- 1 - NC: 2025:KHC:4219 WP No. 5031 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF JANUARY, 2025 BEFORE THE HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR WRIT PETITION NO. 5031 OF 2023 (GM-ST/RN) BETWEEN: PRESTIGE EXORA BUSINESS PARKS LIMITED REPRESENTED BY MR. MANOJ KRISHNA J V, REGISTERED OFFICE AT PRESTIGE FALCON TOWER, NO.19, BURNTON ROAD, BANGALORE, KARNATAKA-560025. …PETITIONER (BY SRI. SAJI P.JOHN, ADVOCATE) AND: 1. STATE OF KARNATAKA REPRESENTED BY PRINCIPAL SECRETARY, REVENUE DEPARTMENT, (STAMPS AND REGISTRATION), ROOM NO.505, 5TH FLOOR, GATE NO. 3, MS BUILDING, DR. B.R.AMBEDKAR VEEDHI, BANGALORE-560001. 2. THE INSPECTOR GENERAL OF REGISTRATION AND COMMISSIONER OF STAMPS, 8TH FLOOR, KANDAAYA BHAVAN, KG ROAD, BANGALURU-560001. 3. THE DISTRICT REGISTRAR OF STAMPS AND REGISTRATION OF SHIVAJINAGAR REGISTRATION DISTRICT, 4TH FLOOR, MONARCH CHAMBER, NO.122/2, INFANTRY ROAD, BANGALORE-560001. …RESPONDENTS (BY SRI. M.R. PATIL, HCGP) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRYING TO, QUASHING THE B K MAHENDRAKUMAR Digitally signed by B K MAHENDRAKUMAR Location: HIGH COURT OF KARNATAKA DHARWAD BENCH Date: 2025.02.03 11:35:15 +0530 - 2 - NC: 2025:KHC:4219 WP No. 5031 of 2023 STAMP DUTY ADJUDICATION ORDER BY THE 3RD RESPONDENT DRO/SJN/COP/ADJ/15/2022-23 DATED 03.12.2022 ANNEXURE-A, SO FAR RELATING TO IMPOSING CESS AT 10 PERCENT OF THE STAMP DUTY FOR AN AMOUNT OF RS.2.50 CRORES TO BE UNCONSTITUTIONAL AND IS IN VIOLATIONS AND IN CONTRAVENTION OF THE PROVISIONS OF PART III OF THE CONSTITUTION OF INDIA; AND ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR ORAL ORDER The petitioner challenges the imposition of cess at 10% of the stamp duty amounting to Rs.2.5 crore and seeks a writ of certiorari to quash the Stamp Duty Adjudication Order passed by respondent No.3, dated 03.12.2022, in DRO/SJN/COP/ADJ/15/2022-2023. 2. The National Company Law Tribunal, by its order dated 22.04.2022 in CP(CAA) No. 06/BB/2022, sanctioned a scheme of arrangement between Prestige Exora Business Parks Limited and Pluto Cessna Business Park Private Limited, along with their respective shareholders and creditors. Under this scheme, Exora Business Park, along with the CAM business, was demerged from Prestige Exora Business Park Limited and vested in Pluto Business Park Private Ltd. as a going concern under Sections 230 to 232 of the Companies Act, 2013. 3. The NCLT order falls within the definition of a conveyance under Section 2(1)(d) of the Karnataka Stamp Act, 1957, and stamp duty is payable on this conveyance as prescribed under Article 20(4)(ii) of the Schedule to the Karnataka Stamp Act, 1957. - 3 - NC: 2025:KHC:4219 WP No. 5031 of 2023 4. The petitioner contends that the maximum stamp duty payable on the conveyance is Rs.25 crore, in light of the amendment to Article 20(4) of the Karnataka Stamp Act, 1957. However, respondent No.3, after adjudication, determined the stamp duty payable on the conveyance to be Rs.25 crore, along with an additional duty of Rs.2.5 crore under Section 3B of the Karnataka Stamp Act, 1957. 5. Shri Saji P. John, learned counsel for the petitioner, argues that the maximum stamp duty payable on the reconstruction or demerger of a company is Rs.25 crore as per The Karnataka Stamp (Second Amendment) Act, 2022. He further contends that Section 3C of the Karnataka Stamp Act, 1957 stipulates that the total stamp duty, including any additional duty, cannot exceed the maximum duty imposed under Section 3, read with Article 20(4) of the Schedule to the Act. Therefore, the imposition of the additional Rs. 2.5 crore is contrary to Section 3C of the Act, 1957. 6. The learned counsel further submitted that a coordinate Bench of this Court had expressed on an earlier occasion in respect of an exemption/concession notification issued under Section 9 of Act, 1957 that such exemption shall be extended to stamp duty leviable under Section 3 and Section 3B of the Act, 1957, on the grounds that the impugned Section 9 notification therein expressly stated a reduction of 50 per cent on the total stamp duty payable under the Stamp Act, 1957. Admittedly, this Court therein had refused to undertake an interpretive exercise, but upheld the rule of strict construction in - 4 - NC: 2025:KHC:4219 WP No. 5031 of 2023 interpretation of the grant of concessions in revenue matters. In support, he places reliance upon the following: 1) Tata Consultancy Services, Mumbai v. State of Karnataka and Anr in W.P. No. 34607/2002 and connected matters: DD 01.09.2002. 