M/S.

Hcl Technologies Limited vs State Of Tamil Nadu on 27 March, 2012

Madras High Court Madras High Court M/S.Hcl Technologies Limited vs State Of Tamil Nadu on 27 March, 2012 DATED: 27.03.2012 CORAM: THE HONOURABLE MR.JUSTICE VINOD K.SHARMA W.P.No.17183 of 2011 M/s.HCL Technologies Limited, Registered Office, 806, Siddharth, 96, Nehru Place, New Delhi-110 019 Rep. by its Associate Director Power of Attorney Holder, Mr.T.A.Srinivasen ... Petitioner -vs1. State of Tamil Nadu, Rep. by its Secretary, Department of Commercial Taxes and Registration, Fort St.George, Chennai-600 009. 2. The Inspector General of Registration, 120, Santhome High Road, Chennai-600 028. 3. The Electronics Corporation of Tamilnadu, 692, Anna Salai, II Floor, MHU Complex, Anna Salai, Nandanam, Chennai 600 035. ... Respondents. Legal &

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M/S.Hcl Technologies Limited vs State Of Tamil Nadu on 27 March, 2012

Prayer: Writ petition is filed under Article 226 of Constitution of India for issuance of a Writ in the nature of Certiorari, to call for the records and to quash the impugned communication No.50896/C3/2007 dated 13.02.2009 passed by the 2nd respondent and to direct the 1st and 2nd respondents to refund the stamp duty of Rs.1,00,80,020/- (Rupees One Crore Eighty Thousand and Twenty only) paid by the petitioner in respect of Lease Deed No.1955/06 dated 12.08.2005 registered on 15.03.2006. For Petitioner : Mr.Arvind P.Dattar, S.C., For Mr.Ananth Padmanabhan For Respondents : Mr.R.Ravichandran, AGP Assisted by Mr.P.Karthikeyan, GA ***** ORDER M/s.HCL Technologies Limited, a company registered under the Companies Act, has invoked the extraordinary equitable jurisdiction of this Court with a prayer for issuance of writ in the nature of Certiorari, to quash the impugned order No.50896/C3/2007 dated 13.02.2009 passed by the Inspector General of Registration / 2nd respondent, declining the relief of refund of stamp duty, with consequential prayer for issuance of writ in the nature of Mandamus, to direct 1st and 2nd respondents to refund the stamp duty of Rs.1,00,80,020/- (Rupees One Crore Eighty Thousand and Twenty only) paid by the petitioner in respect of Lease Deed No.1955/06 dated 12.08.2005 registered on 15.03.2006. 2. The relief is claimed on the pleading, that in the year 2005, the Parliament enacted Special Economic Zones Act, 2005 (Act 28 of 2005) (hereinafter referred to as "the SEZ Act"). The object of the Act was for establishment, development and management of Special Economic Zones. The SEZ Act was enforced on 10.02.2006, vide notification No.S.O.196(E). 3. In exercise of powers conferred under Section 55 of the SEZ Act, the Ministry of Commerce and Industry notified Special Economic Zones Rules, 2006 (hereinafter referred to as "the SEZ Rules"), which were also enforced on 10.02.2006. 4. The petitioner was allotted 50 acres of land by the Government of Tamil Nadu, vide G.O.No.422 Revenue Department (LD.5(2) dated 20th July, 2005. This was a part of 393 acres of land, alienated vide G.O.Ms.No.327, Revenue (LD.5) Dept., dated 26th May, 2005, to the third respondent by the Government of Tamil Nadu. The land allotted to the petitioner was located at 138, Sholinganallur Village, Tambaram Taluk, Kancheepuram District. 5. The petitioner remitted a sum of Rs.24,00,00,000/- (Rupees Twenty Four Crores only) towards Land Deposit, which was refundable without interest. Another sum of Rs.1,20,00,000/- (Rupees One Crore Twenty Laksh only) was deposited as service and development charges to the Electronics Corporation of Tamilnadu. The Electronics Corporation of Tamilnadu entered into 90 years lease with the petitioner. The total lease rent and service charges was fixed at Rs.90/- which was to be collected over the lease period of 90 years at the rate of Rs.1/- per year. 6. The case of petitioner was that though the stamp duty was payable only on the rent amount of Rs.90/-, the petitioner, by mistake, paid it on the entire deposit amount of Rs.24 crores, though such refundable deposit was not rent, premium or advance, as stipulated in the Indian Stamp Act, 1899. The lease deed dated 12/08/2005, was duly executed and registered with the District Registrar, South Chennai, vide Registration Number 1955/2006 on 15.03.2006 and a sum of Rs.1,00,80,020/- (Rupees One Crore Eighty Thousand and Twenty only) was paid towards stamp duty.
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M/S.Hcl Technologies Limited vs State Of Tamil Nadu on 27 March, 2012

