No Omnibus Exemption From Stamp Duty Under Any Other Enactment: Kerala High Court
The Kerala High Court partly allowed Writ Petitions of an Asset Reconstruction Company having a certificate of registration under Section 3 of the SARFAESI Act, from the RBI.
Justice T.R. Ravi, Kerala High Court
The Kerala High Court has observed that there is no omnibus exemption from stamp duty under any other enactment.
The Court observed thus in Writ Petitions filed by the Asset Reconstruction Company (ARC) having a certificate of registration under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), from the Reserve Bank of India (RBI).
A Single Bench of Justice T.R. Ravi held, “… there is no omnibus exemption from stamp duty under any other enactment. Neither Section 5(1A) of the SARFAESI Act, nor Section 8F of the Indian Stamp Act, state anything about exemption being granted to the stamp duty payable under any other enactment. It is settled law that a provision granting exemption has to be strictly construed and the Court cannot by an interpretative process, expand the scope of the exemption, by reading into the provision such aspects, which in the opinion of the Court ought to have been included.”
The Bench said that it is not legally sustainable that there is a total exemption from stamp duty.
Senior Advocate V.V. Asokan and Advocate Sunil Shankar appeared for the Petitioner while Special Government Pleader (SGP) Mohammed Rafeeq appeared for the Respondents.
Facts of the Case
The Petitioner entered into an asset reconstruction agreement with the Karnataka Bank Ltd. and Federal Bank Ltd. The agreements were as required under Section 5(1)(b) of the SARFAESI Act. The agreements were drawn up on stamp paper worth Rs. 1 lakh. The Petitioner presented the agreements for registration before the Registering Authority offering to pay Rs. 25,000/- as registration fee. The Registering Authority declined registration for the reason that the stamp duty and the registration fee paid were not correct.
The Writ Petitions were filed in the above circumstances, seeking directions to the Sub-Registrar-Respondent to register the assignment agreements. A statement was filed on behalf of the Respondents and it was contended that in light of the law declared by the High Court in a Judgment, instrument is chargeable to duty as prescribed under Article 21 of the Kerala Stamp Act, 1959 (KSA) at the rate of 8% of the purchase consideration and not a fixed stamp duty of Rs. 1 lakh.
Reasoning
The High Court in view of the facts and circumstances of the case, noted, “The operation of all the provisions of the Indian Stamp Act as well as the provisions of any other Act will thus stand suspended, for the purpose of giving effect to Section 8F of the Indian Stamp Act. However, Section 8F does not appear to grant exemption from all laws relating to levy of stamp duty. After referring to the type of documents which are entitled to exemption, in the operative portion of the Section, the exemption is restricted to “duty under this Act”, meaning thereby duty under the Indian Stamp Act.”
The Court added that if all the words of the Section are to be given meaning, which is the golden rule of interpretation, it can only mean that, there can be no levy of stamp duty under the Indian Stamp Act.
The Court further held that Section 8F of the Indian Stamp Act will not apply and hence, directed the Respondent to register the assignment agreements by extending the benefit granted to the Petitioner in the Judgments based on the rates suggested in the Government Order within one month.
“It is made clear that this direction will be subject to any final determination of stamp duty based on any amendment to the Stamp Act. It is also made clear that this Court has not gone into the merits of the contention of the State that stamp duty is payable by treating the agreement in question as a conveyance under Section 2(d)(iv) of the Kerala Stamp Act, under Article 21 of the Schedule to the Act, since it is an aspect to be considered while the Government is taking further steps on the Government orders referred above”, it also clarified.
Accordingly, the High Court partly allowed the Writ Petitions.
Cause Title- J.C. Flowers Asset Reconstruction Pvt. Ltd. v. State of Kerala & Ors. (Neutral Citation: 2025:KER:33403)
Appearance:
Petitioner: Senior Advocate V.V. Asoka, Advocates Sunil Shankar and Vidya Gangadharan.
Respondents: SGP Mohammed Rafeeq