7. In response, the learned Government Advocate vehemently submits that Section 3C of the Karnataka Stamp Act, 1957 applies only to duties charged on an instrument under any other law, and the additional duty imposed under Section 3B of the Karnataka Stamp Act, 1957 is rightly imposed as per the provisions of the Act. 8. Having heard the submissions of the learned counsel for both parties, the issue that arises for consideration is whether additional stamp duty levied under Section 3 B of the Karnataka Stamp Act, 1957 to the tune of INR 2.5 crores over and above the duty imposed under Section 3 of the Act, 1957 is valid and sustainable in law? 9. Section 2(1)(d) of the Karnataka Stamp Act, 1957 defines ‘conveyance’ as including: (i) a conveyance on sale; (ii) every instrument; (iii) every decree or final order of any Civil Court; and (iv) every order made by the High Court under Section 394 of the Companies Act, 1956, regarding amalgamation of companies, which transfers property, whether movable or immovable, or any estate to another person, unless otherwise provided in the Schedule. - 5 - NC: 2025:KHC:4219 WP No. 5031 of 2023 10. Section 3 of the Karnataka Stamp Act, 1957 specifies the instruments chargeable with duty. Sub-section (1) states that every instrument mentioned in the Schedule, executed in the State of Karnataka after the commencement of this Act, shall be chargeable with the proper duty as per the Schedule. Sub-section (2) states that instruments executed outside Karnataka after the commencement of the Act, relating to any property situated within the State, shall also be chargeable with duty if received in Karnataka. 11. Article 20(4)(ii) of the Schedule to the Act, 1957 reads: “In cases of reconstruction or demerger of a company, the stamp duty is 3% on the market value of the transferor company's property located within Karnataka or 1% of the aggregate value of shares issued to the resulting company, whichever is higher, subject to a maximum of Rs.25 crore.” 12. Section 3B of the Karnataka Stamp Act, 1957 provides that any instrument of conveyance, exchange, settlement, gift, or lease in perpetuity of immovable property chargeable under Section 3 shall also be chargeable with additional duty at the rate of 10%, for specific state projects. This duty is in addition to the duty under Section 3 of the Act. 13. Section 3C of the Act, 1957, on the other hand, limits the levy of additional stamp duty, stating that no instrument shall be charged with additional duty under any other law that exceeds the maximum duty chargeable under the Karnataka Stamp Act, 1957.In other words, the stamp duty imposed on an instrument under any - 6 - NC: 2025:KHC:4219 WP No. 5031 of 2023 other law shall not exceed the stamp duty chargeable under this Act. 14. The learned counsel for the petitioner further drew the attention of this Court to sub-section (3) of Section 3B of the Act, 1957, which reads that the provisions of the Act of 1957 shall, so far as may be applicable, apply to the additional duty levied under sub-section (1) of Section 3B of the Act of 1957, as they may apply in relation to the duty chargeable under Section 3. 15. In the present case of demerger, the market value of the immovable property is INR 1112,73,87,100/-, on which stamp duty is chargeable at INR 33,38,21,613/- at the prescribed rate of 3%. The transferred movable assets are valued at INR 34,28,19,517/-, with stamp duty charged at INR 1,02,84,585/-. This brings the total stamp duty to INR 34,41,06,198/-. However, the Karnataka Stamp (Second Amendment) Act, 2022 imposes an upper limit on the stamp duty payable at INR 25 crores. 16. Subsequently, the respondent No. 3 imposed an additional duty of 10% (INR 2.5 crore) under Section 3B, bringing the total to INR 27.5 crore. 