7. Subsequently, the Board of Approvals constituted under Section 8(1) of the SEZ Act, approved the establishment of the Special Economic Zone over the above 50 acres of land and the Board granted the status of "Developer" to the Electronics Corporation of Tamilnadu, which is fully owned Government undertaking of Tamil Nadu, which acted as Nodal Agency of the Government of Tamil Nadu under Section 3(10) of the SEZ Act. This was duly notified in the Gazette of India, Extraordinary, Part II, Section 3, Sub-Section (ii) No.393 dated 11th April, 2007. 8. The petitioner was also approved and conferred the status of "Co-Developer" by the Board of Approvals, Ministry of Commerce, Government of India, vide approval No.F/2/51/2006EPZ dated 16th October, 2006, for the land leased out to the petitioner, by the third respondent. 9. The Government of India, in exercise of powers conferred under Section 4(1) of the SEZ Act r/w Rule 8 of the SEZ Rules notified the 50 acres of land as Special Economic Zones, which was duly notified in the Gazette of India dated 11th April, 2007. Along with the application, petitioner had also submitted a project report for establishment of Unit in the Special Economic Zone dedicated for Information Technology / Information Technology Enabled Services. 10. It is the submission of petitioner that by virtue of Section 57 r/w Part III of the Third Schedule of the SEZ Act, a new proviso (3) was inserted to the existing Section 3 of the Indian Stamp Act, 1899, stipulating that any instrument executed, by or, on behalf of, or in favour of the Developer, or Unit or in connection with the carrying out of purposes of the Special Economic Zone, no stamp duty shall be chargeable for any instrument, whether Sale Deed or Lease Deed or otherwise. The deed executed by the third respondent as Developer and the petitioner is Co-Developer for carrying out the purposes of an SEZ. 11. The petitioner, therefore, claims that he is entitled to refund of stamp duty to the tune of Rs.1,00,80,020/(Rupees One Crore Eighty Thousand and Twenty only) paid on the lease deed dated 12th August, 2005, entered into between petitioner and the Electronics Corporation of Tamilnadu. 12. It is the submission of petitioner that subsequently, the amendment to the Indian Stamp Act, was enforced, on 10th February, 2005, i.e. prior to the date of the lease deed entered into between the petitioner and third respondent, as well as the date of registration of the lease deed, i.e.15th March, 2006. 13. Section 51 of the SEZ Act reads as under: "The Provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act." 14. The submission of the petitioner is that reading of Section makes it amply clear that the SEZ Act has been given overriding effect over other laws including the Stamp Act, which entitles the petitioner to refund of the stamp duty. 15. The Tamil Nadu Special Economic Zones (Special Provisions) Act, 2005, came into force on 8th August, 2005. The preamble to the Act reads as under: "An act to make certain special provisions in relation to Special Economic Zones in the State of Tamil Nadu and for matters connected therewith and incidental thereto." The Section 28 of this Act further states that the provisions contained in this Act shall be in addition to and not in derogation of the Special Economic Zones Act, 2005 and shall have effect notwithstanding anything inconsistent with contained in any other State Law for the time being in force.

