Holding

Form No.5 is not an instrument; stamp duty is payable only on the Articles of Association, and the Rs.25 lakh maximum cap is a one‑time ceiling applicable to the instrument as a whole.

Summary

National Organic Chemical Industries Ltd. increased its authorized share capital from Rs.600 crores to Rs.1,200 crores and paid Rs.25 lakh stamp duty on the Form No.5 notice filed under Section 97 of the Companies Act, 1956. The company later sought a refund, arguing that the Articles of Association— the only instrument chargeable under Article 10 of the Bombay Stamp Act— had already attracted the statutory maximum cap of Rs.25 lakh when it was first stamped. The State of Maharashtra contended that each increase in share capital constituted a fresh taxable event and that the cap applied per increase. The Supreme Court held that Form No.5 is not an instrument; only the Articles of Association are chargeable, and the statutory maximum cap is a one‑time ceiling applicable to the instrument as a whole, not to each subsequent increase. Consequently, the Court upheld the High Court’s order directing the refund of Rs.25 lakh with interest, dismissing the appeal.

Issues considered

Whether the notice filed in Form No.5 under Section 97 of the Companies Act is an “instrument” within the meaning of Section 2(l) of the Bombay Stamp Act, 1958.
Whether stamp duty is payable on each subsequent increase in authorized share capital or whether the statutory maximum cap of Rs.25 lakh is a one‑time limit.
Whether stamp duty paid prior to the amendment introducing the cap can be taken into account for later increases.

Legislation cited

Bombay Stamp Act, 1958s. s.14A, s. s.2(l)
Companies Act, 1956s. s.31(2), s. s.33, s. s.94, s. s.97
Maharashtra Stamp (Amendment) Act, 2015

Subjects

Increase in the share capitalStamp dutyMaximum cap on stamp dutyArticles of Association, an instrumentRefund of Stamp DutyFresh stamp dutyGeneral lawSpecial law

Judgment

[2024] 4 S.C.R. 340 : 2024 INSC 270

State of Maharashtra & Anr.
v.
National Organic Chemical Industries Ltd.
(Civil Appeal No. 8821 of 2011)
05 April 2024
[Sudhanshu Dhulia* and Prasanna B. Varale, JJ.]

Issue for Consideration
Whether the notice sent to the Registrar in Form No.5 is an
“instrument” as defined u/s.2(l), Bombay Stamp Act, 1958; whether
the maximum cap on stamp duty is applicable every time there
is an increase in the share capital or is it a one-time measure.

Headnotes
Bombay Stamp Act, 1958 – s.2(l), Article 10 of Schedule-I –
“instrument” – Companies Act, 1956 – ss.97, 31(2) – Articles
of Association, an instrument within the meaning of s.2(l),
Stamp Act and mentioned in Article 10 of Schedule-I, where
stamp duty is to be charged on increase in the share capital
of a company subject to the maximum cap – Respondent
increased its share capital to Rs.600 crores and paid stamp
duty as per Article 10 of Schedule-I, Stamp Act – Article 10
was amended and a maximum cap of Rs.25 lakhs on stamp
duty was introduced – Respondent subsequently increased
its share capital to Rs.1200 crores and paid Rs.25 lakhs as
stamp duty when it filed Notice in Form No.5, pursuant to
s.97, Companies Act – However, later it sought refund of
the same – Denial by appellant no.2 – High Court directed
appellants to refund Stamp Duty of Rs.25 lakhs with interest
– Correctness:
Held: Filing of Form No. 5 is only a method prescribed, whereby
“notice” of increase in share capital or of members of a company
has to be sent to the Registrar, within 30 days of passing of such
resolution – Registrar then has to record such increase in share
capital or members, and carry out the necessary alterations in
the articles – Stamp Duty is affixed on Form No. 5 as a matter
of practical convenience because a company itself cannot carry
out the alterations and record the increase in share capital in

* Author
[2024] 4 S.C.R. 341

State of Maharashtra & Anr. v.
National Organic Chemical Industries Ltd.

