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BIGBLOC Construction Challenges INR 1.84 Crore Stamp Duty Penalty Order
Team Finance Saathi
16/Jan/2025
What's covered under the Article:
- INR 1.84 crore penalty imposed by the Gujarat Stamp Authority on BIGBLOC subsidiary.
- Company asserts the stamp duty was already paid on share acquisition and plans to challenge the order.
- Legal action is underway, citing similar Supreme Court judgments in favor of share purchases.
BIGBLOC Construction Limited has received a significant order from the Collector and Additional Superintendent of Stamps in Gujarat, enforcing the payment of INR 1.84 crore as stamp duty and penalty. The order, dated 10th January 2025 and received by the company on 15th January 2025, comes after the Starbigbloc Building Material Limited (SBML), a subsidiary of BIGBLOC, was issued a notice from the Stamp Duty office regarding a previous Memorandum of Understanding (MOU) executed in July 2018.
The MOU involved the acquisition of 100% shares of Hilltop Concrete Private Limited (HCPL), which resulted in BIGBLOC acquiring all the assets and liabilities of HCPL. The necessary stamp duty was duly paid at the time of the share acquisition. However, following the name change of HCPL to Starbigbloc Building Material Limited, the Stamp Duty office raised concerns about the classification of the transaction, arguing that it involved a transfer of assets, not shares. This led to the imposition of an additional stamp duty and penalty.
BIGBLOC believes that the MOU was a transaction involving the purchase of shares and not the transfer of assets, and as such, the stamp duty was correctly paid. The company points to precedents, including a Supreme Court ruling (Prasad Technology Park Pvt. Ltd. vs Sub Registrar & Ors), which supports their interpretation that share acquisitions do not require additional stamp duty.
BIGBLOC Construction has made it clear that it intends to challenge the order in court, citing legal precedents that favor its position. The company is confident that this legal action will clarify the applicability of stamp duty in this case.