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M/S.Hcl Technologies Limited vs State Of Tamil Nadu on 27 March, 2012

16. The submission of the petitioner is that this amendment with insertion of new proviso 3 to Section 3 of the Indian Stamp Act, 1899, by virtue of Section 57 r/w Part III of the Third Schedule of the SEZ Act, is applicable to the petitioner. The petitioner, therefore, sent the request for refund of stamp duty on 19th April, 2007, which was followed by various reminders. 17. The petitioner received reply dated 13th December, 2008, asking for particulars on Central Government Notification Orders and also a copy of the Document No.1955/2006. The information sought for was immediately supplied by petitioner. 18. In reply to the letter, sent by the petitioner, the second respondent, vide Letter dated 13th February, 2009, replied, stating that the Gazette of India, Notification No.393 issued by the Department of Commerce, Ministry of Commerce and Industry, Government of India, declared the aforementioned 50 acres of land as SEZ only on 11th April, 2007, while the petitioner had registered the Lease deed on 12.08.2005, i.e. prior to the date of notification, hence, the petitioner was not entitled to refund of stamp duty under newly inserted proviso 3 to Section 3 of Indian Stamp Act, 1899. 19. The petitioner submits that the purchase or lease of land is a pre-requisite for seeking approval for establishment of Special Economic Zone, wherein any prospective applicant is expected to state the Ownership of Land in its possession beforehand to get his application considered for approval to be formally notified in the Gazette of India, therefore, the application can be considered only, when the land is in the name or in possession of the applicant. This fact is clear from any final gazette notification issued under Section 3 of the SEZ Act, under which the approval in respect of certain tract of land. 20. It is submission of petitioner that the ground for rejection neither has the legal sanctity and further lacks legal basis. The petitioner has also placed reliance on the policy of the Government of Tamil Nadu, 2003, Special Economic Zones, wherein, it has been provided that all industrial units and their expansions to be located in the SEZs will be exempted from payment of stamp duty and registration charges towards land transactions, therefore, the petitioner claims to be entitled to the refund of stamp duty. The petitioner also placed reliance on the instruction No.18, issued vide F.No.H.4/3/2009-SEZ dated 02.07.2009, by the Government of India, Ministry of Commerce & Industry Department to all the State Governments, wherein issue of refund of stamp duty paid on land purchased before the SEZ approval has been addressed, wherein, it has been laid that for the purchase of land before the formal approval, but after the in-principle approval, the potential developer is to pay the stamp duty up front, which may be refunded by the State Government after the SEZ notification is issued. 21. The order of the second respondent was served on petitioner on 25th February, 2009. Thereafter again the petitioner claimed reimbursement of stamp duty, but failed. 22(i). The impugned order is challenged, being arbitrary and violative of Article 14 of the Constitution of India; 22(ii). That the reason for refund renders nugatory the laudable object behind the SEZ Act; 22(iii). That in view of the SEZ Act, coming into force, the petitioner is entitled to refund of stamp duty, as under Section 50 of the SEZ Act, exemption from various levies to encourage Special Economic Zones; 22(iv). That the non refund defeats legitimate expectation of petitioner; 22(v). That the stamp duty paid by petitioner is claimed to be without authority of law, therefore, hit by Article 265 of the Constitution of India, as the SEZ Act has come into force in the year 2005. Whereas the stamp duty was paid by petitioner on 15.03.2006. 22(vi). That the stamp duty paid is, being in violation of policy of the State Government to encourage setting up of Special Economic Zones, therefore, not sustainable, in view of the law laid down by the Hon'ble Supreme Court in State of Punjab vs. Nestle India, (2004) 6 SCC 465. 22(vii). That refusal of refund of stamp duty is contrary to the Government Instruction issued vide F.No.H.4/3/2009-SEZ dated 02.07.2009.
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M/S.Hcl Technologies Limited vs State Of Tamil Nadu on 27 March, 2012