its Articles of Association – It is only the articles which are an
instrument within the meaning of s.2(l) of the Stamp Act and
accordingly mentioned in Article 10 of Schedule-I of the Stamp
Act – Legislature has specifically mentioned Articles of Association
in Article 10 of Schedule-I of the Stamp Act, where stamp duty
is to be charged inter alia on increase in the share capital of
a company – Thus, in spite of s.31(2) of the Companies Act,
stamp duty will be payable on increased share capital – This
is however subject to the maximum, i.e., Rs. 25 lakhs – If
there is no specific provision for charging the increase, then no
stamp duty is payable for any increase in the share capital of a
company – Ceiling of Rs. 25 lakhs is applicable on Articles of
Association and the increased share capital therein, not on every
increase individually – In case stamp duty equivalent to or more
than the cap has already been paid, no further stamp duty can
be levied – Further, argument of the appellant that stamp duty
paid before the 2015 amendment cannot be taken into account,
not agreed with – It is true that the amendment does not have
retrospective effect, however since the instrument ‘Articles of
Association’ remained the same and the increase was initiated
by the respondent after the cap was introduced, the duty already
paid on the same very instrument will have to be considered – It
is not a fresh instrument which had been brought to be stamped,
but only the increase in share capital in the original document,
which was specifically made chargeable by the Legislation –
Impugned order upheld – Maharashtra Stamp (Amendment) Act,
2015. [Paras 9, 13, 15, 18, 19]
Bombay Stamp Act, 1958 – s.14A – Companies Act, 1956 –
s.31(2) – Relying on s.14A of the Stamp Act, the appellant
contended that any material or substantial alteration in
the character of an instrument requires a fresh stamp duty
according to its altered character:
Held: s.31(2) was introduced with the intention to confer validity
on any alterations to the articles as if they were originally
contained therein – Therefore, any increase in the share capital
of the company also shall be valid as if it were originally there
when the Articles of Association were first stamped – There is
no concept of a company having new Articles of Association –
Thus, s.14A of the Stamp Act would not be of any help to the
appellants. [Para 12]
342 [2024] 4 S.C.R.

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Interpretation of Statutes – Conflict between general law and
special law – Bombay Stamp Act, 1958 – Companies Act, 1956:
Held: In case of conflict between two laws, the general law must
give way to the special law – A conjoined reading of the Stamp
Act and the Companies Act shows that while the former governs
the payment of stamp duty for all manner of instruments, the latter
deals with all aspects relating to companies and other similar
associations – Present case concerns with an instrument which is
chargeable to Stamp Duty and finds its origin in the Companies Act
– Various provisions of the Companies Act provide the purpose and
scope of the instrument – Thus, the Companies Act is the special
law and the Stamp Act is the general law with regards to Articles
of Association, and the special will override the general. [Para 11]

Case Law Cited
Hindustan Lever v. State of Maharashtra [2003] Suppl.
5 SCR 685 : (2004) 9 SCC 438 – held inapplicable.
M. Swaminathan v. Chairman and Managing Director
(1987) SCC OnLine Mad 438; S.E. Investments Ltd. v.
Union of India (2011) SCC OnLine Del 1867; Collector
of Stamps v. Se Investment Ltd. (2012) SCC OnLine
Del 3857; CWT v. Ellis Bridge Gymkhana [1997] Suppl.
4 SCR 626 : (1998) 1 SCC 384 – referred to.
New Egerton Woollen Mills, In re (1899) SCC OnLine
All 22 – referred to.

List of Acts
Bombay Stamp Act, 1958; Companies Act, 1956; Maharashtra
Stamp (Amendment) Act, 2015.

List of Keywords
Increase in the share capital; Stamp duty; Maximum cap on stamp
duty; Articles of Association, an instrument; Refund of Stamp Duty;
Fresh stamp duty; General law; Special law.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8821 of 2011
From the Judgment and Order dated 18.08.2009 of the High Court
of Bombay in WP No. 1844 of 1998
[2024] 4 S.C.R. 343

State of Maharashtra & Anr. v.
National Organic Chemical Industries Ltd.

