI will certainly fall under the expression, “Industrial Estates formed with the assistance of the Government and registered under the Companies Act, 1956”. The learned Counsel further states that when the other Industrial Development Corporations such as SIDCO, SIPCOT, TACIID have been included, there is no reason who TANSI could not be included.

6. Learned Counsel also relies on the judgments of the Supreme Court in The Broach Distt. Co-operative Cotton Sales Ginning and Pressing Society Ltd. v. The Commissioner of Income Tax, A.I.R 1989 SC 1493 and in Commissioner of Income Tax, Amritsar v. Straw Board Manufacturing Co. Ltd., 1989 Supp (2) SCC 523 in support of his contention that all provisions prescribing concessional rate of tax must be liberally construed.

7. I have also heard the learned Government Pleader's contentions that exemption of stamp duty cannot be inferred or presumed and it is only transactions with the institutions which have been specifically mentioned in the Government Order will be entitled for the benefit of exemption and TANSI not having been mentioned in the Government Order, it will not apply to transactions relating to TANSI and the purchase cannot claim the benefit of exemption of stamp duty. The Government Pleader further submits that TANSI was involved only in the manufacturing activities and not in the promotion of the industrial estates.

8. Learned counsel for the petitioner, in reply refers to the Memorandum of Association of TANSI and in particular refers to clauses 6, 12 and 20. Clause 6 contemplates aiding, assisting, financing, protecting and promoting the interests of small or any other industries in the State and to provide them with assistance of all kinds including capital, credit, means, resources, etc. Clause 12 deals with promotion and operation of schemes for development of Industries in the State. Clause 20 deals with the object of establishing, promoting, subsidizing and otherwise assisting any company for the purpose of setting up of any industry or any industrial undertaking, acquiring any property or furthering any of the objects of the Company. The contention of the learned Government Pleader that the TANSI is not involved in promoting any establishment is disputed and the petitioner is a purchaser from TANSI.

9. I have considered the submissions of both sides. Following is the extract of the Government Order in G.O.Ms No. 169, Commercial Tax Department dated 7.6.93, which requires to be interpreted.

“In exercise of the powers conferred by clause (a) of sub-section (i) of Section 9 of the Indian Stamp Act, 1899 (Central Act II of 1899), the Governor of Tamil Nadu hereby remits the duty chargeable under the said Act in respect of the instruments executed by the Tamil Nadu Small Industries Development Corporation Limited (SIDCO), the State Industries Promotion Corporation of Tamil Nadu Limited (SIPCOT), Tamil Nadu Corporation for Industrial Infrastructure Development Limited (TACIID) and the Industrial Estates formed with the assistance of the Government and registered under the Companies Act, 1956 (Central Act 1 of 1956), or under the Tamil Nadu Co-operative Societies Act, 1983 (Tamil Nadu Act 30 of 1983) relating to the sale as well as lease of the Industrial plots and Industrial sheds and this remission of duty shall not apply to subsequent sale or lease made by the allottees to others.

2. The notification hereby made shall come into force on the twenty fifth January, 1993, and shall remain in force upto and inclusive of the twenty forth January, 1996.”

10. A perusal of the above extracted portion of the Government Order would disclose that apart from mentioning of SIDCO, SIPCOT and TACIID, there is no specific mention of any other institution of the TANSI. Thereafter, it is contended by the respondent that there is no scope for including TANSI as falling under the G.O In my opinion, the said contention overlooks the expression, “Industrial estates formed with the assistance of the Government and registered under the Companies Act, 1956”, which means that any other institution which could fit in with the said expression would also be governed by the G.O Therefore, we have to see whether TANSI would be covered by the expression.

11. I have also perused the file relating to the issuance of the said G.O The letter from the Inspector General of Registration to the Secretary, Commercial Tax and Religious Endowment Department dated 21.12.1992 discloses that several institutions, corporations, including private institutions have been requesting exemption and that the request may be granted. It is also stated that the benefits were also sought by many of the Government owned industrial corporations and that therefore the said request may be accepted by the Government. It is only based on the said recommendation, the Government Order as stated above had been issued.

12. It is true that TANSI has not been specifically mentioned. But considering that they are also involved in the promotion of industrial estates and fully owned by the State Government, there is no reason as to why TANSI should not be treated as falling under the expression of “industrial estates formed with the assistance of the Government”. Clauses 6, 12 and 20 of the Articles of Association of TANSI had already been referred to above and therefore TANSI is not a mere commercial venture of the State Government but also like any other undertaking like SIDCO or SIPCOT, involved in promotion and assistance for setting up any industry and acquiring properties for such objects. There is also no doubt over the position that it is an Industrial Estate formed by the Government and registered under Companies Act. A perusal of the sale-deed shows that the land was transferred to TANSI in terms of the Government Grants Act, 1895. Therefore, I am inclined to hold that TANSI would fall under the residuary expression in the G.O It is true that any liability under a fiscal legislation has to be strictly interpreted in favour of the Revenue. But it is equally a settled principle of taxation law that provisions relating to concessions and reliefs have to be liberally interpreted.

13. I am inclined to agree with the contentions of the learned counsel for the petitioner relating to the interpretation of similar provisions by the Supreme Court in Commissioner of Income Tax, Amritsar v. Straw Board Manufacturing Co. Ltd., 1989 Supp (2) S.C.C 523. Having regard to the object of providing concessional rate and higher development rate by providing deduction under Section 80-E of the Income Tax Act., the Supreme Court held that provision for concessional rate of tax should be liberally construed.

14. In The Broach Distt. Co-operative Cotton Sales Ginning and Pressing Society Ltd., v. The Commissioner of Income Tax, Ahmedabad, A.I.R 1989 SC 1493 while dealing with exemption under Section 81(i)(c) of the Income Tax Act, the Supreme Court held that while interpreting taxing statutes, exemption clauses intended to encourage co-operative activities must be liberally construed.

15. Therefore, having regard to the above said rulings and the object of the Government Order being to encourage and to give relief and incentive to the small industrial entrepreneurs, there is no reason why TANSI should not be included in the category of industrial estates formed with the assistance of the Government.

16. In the results, the petitioner is entitled to succeed and I am unable to sustain the impugned order of the respondents rejecting the petitioner's request to apply the benefit of the said Government Order. The writ petition is allowed. No costs.

Kartheepan Tourist B... v. The Government Of Ta...