17. The petitioner disputes this additional duty, by placing reliance on the provision of Section 3C. However, upon close examination, it may be understood that Section 3C of the said Act applies only to duties imposed under other laws, not those under the Karnataka Stamp Act itself. - 7 - NC: 2025:KHC:4219 WP No. 5031 of 2023 18. Furthermore, a careful scrutiny of sub-section (3) of Section 3B of the Act leads us to conclude that it is expressly mandated that all such provisions of the said Act, which apply in relation to the duty as may be levied under Section 3 are equally applicable to any additional duty as may be levied under sub- section (1) of Section 3 of the Act. However, the charging sub- section (1) of Section 3B of Act, stipulates a levy of additional duty at the rate of ten percent for the purpose of various infrastructure projects prescribed therein. 19. Therefore, the legislature has envisaged a levy of additional duty for variegated objects, in addition to the levy of stamp duty. 20. It is pertinent to note that the petitioners before this Court are not challenging the imposition of the additional duty under Section 3B of the Act but merely contend that such imposition of additional duty must also be read in conjunction with the corresponding articles of the Schedule. Arguendo, if the petitioners’ contention were to be accepted, an entity that suffers a stamp duty of INR 25 crores or more would, in essence, be excused from paying any additional duty. However, where a person or entity suffers a stamp duty below the upper limit of INR 25 crores, such an entity would not be excused from the payment of additional duty as payable under Section 3B of the Act. Therefore, any such interpretation would be in violation of the principle of reasonable classification and the test of intelligible differentia, resulting in arbitrary discrimination against entities suffering a stamp duty lower than the maximum amount of INR 25 crores. - 8 - NC: 2025:KHC:4219 WP No. 5031 of 2023 21. The petitioner, in support of their contention that no distinction can be made between the nature of stamp duty levied under Section 3 and additional duty under Section 3B of the Act, has placed reliance on the decision of a coordinate bench of this Court in the case of Tata Consultancy Services, Mumbai v. State of Karnataka and Anr. in W.P. No. 34607/2002 and connected matters, dated 01.09.2002. In that case, the Court dealt with the issue of whether an exemption notification issued under Section 9(1) of the Karnataka Stamp Act, 1957, extending concessionary benefits in respect of the stamp duty levied under Section 3 of the Act, could also be extended to the additional duty levied under Section 3B of the Act. 21.1. While observing the legislative intent contained in sub- section (3) of Section 3B of the Act, 1957, which prescribes that all provisions applicable to the duty levied under Section 3 shall be equally applicable to the additional duty levied under Section 3B, and upholding the principle that a strict rule of interpretation must be applied in matters relating to revenue and the grant of concessions in the stamp duty payable, this Court, however, did not engage in any interpretive exercise. The coordinate bench adjudicated the issue therein, similar to the present case, by merely examining the wording of the impugned notification, which granted a 50 percent exemption from the total stamp duty payable under the Act for a specific class of transactions. Therefore, since no interpretive exercise was undertaken, the said decision is not applicable to the case at hand. - 9 - NC: 2025:KHC:4219 WP No. 5031 of 2023 22. In view of the above, the imposition of additional duty under Section 3B is justified, and the statutory upper limit of the maximum stamp duty payable, being limited to INR 25 crores under the Karnataka Stamp (Second Amendment) Act, 2022, is not applicable to the additional duty levied under the said Act. Accordingly, the writ petition is dismissed. Sd/- (HEMANT CHANDANGOUDAR) JUDGE BKM Ct:vh List No.: 8 Sl No.: 1