Gujarat Stamp Act, 1958 – ss. 9(a), 54(1)(a) – Art. 20(a), 45(f) of Schedule I – Deed of assignment containing Power of Attorney (POA) – POA chargeable to stamp duty or not – The Full Bench of the High Court came to conclusion that the appellant (an asset reconstruction company, who was assigned debt by the bank) has to pay stamp duty as fixed by Art.45(f) – High Court opined that merely because the power to sell, forms part of the deed of assignment under Schedule 3, the appellant could not escape the charge of duty and that the PoA is required to be considered independently – On appeal, held: What was presented for registration by the appellant was a single document namely an “Assignment Agreement” – The High Court overlooked the fact that there was no independent instrument of PoA and that in any case, the power of sale of a secured asset flowed out of the provisions of the Securitisation Act, 2002 and not out of an independent instrument of PoA – After having accepted the deed of assignment as an instrument chargeable to duty as a conveyance under Art. 20(a) and after having collected the duty payable on the same, it is not open to the respondent to subject the same instrument to duty once again u/Art. 45(f) – Once a single instrument has been charged under a correct charging provision of the Statute, namely Art. 20(a), the Revenue cannot split the instrument into two, because of the reduction in the stamp duty facilitated by a notification of the Government issued u/s. 9(a) – Since the High Court did not address these issues and went solely on the interpretation of Art. 45(f), the same is unsustainable – The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – ss. 3, 5(1)(b)
Allowing the appeal, the Court
HELD: 1. The High Court overlooked the fact that there was no independent instrument of PoA and that in any case, the power of sale of a secured asset flowed out of the provisions of the Securitisation Act, 2002 and not out of an independent instrument of PoA. For invoking Article 45(f), two conditions have to be satisfied. They are, (i) the PoA should have been given for a consideration; and (ii) an authorization to sell any immovable property should flow out of the instrument. In the case on hand, the consideration paid by the appellant to OBC, was for the purpose of acquisition of the financial assets, in respect of a particular borrower. The draft of the PoA contained in Schedule
3 of the deed of assignment was only incidental to the deed of assignment. The deed of assignment has already been charged to duty under Article 20(a) which deals with “conveyance”. In fact Article 45(f) also requires a PoA covered by the said provision to be chargeable to stamp duty under Article 20. [Paras 9, 11 & 12][1099-E; 1100-B-D]
2. But what has happened in this case was that under a Notification dated 25th January, 2002, the Government ordered the reduction of stamp duty payable on an instrument of securitization of loans or assignment of debt with underlying securities, to 75 paise for every Rs.1000 or part thereof. The above Notification was amended by a subsequent Notification dated 1st April, 2003. In view of the Notification dated 01.04.2003 issued in exercise of the power to reduce, remit or compound the duty, conferred by Section 9(a) of the Act, the amount of duty chargeable in terms of Article 20(a) was capped at Rs. 1,00,000/. In addition to the said amount of Rs.1,00,000/, the appellant was asked to pay an additional duty of Rs.40,000/ under Section 3A. The appellant has thus paid a total amount of Rs.1,40,000/with the instrument having been charged as a conveyance under Article 20(a). In all taxing Statutes, there are taxing provisions and machinery provisions. Once a single instrument has been charged under a correct charging provision of the Statute, namely Article 20(a), the Revenue cannot split the instrument into two, because of the reduction in the stamp duty facilitated by a notification of the Government issued under Section 9(a). In other words after having accepted the deed of assignment as an instrument chargeable to duty as a conveyance under Article 20(a) and after having collected the duty payable on the same, it is not open to the respondent to subject the same instrument to duty once again under Article 45(f), merely because the appellant had the benefit of the notifications under Section 9(a). Since the impugned order of the High Court did not address these issues and went solely on the interpretation of Article 45(f), the same is unsustainable. Therefore, the appeal is allowed and the impugned order is set aside. The demand made by the Chief Controlling Revenue Authority is consequently set aside. [Paras 13-16][1100-E-F; 1101-A, D-H; 1102-A]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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