Appearances for Parties
Aniruddha Joshi, Siddharth Dharmadhikari, Aaditya Aniruddha Pande,
Bharat Bagla, Sourav Singh, Aditya Krishna, Ms. Preet S. Phanse,
Adarsh Dubey, Advs. for the Appellants.
Ms. Madhavi Divan, Sr. Adv., Aayush Agarwala, Anuj P. Agarwala,
Mrs. Bhumika Sharma, M/S. Pba Legal, Advs. for the Respondent.
Judgment / Order of the Supreme Court

Judgment
Sudhanshu Dhulia, J.
1. The State of Maharashtra is in appeal before us challenging the order
of the Division Bench of Bombay High Court dated 18.08.2009, which
has allowed the writ petition of the respondent, while setting aside
the order of the Deputy Superintendent of Stamps, Maharashtra
(appellant no.2).
We have heard learned counsel Mr. Aniruddha Joshi for the
appellants and learned senior counsel Ms. Madhavi Divan for the
respondents.
2. National Organic Chemical India Ltd. (respondent) was incorporated
with an initial share capital of Rs.36 crores. In 1992 it increased its
share capital to Rs. 600 crores and accordingly paid a stamp duty
of Rs.1,12,80,000/- as per Article 10 of Schedule-I of the Bombay
Stamp Act, 1958 (hereinafter “Stamp Act”). At that time, the provision
read as under:

1 2
Description of Instrument Proper Stamp Duty
10. ARTICLES OF ASSOCIATION One thousand rupees for
OF A COMPANY – Where the every rupees 5,00,000 or
Company has no share capital or part thereof.
nominal share capital or increased
share capital.
The State of Maharashtra (appellant no.1) on 02.08.1994 amended
Article 10 and introduced a maximum cap of Rs.25 lakhs on stamp
duty which would be payable by a company. The amending notification
is reproduced below in part:
344 [2024] 4 S.C.R.

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“In exercise of the powers conferred by clause (a) of Section
9 of the Bombay Stamp Act, 1958 (Born. LX of 1958), the
Government of Maharashtra, having satisfied that it is
necessary to do so in the public interest, hereby reduces,
with effect from the 1st August, 1994, the maximum duty
chargeable on Article of Association of a Company under
Article 10 of Schedule-I to the said Act, to Rs. Twenty
Five Lakhs.”
Subsequently, the respondent passed a resolution for a further
increase in its share capital to Rs.1,200 crores and paid Rs. 25 lakhs
as stamp duty when it filed its Notice in Form No.5,1 pursuant to
Section 97 of the Companies Act, 1956 (hereinafter “Companies Act”).
However, according to the respondent this was done inadvertently
as it was soon realised that stamp duty was not liable to be paid
by them since the maximum stamp duty which was of Rs. 25 lakhs
payable on Articles of Association as per the provisions of the Stamp
Act, had already been paid by them in 1992. Consequently, the
respondent wrote a letter to appellant no.2 seeking a refund of the
payment of Stamp Duty of Rs. 25 lakhs.
This request was turned down by appellant no.2, vide Order dated
20.01.1998 where it was stated that whenever the authorised share
capital of a company is increased, stamp duty is payable on each
such occasion at the time of filing of Form No. 5 and it is not a one
time measure. Aggrieved, the respondent filed a writ petition before
the Bombay High Court challenging the aforesaid order and seeking
refund of Stamp Duty of Rs. 25 lakhs with interest, paid by them
inadvertently.
The Bombay High Court, after hearing the parties, concluded that
Form No.5 is not an instrument as defined by Section 2 of the
Stamp Act and that stamp duty can only be charged on Articles of
Association, where the maximum duty (Rs.25 Lakhs), payable as
per the amendment has already been paid by the respondent. The
High Court allowed the writ petition and directed the appellants to
refund Stamp Duty of Rs.25 lakhs along with interest @ 6% per
annum.

1 Form No. 5 of the Companies (Central Government’s) General Rules & Forms, 1965 is the prescribed
form of notice, which has to be sent under Section 97 of the Companies Act.
[2024] 4 S.C.R. 345

State of Maharashtra & Anr. v.
National Organic Chemical Industries Ltd.

