The Supreme Court dismissed the appeal filed by the State of Maharashtra, upholding the Bombay High Court's decision that granted National Organic Chemical India Ltd. (NOCIL) a refund of Rs. 25 lakhs in stamp duty. The Court confirmed that the maximum stamp duty of Rs. 25 lakhs payable under Article 10 of Schedule-I of the Bombay Stamp Act, 1958, is a one-time payment and does not require fresh payments upon subsequent increases in share capital.

1. Background of the Case:

National Organic Chemical India Ltd. (NOCIL) had initially paid a stamp duty of Rs. 1,12,80,000/- in 1992 when it increased its share capital to Rs. 600 crores. After Maharashtra amended Article 10 of the Bombay Stamp Act in 1994, introducing a maximum cap of Rs. 25 lakhs on stamp duty, NOCIL later sought a refund of Rs. 25 lakhs paid during a subsequent share capital increase.

2. Contention by the State of Maharashtra:

The State argued that every increase in share capital constitutes a separate taxable event, requiring stamp duty payment irrespective of any previous payment or maximum cap. They also argued that the character of the Articles of Association was materially altered with each increase in share capital.

3. Respondent's Argument:

NOCIL, represented by learned senior counsel Ms. Madhavi Divan, argued that the Articles of Association, and not Form No. 5, is the instrument liable for stamp duty. They contended that the maximum cap of Rs. 25 lakhs should be applied as a one-time measure, and no further stamp duty was payable since the maximum amount had already been paid.

4. Supreme Court's Decision:

The Supreme Court, agreeing with the Bombay High Court, held that Form No. 5, which merely notifies the Registrar of an increase in share capital, is not an instrument liable to stamp duty. The Court also confirmed that the maximum cap of Rs. 25 lakhs on stamp duty is applicable as a one-time payment, rejecting the State's claim for additional duty on subsequent increases in share capital.

5. Conclusion and Implications:

This ruling clarifies the interpretation of stamp duty provisions under the Bombay Stamp Act, ensuring that companies are not required to pay additional stamp duty beyond the maximum cap for future increases in share capital. This decision is significant for corporations, providing clarity and certainty in stamp duty obligations.