stamp duty on deed of assignment in gujarat

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Rate of Stamp duties in Gujarat

What is Stamp duty?

Stamp duty is the tax amount an individual pays to the Government (Central and/or State of Gujarat) for executing various types of deeds or documents which have some sort of financial exchange, transaction or obligation associated with it. Stamp duty is also chargeable on the registration of sale, purchase or transfer of immovable property. Stamp duty is paid during the registration of a document or deed for e.g. for registration of Partnership deed or LLP agreement in case of LLP registration, the stamp duty is levied.

How to pay stamp duty?

• Stamp duty value is printed on stamp paper or e-stamp paper after the stipulated duty is paid.
• Stamp papers have different stamp values and each type of document/deed has to be executed on a stamp paper of a requisite value.
• Stamp value varies from region to region, and also on the value of the deed or transaction is executed.

Modes of Payment of Stamp duty in Gujarat:

Stamp duty rates in Gujarat:

Stamp duty charges vary from one state to another and may depend on gender, municipal areas or income groups within the state too. In Gujarat Basic rate of Stamp duty is 3.50% and Total rate is 4.90% i.e., Rs. 4.90 for every Rs. 100/- need to be paid as stamp duty for Gujarat Property Registration. The registration fee is 1.05%.

Here is a table showing Stamp duty rates in Gujarat for different documents, and agreements.

Table showing Stamp duty rates in Gujarat

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21 Comments

how to calculate Stamp duty & registration on Leave and liocense for 3 years in Gujarat State

Mr. A has purchase a apartment in 2002 directly from builder (With out paying Stamp duty) and I have purchased it from Mr. A in 2006 and paid stamp duty at the time of purchase. As per new changes in stamp duty law if I want to sell the apartment, is it necessary to pay stamp duty for the first purchase? if, yes at which jantri current or as on 2002?

i am a shareholder in kolkata. i am applying for duplicate share certificates to a co with regd office in gujarat . i will buy stamp paper in kolkata for indemnity bond , so the duty will go to bengal govt . so the value of stamp paper will be as per bengal rate or gujarat rate ? KINDLY GUIDE

Who will be responsible to pay stamp duty & in what amount in Ahmedabad Gujarat?

In 2000 @ Rs. 180000 Purchase by A from contactor In 2004 @ Rs. 325000 Purchase by ME from A In 2022 @ Rs. 1800000 me selling to C

Can you guide me?

what is the stamp duty for assignment deed? Provide reference for the same.

Whether stamp duty is exempted for BPL beneficiaries who are availing free3 LPG connection under Ujjawala scheme ?

On affidavit how much amount of notarial tickets are required to affix.

What is the rate of stamp duty applicable on Gold Loan Agreement in Gujarat

May I know the stamp duty levied by the Credit Co-operative society on loan amount of Rs.500000

Stamp Paper for Change in Constitution Partnership

May i know how much stamp duty pay for agriculture lend lease agreement (up to 1 year) in Gujarat

i want guidenance for partneship desolution

Is there any rule that the frenking touch to the words

In Gujarat: How much can a rental agreement be written on stamp paper?

Can u inform present stamp duty for Maninagar/ a’bad old apartment house flat transfer when a girl is purchasing .Is it possible to do on line or any ho d authorised/ local agent available.regs

please tell me :Who has to pay stamp duty for registration of a lease deed—the Lessor or Lessee?

For issue counter bank guarantee in Gujarat what stamp duty is impacted..

Please inform me how much Registration fee rate for female & men jointly buyers?

May i know how much stamp duty is to be paid by male on immovable property Land 618.43 sq. met + construction on land, survey no. 102, Village Vasana chacharwadi,Ta:Sanand, District:Ahmedabad, Gujarat

May i know how much stamp duty of construction on land 618.43 sq. met in survey no 102, village vasna chacharwadi, Ta: Sanand, Distr: Ahmedabad is to be paid. It is immovable property. Purchaser is male.

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Stamp Duty Liability under the Gujarat Stamp Act: Delineating ‘Conveyance’ and ‘Instrument’

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Introduction

In the sphere of property transactions, the imposition of stamp duty is a significant aspect governed by the Gujarat Stamp Act. This act, through its definitions and provisions, determines when a document is legally recognized as a ‘conveyance’ or an ‘instrument’ and consequently, when it is liable for stamp duty. This article delves into the relevant legislative provisions from the Gujarat Stamp Act, the Registration Act, the Transfer of Property Act, and pertinent judicial interpretations that shape the understanding and enforcement of these terms.

Legal Provisions Defining ‘Conveyance’ and ‘Instrument’

The gujarat stamp act and stamp duty implications.

The Gujarat Stamp Act provides definitions for ‘conveyance’ and ‘instrument’, which are crucial in determining the applicability of stamp duty.

