#1 Object and Purpose of the Stamp Act 1949

BASF Services (M) Sdn Bhd v. Pemungut Duti Setem [2010] 1 MLRA 317, following Commissioners of Inland Revenue v. Angus & Co Ltd [1889] 23 QBD 579

“The object of the act relating to stamp duties is to raise revenue by requiring documents of certain kinds to be stamped. In other words, the stamp act taxes documents and not transactions.”

Four principles can be discerned from this authority:

1. Every charge upon the subject must be imposed by clear and unambiguous language.
2. A statute imposing a tax upon the subject should be interpreted strictly and may only operate as a charge if the words are plain and unambiguous.
3. The party seeking to bring an instrument within the Stamp Act must show clearly that it falls within it, and no intendment can be made in favour of liability.
4. If the statute is uncertain and open to two interpretations — one favouring the Crown and the other the subject — the latter construction should be adopted. It is the subject, not the Crown, that is entitled to the benefit of the doubt: Chiew Chiu Sing v. Dato’ Seri Tiong King Sing [2004] 2 MLRH 869.

C.C. Gallagher, Highmore’s Stamp Laws (4th ed., p. 7) further states that in determining stamp duty, the real and true meaning of the instrument must be ascertained — the description given by the parties in the instrument itself is immaterial. The question of stamp or no stamp, and if a stamp to what amount, is to be determined upon the real and true character and meaning of the writing.

#2 Definition of “Conveyance on Sale” (Item 32(a), First Schedule)

BASF Services (M) Sdn Bhd v. Pemungut Duti Setem [2010] 1 MLRA 317

“Conveyance on sale” includes every instrument and every decree or order of any court whereby any property, or any estate or interest in any property, upon the sale thereof is transferred to or vested in a purchaser or any other person on his behalf or by his direction.

Tay Geok Yap & Anor v. Commissioner of Stamps [1966] 1 MLRH 316

To come within the definition of conveyance on sale, the conveyance must be of “property” and there must have been a sale of that property.

Galaxy Energy Technologies Sdn Bhd v. Timbalan Pemungut Duti Setem, Malaysia & Anor [2011] 1 MLRA 360

A memorandum of transfer that is incapable of transferring or vesting the property in the purchaser does not attract stamp duty.

Lim Teck Lee v. The Commissioner of Stamps [1956] 1 MLRH 241

An instrument relating to the retirement of a partner was held to be not a mere receipt, but in effect a transfer of the retiring partner’s share in the partnership assets to the continuing partners — and therefore in equity a conveyance on sale chargeable with ad valorem duty.

#3 Some Meanings of Words Are Peculiar to the Law of Stamp Duty

Pernas Securities Sdn Bhd v. The Collector of Stamp Duties [1976] 1 MLRH 546

Acts of Parliament imposing stamp duties ought to be construed according to the plain and ordinary meaning of the words used, and courts will not adopt a strained or forced construction to avoid incongruity. However, in taxing Acts, technical words are given their technical meaning.

It must be remembered that the Stamp Act itself contains several definitions of words that are at variance with their technical meaning. By virtue of various extending provisions, the expression “conveyance or transfer on sale” has a wider meaning than under the general law, and other words such as “security” have acquired meanings peculiar to the law of stamp duty.

#4 The Content of the Instrument Is More Important Than What It Is Called

Tan Kay Thye & Ors v. Commissioner of Stamp Duties [1991] 4 MLRH 784, following Limmer Asphalte Paving Co v. Commissioners of Inland Revenue [1872] LR 7 Ex 211

The legal rule is that the real and true meaning of the instrument is to be ascertained; the description given by the parties is immaterial, even if they believed and declared its effect was to create a particular instrument mentioned in the Stamp Act.

For instance, if a writing were headed with a recital that the parties agreed to execute a promissory note, yet if the contract set forth was not a promissory note but an agreement of another character, the stamp duty would be that of the agreement — not of the promissory note. The question of stamp or no stamp, and the amount, is to be determined on the real and true character and meaning of the writing.

