Judgment clarifies non-retrospective application of Kerala Stamp Act amendments on amalgamation and reconstruction transactions
In a significant judgment dated 03 July 2026, the Kerala High Court, presided over by Justice Harisankar V. Menon, has ruled against the demand for stamp duty on amalgamation and reconstruction transactions that were approved prior to amendments in the Kerala Stamp Act, 1959. The case, Zuri Hotels and Resorts Private Limited v. Principal Sub-Registrar, revolved around the petitioner’s challenge to stamp duty demands and subsequent coercive recovery proceedings initiated under the Kerala Revenue Recovery Act, 1968.
Zuri Hotels and Resorts Private Limited filed a writ petition contesting the notices issued by the Principal Sub-Registrar, demanding stamp duty for amalgamation and de-merger activities sanctioned by the Bombay High Court (Goa Bench) in 2010 and 2012, respectively. The crux of the dispute was the applicability of amendments to the Kerala Stamp Act, which introduced stamp duty requirements for "amalgamation" and "reconstruction" only prospectively, effective from 13 November 2016 and 01 April 2020.
The petitioner argued that these amendments could not be applied retroactively to transactions that were approved by court orders prior to their effective dates. The court concurred, emphasizing that the statutory amendments did not possess retrospective effect, thus rendering the stamp duty demands unsustainable.
Justice Menon underscored that the crucial date for determining the applicability of stamp duty is the date of execution of the instrument, as established in the Supreme Court judgment Vijay v. Union of India, (2023) 17 SCC 455. Accordingly, since the amalgamation and de-merger were executed and approved before the amendments took effect, the demand for stamp duty was deemed erroneous.
Further, the court addressed the procedural aspect under Section 89(5) of the Registration Act, 1908, which necessitates sending copies of court orders to registering authorities. However, it clarified that such orders themselves do not attract stamp duty, as the statute does not envisage court orders as chargeable instruments under the Stamp Act.
Consequently, the Kerala High Court set aside the impugned stamp duty demands and the related coercive recovery proceedings initiated under the Revenue Recovery Act, 1968. This judgment not only provides relief to Zuri Hotels and Resorts but also sets a precedent regarding the non-retrospective application of legislative amendments affecting financial obligations.
Bottom line:-
Amendments to the Kerala Stamp Act, 1959, introducing stamp duty requirements for amalgamation and reconstruction, are not retrospective in operation. Orders of a High Court approving amalgamation/reconstruction cannot form the basis for a demand of stamp duty under the statute.
Statutory provision(s): Kerala Stamp Act, 1959 Section 2(d), Registration Act, 1908 Section 89(5), Revenue Recovery Act, 1968
