The Madras High Court has held that an instrument, whether a certificate of sale or sale deed, issued in a public auction of properties, was chargeable with stamp duty under Article 18 read with Article 23 of Schedule I to the Indian Stamp Act, 1899.
In an elaborate 48-page judgement on an application filed by the Official Liquidator, High Court, seeking general directions, Mr Justice V. Ramasubramanian ruled that while the Official Liquidator could leave the choice to the auction purchaser to choose the title to or nomenclature of the document, neither he nor the purchaser had any choice with regard to the liability to pay stamp duty.
Noting that there was an emerging trend among purchasers of properties in public auctions to seek issue of ‘Certificates of Sale’ rather than ‘Deeds of Sale’, the Judge recalled that in Shree Vijayalakshmi Charitable Trust case [Shree Vijayalakshmi Charitable Trust vs Sub-Registrar, Erode Dt (2009 (5) CTC 15], the view that a certificate of sale did not attract stamp duty had found acceptance.
But the question as to whether stamp duty was payable on a certificate of sale was not examined in the said case on a comparative analysis of all provisions of the Transfer of Property Act, 1882, the Stamp Duty Act and the Registration Act, 1908, and issues of repugnancy and the overriding effect of one Act over the other, the Judge said. Analysing the Transfer of Property Act, the Judge recalled that the Apex Court made it clear in Raghunath vs Kedar Nath [1969 (1) SCC 497] that the documents of which registration was necessary, fell within the scope of Section 49 of the Registration Act and that if not registered, they were not admissible as evidence of any transaction affecting any immovable property comprised therein.
Under the Stamp Act, the Judge said, irrespective of and de hors provisions of the Registration Act, a certificate of sale issued to a purchaser of property sold in public auction, was required to be stamped as per Article 18 read with Article 23 if the purchase money exceeded Rs 50 of Schedule I of the Stamp Act. The provisions of the Stamp Act and the Registration Act operated on parallel lines. Neither of them contains a non-abstante clause so as to exclude operation of the other. Therefore, the option given under the Registration Act to makers of certain documents, to register them or not, was not to be construed as an exemption from payment of stamp duty.
Therefore, the only conclusion that could be drawn by a combined reading of the three Acts was that by whatever name the instrument was called, it was chargeable with stamp duty, the judge held.
In view of the above, the application was disposed of with a direction to the Official Liquidator to issue a certificate of sale or execute a sale deed in line with the choice of the auction purchaser.
There is only one exception where the property is vested n favour of the Governor or the State or the President of India that Stamp Duty is not payable on transfer, including on acquisitions. There is another device adopted for evasion of Stamp Duty, namely transfer of the property pursuant to transfer of shares of a company or of a housing co-operative society, paying only that duty (a nominal amount). However, in such a case also, the decision of Bombay High Court (Hanuman Vitamin Foods Private Limited, 1990 AIR 204) applies, and since the underlying asset being transferred is immovable property, the rate of duty applicable would be that applicable to immovable property.