3. Learned counsel for the appellants submits that a company increases
its share capital by sending a notice in Form No.5 as per Section 97
of the Companies Act. Thus, he contends that every time a company
increases its share capital, it is a separate taxing event and stamp
duty is liable to be paid irrespective of whether the maximum amount
payable under the section has previously been paid.
The learned counsel further relies on Section 14A of the Stamp Act
to contend that any material or substantial alteration in the character
of an instrument requires a fresh stamp duty according to its altered
character.
Finally, it is also contended that the maximum cap or upper ceiling
of Rs. 25 lakhs was introduced after the payment of Stamp Duty of
Rs.1,12,80,000/-. Therefore, the stamp duty paid earlier cannot be
taken into consideration in any case.
4. On the other hand, learned senior counsel for the respondent submits
that it is only the Articles of Association of a company which are
chargeable to Stamp Duty under Article 10. Form No.5 which is
being contended by the appellants to be a separate instrument, is
completely alien to the Stamp Act as it serves a very limited purpose
of giving notice to the Registrar that a company has increased its
share capital beyond the authorised share capital.
She would further submit that increase in the share capital of a
company does not materially or substantially alter the character of the
Articles of Association so as to fall within Section 14A of the Stamp
Act. She refers to Section 31 of the Companies Act to submit that
any alterations made to the Articles of Association are valid and are
to be taken as if originally contained therein.
Finally, she relies on a catena of judgements to contend that fiscal
statutes have to be construed strictly and in case of any ambiguity
in the charging provision, the same has to be resolved against the
Department.
5. Let us now examine the relevant provisions of the Stamp Act. Section
3 of the Stamp Act provides that inter alia stamp duty is payable
on instruments which are executed in the State of Maharashtra and
the duty payable is the amount indicated in Schedule-I of the Stamp
Act. The definition of instrument is provided under Section 2(l) of the
Stamp Act, which is reproduced below:
346 [2024] 4 S.C.R.

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“(l) instrument” includes every document by which any
right or liability is, or purports to be, created, transferred,
limited, extended, extinguished or recorded, but does not
include a bill of exchange, cheque, promissory note, bill
of lading, letter of credit, policy of insurance, transfer of
share, debenture, proxy and receipt.”
6. The first question that we now have to answer is whether the notice
sent to the Registrar in Form No.5 is an “instrument” as defined
under Section 2(l).
Learned counsel for the appellants contends that Form No.5 records
or purports to record the right or extension of the right of a company
to increase its share capital as recorded in its Articles of Association
and thus falls within the definition of an “instrument”.
Share capital of a company refers to the amount invested in the
company for it to carry out its operations while Articles of Association
contain the prescribed rules and regulations that a company adopts
for its internal management.2 When a company is incorporated it has
to present certain documents, including its Articles of Association,
to the Registrar under Section 33 of the Companies Act and if the
Registrar is satisfied that all necessary requirements have been
complied with, he then registers the documents submitted. This is
because of the implication that provisions contained in the articles
amount to a public notice to all those who deal with the company.
7. Section 2(2) of the Companies Act inter alia defines “articles” as the
Articles of Association of a company as originally framed or as altered
from time to time. A company is empowered to alter its Articles of
Association by passing a special resolution in the manner provided
in Section 31 of the Companies Act, which states that:
“31. Alteration of articles by special resolution.— (1)
Subject to the provisions of this Act and to the conditions
contained in its memorandum a company may, by special
resolution, alter its articles:
Provided that no alteration made in the articles under
this sub-section which has the effect of converting a

2 Section 26 of the Companies Act, 1956.
[2024] 4 S.C.R. 347

State of Maharashtra & Anr. v.
National Organic Chemical Industries Ltd.

public company into a private company, shall have effect
unless such alteration has been approved by the Central
Government.
(2) Any alteration so made shall, subject to the provisions
of this Act, be as valid as if originally contained in the
articles and be subject in like manner to alteration by
special resolution.
(2-A) …
(3) …”
(emphasis supplied)
Any alteration in the share capital of a limited company is provided
under Section 94 of the Companies Act, which reads as under:
“94. Power of limited company to alter its share
capital.— (1) A limited company having a share capital,
may, if so authorised by its articles, alter the conditions of
its memorandum as follows, that is to say, it may—
(a) increase its share capital by such amount as it thinks
expedient by issuing new shares;
(b) …
(c) …
(d) …
(e) …
(2) The powers conferred by this section shall be exercised
by the company in general meeting and shall not require
to be confirmed by the Court.
(3) …”
(emphasis supplied)
A perusal of Section 94 of the Companies Act shows that a company
is empowered to increase its share capital, by such amount as it
thinks expedient, by passing a resolution in a general meeting. It
is pertinent to note that no approval or confirmation by the Court is
required to exercise this power.
348 [2024] 4 S.C.R.