23. This writ petition is opposed, on the ground that the Special Economic Zone Act, 2005, came into force only from 10.02.2006. Whereas the land in question was formally allotted to petitioner vide G.O.Ms.No.327 dated 26.05.2005, i.e. prior to enforcement of the SEZ Act. The stand of respondents is that Clause (b) of Article 35 of Schedule I to the Indian Stamp Act, provides that stamp duty shall be levied at the rate of four rupees for every Rs.100/- or part thereof of the amount of rent, find, premium of advance, if any, payable, which does not extinguish between refundable and non refundable advance. 24. It is also stand of respondents that there is no provision in the SEZ Act, to notify an area retrospectively as Special Economic zone or be deemed to have been notified and established in accordance with the provisions of the Act. Rather the provisions of this Act shall provide to notify to such zone accordingly. The property in question was not notified by any Government order within the Special Economic Zone at the time of lease. 25. The third respondent was the notified developer under the SEZ Act, by the Central Government, only on 11.04.2007, therefore, on the date of execution of lease deed in question, the property in question did not fall under the purview of the Special Economic Zone. 26. Similarly, petitioner was notified co-developer only on 16.10.2006, after execution of lease deed in question. The Government of India, by virtue of powers conferred under Section 4 of the SEZ Act, r/w Rule 8 for establishment of unit in the Special Economic Zone, also notified on 11.04.2007, i.e. subsequent to the execution of the lease deed. 27. The amendment to the stamp act by inserting proviso to Section 3 of the Indian Stamp Act, 1899, is also prospective in nature, therefore, cannot be applied to the lease deed in question, which was executed on 12.08.2005, i.e. prior to the amendment, therefore, the amendment to the stamp act, is not applicable to the case of petitioner. 28. The Section 51 of the SEZ Act is prospective in nature and cannot be applied retrospectively to cover up the lease of petitioner. 29. The policy of Government is challenged, by the respondents on the ground of it being beyond the Act, and that the notification is only prospective in nature. The policy of the Government, that stamp duty be paid, and refund sought thereafter, is said to be contrary to the Indian Stamp Act. 30. The stand of respondents is that the petitioner is not entitled to refund of stamp duty, in absence of payment having been made under protest or objection in view of law laid down by this Court in AREV T& D Lightening Arresters Pvt. Ltd vs. The Additional Secretary, Departmental of Revenue and Disaster Management Government of Pondicherry, 2009 (3) CTC 34. The stand of respondents further is that judgment of the Hon'ble Supreme Court in the case of State of Punjab vs. Nestle India (supra), is not applicable to the facts of the case, therefore, it is prayed that the writ petition be dismissed. 31. The contention of learned Senior Counsel appearing on behalf of petitioner is that under Section 56 of the SEZ Act, the Central Government has authorized to make such provisions, which are not inconsistent with the provisions of this Act, by order published in the official Gazette. Whereas under Section 57, the Central Government has further authorized to amend certain enactments with effect from such date as the Central Government may, by notification, appoint enactments specified in the Third Schedule, shall be amended in the manner specified therein. 32. It is in exercise of the powers under the Act, that another Part 3 of Schedule-III, Sub Clause-3, is inserted under Section 3 of the Indian Stamp Act to exempt any instrument executed by, or on behalf of, or in favour of developer or Unit or in connection with the carrying out of purposes of the Special Economic Zone. The above provision does not prescribe any date for enforcement and enactment, therefore, in absence of any such date, any instrument executed by the developer is entitled to duty exemption and if duty is paid to refund
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M/S.Hcl Technologies Limited vs State Of Tamil Nadu on 27 March, 2012