Definition of ‘Conveyance ’: The term ‘conveyance’ under the Gujarat Stamp Act includes a wide array of documents that facilitate the transfer of property rights. It encompasses deeds of sale, certain decrees or orders of civil courts, and other specified instruments.

Definition of ‘Instrument’ : The term ‘instrument’ is a broad one that covers any document that creates, alters, or extinguishes rights or liabilities. Notably, it extends to electronic records in line with the Information Technology Act, 2000.

The Registration Act: Ensuring Legality of Documents

The Registration Act plays a crucial role in conferring legality to documents. It mandates the registration of certain documents, including those that pertain to conveyance. This facilitates the establishment of titles in courts.

The Transfer of Property Act: Transference and Rights

The Transfer of Property Act details the legal procedures for transferring property. It includes provisions that intersect with ‘conveyance’ as defined in the Gujarat Stamp Act.

Judicial Interpretations and Case Law on applicability of Stamp duty

The case of bic cello (india) pr… v. state of gujarat.

In this pivotal case, the Gujarat High Court scrutinized the definitions of ‘conveyance’ and ‘instrument’ to determine the applicability of stamp duty on a rectification deed. The court concluded that rectification, which merely corrects the survey numbers without altering property rights, does not attract stamp duty.

Precedents Cited within the Judgment

Prasad Technology Park Pvt. Ltd. vs. Sub Registrar : In this case, the Supreme Court established that supplementary agreements, which do not create new rights or transfer property, should not attract stamp duty.

Tabulation of Relevant Provisions

Here are some relevant provisions from different acts:

Gujarat Stamp Act

Registration Act

Transfer of Property Act

Conclusion: Ensuring Compliance with Stamp Duty Regulations

Understanding the definitions of ‘conveyance’ and ‘instrument’ under the Gujarat Stamp Act is crucial for legal practitioners and parties involved in property transactions. It is imperative to discern whether a document necessitates stamp duty to ensure compliance with legal obligations and to avoid potential disputes. The discussed judicial precedents further clarify the application of these definitions, providing a clearer roadmap for navigating the intricacies of property transfer taxation.

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• Posted On November 19, 2021
• Posted By By Dharti Popat
• Stamp duty and registration

All about Stamp Duty and Stamp Duty Rates in India

Table of Content

What is Stamp Duty?

Stamp Duty is the tax amount an individual pays to the Government (Central and/or State of Gujarat) for executing various types of deeds or documents which have some sort of financial exchange, transaction or obligation associated with it. Stamp Duty is also chargeable on the registration of sale, purchase or transfer of immovable property. Stamp Duty is paid during the registration of a document or deed as per the fixed rate of Stamp Duty for e.g. for registration of Partnership deed or LLP agreement in case of LLP registration , the Stamp Duty is levied.

How to pay Stamp Duty?

• Stamp Duty value is printed on stamp paper or e-stamp paper after the stipulated duty is paid.
• Stamp papers have different stamp values and each type of document/deed has to be executed on a stamp paper of a requisite value.
• Stamp value varies from region to region, and also on the value of the deed or transaction is executed.

Modes of Payment of Stamp Duty in Gujarat

What is stamp duty rate.

Stamp Duty charges vary from one state to another and may depend on gender, municipal areas or income groups within the state too. In Gujarat Basic rate of Stamp Duty is 3.50% and Total rate is 4.90% i.e., Rs. 4.90 for every Rs. 100/- need to be paid as stamp Duty for Gujarat Property Registration. The registration fee is 1.05%.

Table showing Stamp Duty in Gujarat for different documents, and agreements

Download: PDF for Stamp Duty Rates in Gujarat

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2 thoughts on “ rate of stamp duties in gujarat ”.

Hi, do you have any idea of stamp duty applicability on machinery / immovable property on conversion of partnership firm to Company

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Stamp duty in gujarat: the essentials.

posted in General by Krupesh Bhat

What Is Stamp Duty?

Stamp duty is the tax amount an individual pays to the Government (Central and/or State of Gujarat) for executing various types of deeds or documents which have some sort of financial exchange, transaction or obligation associated with it. Stamp duty is also chargeable on the registration of sale, purchase or transfer of immovable property. Stamp duty is paid during the registration of a document or deed.

Stamp duty value is printed on stamp paper or e-stamp paper after the stipulated duty is paid. Stamp papers have different stamp values and each type of document/deed has to be executed on a stamp paper of a requisite value. Stamp value varies from region to region, and also on the value of the deed or transaction being executed.

Gujarat State Stamp Act

The Gujarat State Stamp Act, 1958, was established based on the Bombay Stamp Act, 1958 (specifically refers to electronic records).  This Act set the platform and foundation for how Stamps and Rules relating to Stamps are dealt with in the State of Gujarat.

This was followed by the State passing the Bombay Stamp (Gujarat Amendment) Act. Other notable amendments made to the Bombay Stamp (Gujarat Amendment) Act were passed in 1970, 1976, 2006, 2007, 2013, 2015 and 2016.