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Once a resolution for authorising increase in share capital has been
passed in terms of Section 94 of the Companies Act, a notice is required
to be sent by the company in Form No.5 to the Registrar, pursuant to
Section 97 of the Companies Act. The provision is reproduced below:
“97. Notice of increase of share capital or of members.—
(1) Where a company having a share capital, whether its
shares have or have not been converted into stock, has
increased its share capital beyond the authorised capital,
and where a company, not being a company limited by
shares, has increased the number of its members beyond
the registered number, it shall file with the Registrar, notice
of the increase of capital or of members within thirty days
after the passing of the resolution authorising the increase;
and the Registrar shall record the increase and also make
any alterations which may be necessary in the company’s
memorandum or articles or both.
(2) …
(3) …”
(emphasis supplied)
A perusal of the provisions referred above shows that it is the Registrar
who is the custodian of the articles of a company and not the company.
Thus, when a company has to alter the same or modify its share
capital as recorded therein, it has to pass a resolution and file its
Form No. 5. The relevant portion of Form No.5 is reproduced below:
“Notice is hereby given –
1…
2. In accordance with Section 97 of the Companies Act,
1956, that by ordinary resolution / special resolution of the
company dated the day of ______
(i) the authorised share capital of the company has been
increased by the addition thereto of the sum of Rs. ______
beyond the present authorised capital of Rs. ______.
(ii)...
3…
4…”
[2024] 4 S.C.R. 349

State of Maharashtra & Anr. v.
National Organic Chemical Industries Ltd.

8. The appellants have relied on Hindustan Lever v. State of
Maharashtra, (2004) 9 SCC 438, and would submit that Form
No.5 is an instrument. In this case, the question whether an order
passed by the Court (under Section 394 read with Section 391 of
the Companies Act), sanctioning a scheme of amalgamation of two
companies is an instrument within the meaning of Section 2(l) of the
Stamp Act, was answered in the affirmative. It was observed that
the Court passes the order of sanction based on the arrangement
arrived at between the parties and thereby affects transfer of assets
and liabilities between them, which binds all. This is what was said:
“32. In view of the aforesaid discussion, we hold that
the order passed by the Court under Section 394 of the
Companies Act is based upon the compromise between two
or more companies. Function of the court while sanctioning
the compromise or arrangement is limited to oversee that
the compromise or arrangement arrived at is lawful and that
the affairs of the company were not conducted in a manner
prejudicial to the interest of its members or to public interest,
that is to say, it should not be unfair or contrary to public
policy or unconscionable. Once these things are satisfied
the scheme has to be sanctioned as per the compromise
arrived at between the parties. It is an instrument which
transfers the properties and would fall within the definition of
Section 2(1) of the Bombay Stamp Act which includes every
document by which any right or liability is transferred…”
The above judgment nowhere states that Form No. 5 is an instrument.
The reliance of the appellant here, on the above judgment, seems
to be misconceived. An order of the Court sanctioning a scheme of
amalgamation cannot be equated to Form No. 5. Any increase in the
share capital by a company is neither required to be confirmed by
the Court in view of Section 94(2), nor does the Registrar exercise
any discretion, provided Form No. 5 is duly filled.
On the other hand, learned senior counsel for the respondent has
relied on New Egerton Woollen Mills, In re, 1899 SCC OnLine
All 22, where the Allahabad High Court was faced with a similar
question; as to whether stamp duty is payable on the document
whereby alterations were made to Articles of Association. A Full
Bench of the High Court (in the context of the Indian Companies
Act, 1882) answered in the negative with the following reasoning:
350 [2024] 4 S.C.R.