thereof. 33. This contention cannot be accepted. The Central Government, by way of notification, has appointed the 10th February 2006 as the date of which Sections 42 to 58 came into force. The amendment made, therefore, in exercise of the such power, can be operative only from 10th February 2006. It may also be noticed here that the amendment deals with exemption and not refund of the stamp duty paid. 34. The lease deed was registered by petitioner on 15.03.2006. Whereas the lease deed was executed on 12.08.2005, i.e. much before coming into force of amendment. The respondent no.3 was declared as developer on 30.05.2006. Whereas the petitioner was declared as Co-Developer on 11.04.2007. The transaction in 2005 was neither by developer or on behalf of developer. It may further be noticed that the Stamp Act only gives exemption to payment of stamp duty and not to refund thereof. 35. The petitioner also relied on the guidelines dated 02.07.2009, which deals with refund of stamp duty for purchase of land by developer for the purpose of setting up of SEZ. The reading of the notification also shows that refund can be claimed if the purchase is after the in-principle approval. There is nothing on record to show that in-principle approval was granted to petitioner or respondent no.3, for being declared as developer and co-developer, therefore, the instruction on which strong reliance was placed is not applicable to the case of petitioner. 36. Learned Senior Counsel for the petitioner thereafter contended that the definition of the SEZ and Unit included existing SEZ and Unit, which were in existence before commencement of this Act. Therefore, the SEZ Act was not a new policy, but formation of existing one in more detailed manner. 37. Even if, this contention is accepted, still the law can be enforced, when it is notified, but not prior to. The law would be only prospective. The judgment in the case of Rattan Lal vs. The State of Punjab, AIR 1965 SC 444 and also the judgment in the case of T.Barai vs. Henry Ah Hoe and another, (1983) 1 SCC 177, have no application to the facts of the present case, as they deal with criminal law in view of prohibition under Section 20 of the Constitution of India, which cannot be applied to other Statute, which have to be applied prospectively, unless specifically made retrospective. 38. It was next contended by learned Senior Counsel for the petitioner that exemption for stamp duty was not for instrument executed in respect of the SEZ, but the one executed in connection with the carrying out the purposes of the Special Economic Zone, which, for the purpose of SEZ, may commence even before the formal approval and notification of the SEZ. 39. This contention cannot be accepted, in view of the stipulation of the Central Government, laying down that refund can be claimed in cases after in-principle approval had been granted. The in-principle approval is a positive act, which cannot be based on the presumption, as contended by the learned Senior Counsel for the petitioner. 40. The contention of learned Senior Counsel that the State of Tamil Nadu, had intended that benefits and exemption conferred by the SEZ Act, was to apply to transaction, that had occurred prior to notification, also cannot be accepted. Rules stipulate, that the State Government can exempt from the State and local taxes, levies and duties, including stamp duty for setting up of proposed Special Economic Zones, cannot cover the transaction before implementation of the Act or amendment of the Stamp Act. 41. This Court in the case of AREV T& D Lightening Arresters Pvt. Ltd vs. The Additional Secretary, Departmental of Revenue and Disaster Management Government of Pondicherry (supra), has been pleased to lay down as under: "20. For the purpose of invoking Section 45 there should have been circumstances warranting application of Section 35 or 40. Section 40 and 42 of the Act requires endorsement by the Collector. Therefore, invoking of Section 45 is a consequential act and cannot be directly invoked. As rightly
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M/S.Hcl Technologies Limited vs State Of Tamil Nadu on 27 March, 2012

submitted by the Senior Government Pleader (P) Chief Revenue Authority referred to in Sections 45(1) and (2) does not have jurisdiction to deal with such Application as filed by petitioner for refund of stamp duty. Section 45 does not provide for any ground such as "Oversight" or "mistake" or "ignorance" to be the basis for making a claim for refund." 42. The case of petitioner admittedly fall under Section 45 of the Act for refund, as regards instructions are concerned, which deals with refund of stamp duty and clearly stipulates that refund can be claimed, if the purchase was after in-principle approval. There is no material placed on record that in-principle approval was granted to petitioner as Co-Developer under the SEZ Act. 43. The impugned order declining the request of petitioner for refund of amount, therefore, is in order and does not call for any interference by this Court in exercise of writ jurisdiction. 44. No merits. Dismissed. No costs. 27.03.2012 Index: Yes Internet: Yes ar To 1. State of Tamil Nadu, Rep. by its Secretary, Department of Commercial Taxes and Registration, Fort St.George, Chennai-600 009. 2. The Inspector General of Registration, 120, Santhome High Road, Chennai-600 028. 3. The Electronics Corporation of Tamilnadu, 692, Anna Salai, II Floor, MHU Complex, Anna Salai, Nandanam, Chennai 600 035.

VINOD K. SHARMA,J. ar
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M/S.Hcl Technologies Limited vs State Of Tamil Nadu on 27 March, 2012

Pre-Delivery Order in W.P.No.17183 of 2011

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