Justice over Limitation – Stamp duty refund – failed Foreign Investment
Judgment dated 3.9.2025 of the High Court of Bombay in Writ Petition No.8750 of 2024 of Armstrong Machine Builders Pvt Ltd vs. State of Maharashtra through Secretary Ministry of Revenue and another
Is the Petitioner remediless? – Refund of Stamp Duty – Limitation – Mah Stamp Act, 1958
On 13.7.2021, the petitioner had entered into Share Purchase Agreement with UK Company and others for transfer of equity shares of Rs.55,37,92.000/- and paid stamp duty of Rs.1,17,08,200/-.
On 17.4.2020, the Government of India issued Press Note No.3 for its prior approval for investment in India by non-resident of a country sharing border with India or beneficial owner of investment is situated or is a citizen of such a country.
The Company applied for approval of the Ministry of Commerce and Industry to the said investment. However, it was rejected by the letter dated 24.3.2022. As a result, the SPA was rendered void-ab-initio and enforceable.
On 22.9.2022, the petitioner applied for refund of stamp paid on the SPA. It was rejected solely on the ground of limitation vide order dated 9.10.2023, i.e. the refund application was filed after one year, two months and nine days.
HELD that the underlying transaction between the parties did not go through and fructify and hence, the refund application could not have been filed within six months prescribed under Section 48(3) of the Stamp Act and until such reject the SPA was withheld. Once the SPA was rejected, it has become infructuous and this delay was beyond the control of the petitioner. That would not prima facie entitled the State to retain the stamp duty admittedly refundable to the petitioner.
Thus, it is the cause for delay propounded by a party will have been examined. If the cause for delay would fall within the four corners of “sufficient cause”, irrespective of the length of delay, then the same deserves to be condoned.
The Government cannot unjustly enrich itself by forfeiting the stamp duty paid by the petitioner. A litigant cannot be penalized for the time consumed before a Government authority.
To deny refund solely on the ground of limitation would offend equity justice and fairness in the present case.