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“... we are satisfied that the document which was submitted
to the Registrar of Joint Stock Companies was submitted
to him under s. 79 to be recorded by him, and not, as he
states, for registration. The document was not new articles
of association, or articles of association at all within the
meaning of the Indian Companies Act. It was a copy of
the special resolution passed by the company, notifying
to the Registrar, and through him to the world concerned,
that the regulations of the company, which were covered
by the resolution, would be the regulations by which the
company would in future be bound. These regulations, even
though they were new regulations to the exclusion of all
the existing regulations of the company, are, by the second
paragraph of s. 76, to be deemed to be regulations of the
company of the same validity as if they had been originally
contained in the articles of association. The law does not
say that they are to be deemed articles of association, but
expressly declares that they are to be deemed regulations
of the same validity as if they had been contained in the
articles of association. The document which has been
forwarded to us is certainly not one which falls within art.
8 of sch. I of the Stamp Act of 1879, and is not liable to
stamp-duty as provided by that article.”
9. We agree with the view taken by the Allahabad High Court. Filing of Form
No. 5 is only a method prescribed, whereby “notice” of increase in share
capital or of members of a company has to be sent to the Registrar,
within 30 days of passing of such resolution. The Registrar then has
to record such increase in share capital or members, and carry out the
necessary alterations in the articles. Stamp Duty is affixed on Form No.
5 as a matter of practical convenience because a company itself cannot
carry out the alterations and record the increase in share capital in its
Articles of Association. It is only the articles which are an instrument
within the meaning of Section 2(l) of the Stamp Act and accordingly have
been mentioned in Article 10 of Schedule-I of the Stamp Act.
10. Counsel for the appellants, however, contends that increase in the
share capital of the respondent from Rs. 600 crores to Rs.1,200
crores, materially alters the character of the instrument, i.e., Articles
of Association. As such, it requires a fresh stamp according to its
altered character and needs to be charged as a separate instrument.
[2024] 4 S.C.R. 351

State of Maharashtra & Anr. v.
National Organic Chemical Industries Ltd.

On the other hand, learned senior counsel for the respondent refers
to Section 31(2) of the Companies Act, which provides that any
alteration of the articles shall, subject to the provisions of this Act,
be valid as if it were originally in the articles. She further submits
that whether an instrument has been materially altered or not is
a question of fact and the appellants have neither taken this plea
while rejecting the request for the refund, nor before the High Court.
11. It is a settled position of law that in case of conflict between two
laws, the general law must give way to the special law. A conjoined
reading of the Stamp Act and the Companies Act would show that
while the former governs the payment of stamp duty for all manner
of instruments, the latter deals with all aspects relating to companies
and other similar associations.
In the case at hand, we are concerned with an instrument which is
chargeable to Stamp Duty and finds its origin in the Companies Act.
The various provisions of the Companies Act provide the purpose and
scope of the instrument. Thus, it has to be said that the Companies Act
is the special law and the Stamp Act is the general law with regards
to Articles of Association, and the special will override the general.
12. A Division Bench of the High Court of Madras in M. Swaminathan
v. Chairman and Managing Director, 1987 SCC OnLine Mad
438 discussed Section 31(2) of the Companies Act and made the
following observations:
“The section cannot be understood to mean that any
alteration made in the Articles of Association would have
retrospective effect as if it was there from the inception
of the Articles of Association. The section is intended
only to confer validity on the alteration made to the
Articles. It is only for the limited purpose of making the
alteration valid it is to be treated as if it was originally
in the Articles. It is seen from Sec. 29 and 30 of the
Companies Act, that certain formalities are prescribed
for Articles of Association. Unless the requirements of
Ss. 29 and 30 are satisfied, the Articles of Association
will not be valid in law. If the same formalities are to be
gone through whenever any alteration is made, it may
lead to several difficulties.”
352 [2024] 4 S.C.R.

