Fresh Lease, Fresh Duty – Bombay HC – Stamp duty on renewals
Judgment dated 2.9.2025 of the High Court of Bombay in Writ Petition No.3960 of 2022 of Sony Pictures Networks India Limited (formerly known as Multi Screen Medica Pvt Ltd) Vs. The State of Maharashtra and others with connected matters
Lease or Renewal – Bombay HC decoding stamp duty liability under Article 36 of Maha Stamp Act
Stamp duty showdown – Nine-year lease Vs Eighteen-year Demand
Legal Boundaries of Stamp Duty when a Lease ends and New lease begins
Lease deed and demand of differential stamp duty
On 19.12.2014, the petitioner had lease of the commercial property of Rosette Leasing and Infotech Pvt Ltd, initially for three years and this was continued for total period of nine years. The lease deed provided for interest free refundable security deposit of Rs.109,22,924/-.
Thus, the same instrument which specified more than one period governed the parties
The lease deed was stamped for Rs.64,75,500/- for the lease period of nine years.
In March / April 2016, the petitioner received two notices demanding stamp duty of Rs.1,25,51,000/- for 18 years.
On 10.1.2017, the order under Section 33A of the Stamp Act was passed for differential stamp duty of Rs.64,75,000/- calculated under Article 36(iii).
On 11.12.2023, fresh lease deed was executed and stamp duty under Article 36(i) was paid.
The question was if the Lease Deed dated 19.12.2024 should be stamped under Article 36(ii) or 36(iii) of Schedule I of the Maharashtra Stamp Act, 1958. In other words, whether the lease is to be treated for nine years or eighteen years.
The meaning of the phrase “…with a renewal clause contingent or otherwise” in Article 36(ii) and (iii).
In the instant case, there is no automatic renewal of the lease agreement after expiry of first nine years period but if the parties agree a fresh document will be executed for second nine years on fresh terms and conditions.
HELD that the case of the petitioner does not fall within extension of lease but would fall into execution of fresh lease deed. It is not a case of single transfer for 18 years but two different transactions – first lease for nine years period on agreed terms and conditions and another for nine years on new terms and conditions to be agreed upon. Therefore, Section 4 of the Stamp Act is not applicable to the instant case.