#5 Determining Market Value of Properties for Stamp Duty Purposes

Collector of Stamp Duties v. Ng Fah In & Ors [1980] 1 MLRA 722

Market value is the price which a willing seller, not obliged to sell, might reasonably expect from a willing purchaser bargaining for sale and purchase of the land. This is best determined by looking at recent sales of comparable lands in the vicinity. The features of a comparable sale are:

1. It must be within a reasonable time of the date of notification.
2. It should be a bona fide transaction.
3. It should be a sale of the land acquired or of adjacent land.
4. It should possess similar advantages.

Universiti Malaya v. Pemungut Duti Setem [2006] 4 MLRH 416

The date for determining the market value of property being transferred under a duly stamped agreement of sale and purchase shall be the date of execution of the agreement.

UMBC v. Pekeliling Triangle Sdn Bhd [1991] 1 MLRA 248

This case discusses whether the interest element ought to be considered in determining market value.

On whether the term “sale of property” should be stretched to include development costs: since the land was vacant at the material time and no development had yet begun, strict interpretive rules dictate that only the costs of the land — being the monetary consideration stipulated under the SPA, or the market value of the vacant land, whichever is greater — should form the basis of assessment of stamp duty.

#6 What Is the Meaning of “Ad Valorem Duty”?

Malaysia Smelting Corporation Bhd v. Pemungut Duti Setem, Pulau Pinang [2010] 3 MLRA 697

Ad valorem duty simply means duty that varies based upon the value of the product, services, or property on which it is levied. Unlike cost, which can be determined with some precision, price and value are fluid and subjective — they may vary at different times, and the value of the same item may be much more to one person than to another. The price paid does not always necessarily represent the value.

#7 What Is the Meaning of “Scheme for the Amalgamation of Any Companies” for Section 15 Stamp Duty Exemption?

Cold Storage (M) Bhd v. Pemungut Duti Setem [1988] 1 MLRA 232, following Crane Fruehauf Ltd v. IRC [1975] 1 All ER 429

An amalgamation consists of combining the businesses of more than one company such that the businesses remain in substance owned by the same persons. This may be achieved in two ways:

1. By a transaction whereby the business of an existing company is acquired by the transferee company in return for an issue of shares in the transferee company to the transferor company or to its shareholders.
2. By the acquisition by the transferee company of shares of the existing company in exchange for shares in the transferee company issued to the shareholders of the existing company.

To be entitled to relief under section 15, all conditions must be fulfilled:

1. The Collector of Stamp Duties must be satisfied.
2. He must be satisfied that the instrument for which relief is sought is in connection with a scheme for reconstruction or amalgamation.
3. The consideration for acquisition consists of not less than 90% of shares in exchange for shares.

#8 Are Unstamped Documents Invalid or Just Inadmissible as Evidence? — Interpretation of S 52(1)(A)

Tang Vee Luen @ Phillip v. Titan Energy Sdn Bhd [2021] MLRHU 493

The prohibition against admissibility of unstamped documents under proviso (a) to s 52(1) of the Stamp Act 1949 is not absolute. A party may still stamp a document late and pay the penalty for late stamping, after which the document becomes admissible in court.

The non-stamping of a document does not provide the other party with a defence, nor does it mean the contents of the document are untrue. The document is not invalidated — it is simply rendered inadmissible as evidence, at least until it is duly stamped.

#9 Can Stamp Duty Paid on Instruments Be Refunded If the Transaction Does Not Complete? — Application of Section 57, Allowance for Spoiled Stamps

The proviso to s 57 allows for relief if application is made within 12 months after the stamp becomes spoilt or useless, or in the case of an executed instrument, after the date of the instrument.

Koperasi Serbaguna Kebangsaan Bhd v. Pemungut Duti Setem, Wilayah Persekutuan, Kuala Lumpur [2003] 3 MLRH 123

The instrument in question was a transfer on which duty had been paid, and s 57 was held to be inapplicable.

Galaxy Energy Technologies Sdn Bhd v. Timbalan Pemungut Duti Setem, Malaysia & Anor [2011] 1 MLRA 360

The memorandum of transfer was held to be incapable of transferring or vesting the property in the purchaser, as the intended purpose had failed due to the appellant’s inability to pay the balance purchase price, resulting in the termination of the agreement. There was therefore no conveyance on sale within the meaning of s 2 of the Act. The appellant’s case fell within s 57(f)(iv) of the Act, and it was accordingly entitled to a full refund of the stamp duty paid on the memorandum of transfer.