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Section 31(2) was thus introduced with the intention to confer validity
on any alterations to the articles as if they were originally contained
therein. Therefore, any increase in the share capital of the company
also shall be valid as if it were originally there when the Articles of
Association were first stamped. As discussed by the Allahabad High
Court in New Egerton Woollen Mills, In re, (supra) there is no concept
of a company having new Articles of Association. Thus, Section 14A
of the Stamp Act would not be of any help to the appellants.
13. We may here add that the Legislature has specifically mentioned
Articles of Association in Article 10 of Schedule-I of the Stamp Act,
where stamp duty is to be charged inter alia on increase in the share
capital of a company. Thus, in spite of Section 31(2) of the Companies
Act stamp duty will be payable on increased share capital. This is
however subject to the maximum, i.e., Rs. 25 lakhs which we shall
refer to in a while.
If there is no specific provision for charging the increase, then no
stamp duty is payable for any increase in the share capital of a
company. In order to clarify, we may refer to a decision of the Delhi
High Court in S.E. Investments Ltd. v. Union of India, 2011 SCC
OnLine Del 1867. In Delhi, the charging provision of the Indian
Stamp (Delhi Amendment) Act, 2007 which was under consideration
of the High Court was as follows:

10 ARTICLES OF ASSOCIATION OF A COMPANY:-
(a) When the authorized 0.15% of the Authorized
capital of the company share capital with a
does not exceed one lac monetary ceiling of Rs. 25
Lakhs.
(b) In other cases 0.15% of the Authorized
share capital with a
monetary ceiling of Rs. 25
Lakhs.
The Single Judge of the High Court3 observed that other State
Legislatures have included a specific provision for levy of stamp
duty on increase in authorised share capital and held as follows:

3 The judgement of the Single Judge was upheld by the Division Bench in Collector of Stamps v. Se
Investment Ltd., 2012 SCC OnLine Del 3857.
[2024] 4 S.C.R. 353

State of Maharashtra & Anr. v.
National Organic Chemical Industries Ltd.

“13. In the absence of a specific provision that permits
the levy of stamp duty on the increase in authorized
share capital, it would not be open to the Respondents
to insist upon the Petitioner having to pay stamp duty for
the increased authorized share capital. The fact that the
Petitioner earlier paid stamp duty when the authorized
share capital was increased to Rs. 8.5 crores cannot act
as an estoppel against the Petitioner.”
14. The second question is whether the maximum cap on stamp duty
is applicable every time there is an increase in the share capital
or it is a one-time measure. It is an admitted fact that when the
respondent increased its share capital from Rs. 36 crores to Rs.
600 crores it paid a stamp duty of Rs.1,12,80,000/- and at that time
there was no provision for a maximum cap or upper ceiling on the
amount payable.
On 02.08.1994, the State Legislature amended Article 10 of Schedule-I
of the Stamp Act and the amended provision, which was applicable
when the respondent passed a resolution to increase its authorised
share capital to Rs. 1200 crores, is reproduced below:

1 2
Description of Instrument Proper Stamp Duty
10. ARTICLES OF ASSOCIATION One thousand rupees for
OF A COMPANY – Where the every rupees 5,00,000 or part
Company has no share capital or thereof, subject to a maximum
nominal share capital or increased of Rs.25,00,000.
share capital.
15. The appellant has relied on Collector of Stamps v. Se Investment
Ltd., 2012 SCC OnLine Del 3857 to contend that each increase
in authorised share capital will be chargeable to stamp duty in
Maharashtra due to the inclusion of “increased share capital” in the
charging provision and hence, respondent has rightfully paid Rs. 25
lakhs (for the subsequent increase from Rs.600 crores to Rs.1200
crores) as stamp duty in view of the maximum cap.
The Stamp Act authorises involuntary exaction of money and is in the
nature of a fiscal statute, which has to be interpreted strictly. This Court
in CWT v. Ellis Bridge Gymkhana, (1998) 1 SCC 384 held as under:
354 [2024] 4 S.C.R.

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“5. The rule of construction of a charging section is that
before taxing any person, it must be shown that he falls
within the ambit of the charging section by clear words
used in the section. No one can be taxed by implication.
A charging section has to be construed strictly. If a person
has not been brought within the ambit of the charging
section by clear words, he cannot be taxed at all.”
Thus, even though “increased share capital” is a part of Article 10,
which column it has been placed in assumes importance. Column
1 of the Schedule describes the instrument on which stamp duty is
to be levied whereas Column 2 prescribes the stamp duty payable.
Column 1 has to be construed as describing three situations or
contingencies relating to Articles of Association, i.e., “where the
company has no share capital or nominal share capital or increased
share capital”. In cases where a company has no share capital it
would have to pay no stamp duty and if a company is submitting
its articles for the first time, stamp duty would be calculated as per
the nominal share capital. The effect of adding “increased share
capital” is that stamp duty will be charged on subsequent increases
in the authorised share capital, subject to the maximum cap. In
other words, the ceiling of Rs. 25 lakhs in Column 2 is applicable
on Articles of Association and the increased share capital therein,
not on every increase individually. In case stamp duty equivalent
to or more than the cap has already been paid, no further stamp
duty can be levied. For a better understanding, let us consider a
hypothetical example:

SHARE STAMP STAMP DUTY TO TOTAL
CAPITAL OF A DUTY BE ACTUALLY PAID STAMP
COMPANY PAYABLE DUE TO CAP DUTY
50 crores 10 lakhs 10 lakhs 10 lakhs
100 crores 10 lakhs 10 lakhs 20 lakhs
150 crores 10 lakhs 5 lakhs 25 lakhs
200 crores 10 lakhs Nil 25 lakhs
16. The fact that the maximum cap of Rs.25 lakhs would be applicable
as a one-time measure and not on each subsequent increase in the
share capital of a company is fortified directly by the Maharashtra
[2024] 4 S.C.R. 355

State of Maharashtra & Anr. v.
National Organic Chemical Industries Ltd.

Stamp (Amendment) Act, 2015 which amended the charging section
for Articles of Association i.e., Article 10 of the Stamp Act. The Section
as it stands now is reproduced below:

1 2
Description of Instrument Proper Stamp Duty
10. ARTICLES OF ASSOCIATION [0.2 per cent. on share capital
OF A COMPANY – Where the or increased share capital,
Company has no share capital or as the case may be] subject to
nominal share capital or increased a maximum of Rs.50,00,000.
share capital.
The effect of the 2015 amendment is that “increased share capital”
has also been added in Column 2 and proper stamp duty shall be
calculated, for either of the three situations, as per the share capital
or increased share capital. This means that the cap will now be
applicable on each individual increase.
17. A reference can also be made to the provisions of Stamp Duty
Acts of a few other States where Articles of Association are
chargeable:

STATE Description of Instrument Proper Stamp Duty
Gujarat 7. Alteration of Articles of A sum equal to the duty that
Association of a Company would have been leviable
under the Companies under Article 12 as though
Act, 2013 (18 of 2013), in the company’s nominal
consequence of increase share capital had been
of the company’s share when the company was
capital; instrument of– formed, equal to the total
Exemption… share capital so increased,
less the sum already paid
under Article 12.

Art. 12. Articles of Subject to maximum of five
Association of a lakhs rupees, fifty paise for
Company.— Where the every hundred rupees or
Company has no share part thereof.
capital or nominal share
capital.
356 [2024] 4 S.C.R.

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Madhya 11. Articles of Association
Pradesh of a Company–

(a) where the company Five thousand rupees.
has no share capital

(b) where the company 0.15% of such nominal or
has nominal share capital increased share capital,
or increased share capital subject to a minimum of
five thousand rupees and
a maximum of twenty five
lakh rupees.
18. We also do not agree with the appellant that stamp duty paid before
the amendment cannot be taken into account. It is true that the
amendment does not have retrospective effect, however since the
instrument ‘Articles of Association’ remains the same and the increase
was initiated by the respondent after the cap was introduced, the duty
already paid on the same very instrument will have to be considered.
It is not a fresh instrument which has been brought to be stamped,
but only the increase in share capital in the original document, which
has been specifically made chargeable by the Legislation.
19. For the reasons stated above, we dismiss this civil appeal and uphold
the order of the High Court of Bombay. Accordingly, we direct the
appellants to refund Rs. 25 lakhs paid by the respondent along with
interest @ 6% per annum. Let the needful be done within 6 weeks
from today.
20. Interim order(s) shall stand vacated. Pending application(s), if any,
shall stand disposed of.

Headnotes prepared by: Divya Pandey Result of the case:
Appeal dismissed.