The Gujarat Stamp Amendment Bills passed made these key amendments:

• The Stamp duty rates on the transfer of shares, bonds, instruments, registration and amalgamation were all increased.
• Mandatory for developers to register partnership deeds.
• The Government has permitted the use of self attested agreements online so that neither parties have to go to the Registrar’s Office. Individuals in the State of Gujarat can self attest and register rental agreement and leave and license agreement online.
• The penalty for stamp duty evasion is 200% of the value of the document executed.
• Stamp Duty is collected to authenticate the registration, transfer and/or sale of any instrument, deed or property with a value of more than INR 100 as per Section 17 of the Registration Act, 1908.

Stamp duty or non-postal stamps are obtained at a nodal point (M.S. Building, Lal Darwaja office), and then distributed to the rest of Gujarat. The head of the nodal point is the Superintendent of Stamps. Non-postal stamps are received from the India Security Press Nasik and redistributed to District Treasury Offices across the State. For a list of registrable and non-registrable documents , do read up more on Stamp duty in the State of Gujarat.

Modes Of Payment Of Gujarat Stamp Duty

Rates of stamp duty in gujarat, how can we help.

LegalDesk.com is an established legal tech service provider of drafts of agreements and related services to individuals and companies in India. Get rental agreements drafts , wills, partnership agreements, gift deeds , power of attorney deeds , affidavits , etc. to e-stamping services and incorporation services , LegalDesk.com has got you covered.

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Stamp Duty and Property/Flat Registration Charges in Gujarat

The expenses of purchasing a house are not only limited to its cost; there are other charges that individuals have to pay. These charges include stamp duty and registration charges which are essential constituents of the total cost of a new property. Evading these costs can thrust homebuyers with future hurdles.

If you are willing to buy a property in Gujarat, you must know about these essential charges. In this piece, we have gathered crucial information regarding fees of registration and stamp duty in Gujarat. Read along!

What Are the Property Registration and Stamp Duty Rates in Gujarat?

Stamp duty is a tax that individuals pay to the Government for purchasing property in any state of India. This tax is collected to manage different types of deeds and documents having financial transactions, execution or obligation.

Stamp duty is applicable on registration of property purchase, sale or transfer of immovable property.

Stamp duty rates in Gujarat depend on income group, municipal area or gender. These rates have undergone several changes in the previous years and now is set at 4.9% (earlier it was 16%).  The basic rate of stamp duty in Gujarat is 3.50% and the total rate is 4.90%.

Follow the table mentioned below to get a clear idea of the rates of stamp duty on property in Gujarat.

Know more about Digit's Property Insurance

Current Stamp Duty and Registration Charges in Gujarat

New Stamp Duty Rates in Gujarat  [ 1 ]

Stamp Duty on Different Property Deeds in Gujarat

Below is the given stamp duty percentage in Gujarat on different Property Deeds,

How to Calculate Registration Charges and Stamp Duty in Gujarat?

Registration charges are paid over and above the stamp duty charges and vary from one state to another.

Follow the given example to get a clear understanding of the registration fee calculation process.

Suppose Mr Kumar has bought a property of ₹3 lakhs. The total amount he has to pay is discussed in the table.

On the other hand, Mrs Kumar has separately bought a property worth ₹3 lakhs. The total amount they have to pay is discussed in the table.

The calculation process follows the registration charge rates applicable within the State of Gujarat. These charges are discussed in a tabular format. Read along!

There are certain additional charges for registration. These include,

• Folio Fees - ₹10
• Index Fees - ₹10 per page
• Advocate Fee

Apart from using the property registration charges manually, property owners can take the help of a stamp duty calculator in Gujarat. Here is a step by step guide to using a stamp duty calculator.

Steps to Use a Stamp Duty Calculator in Gujarat

• Step-1 - Visit the official website of Garvi and click on ‘Calculators’ on the home page.
• Step-2 - Next, tap on the “Calculator” option, available on the right side of the screen and click on ‘Registration Fee Calculator’.
• Step-3 - Finally, select ‘Article’ and click on ‘Calculate Registration Fee’.

Registration Fees amount will display on the screen.

How to Pay Stamp Duty and Registration Fees in Gujarat?

In Gujarat, property owners can pay stamp duty charges via offline and online methods. These are,

Offline Payment of Stamp Duty in Gujarat

• Paper-based Method : Here, property owners have to purchase stamp papers from authorized sellers and pay stamp duty.
• Franking : Here, property owners have to visit the banks or Franking centre and pay stamp duty in Gujarat via Franking.

Online Payment of Stamp Duty in Gujarat

• E-stamping : It is an online method of paying non-judicial stamp duty on property. E-stamp in Gujarat is valid.  

After paying the stamp duty in Gujarat, property owners have to pay to register their property under the Indian Registration Act with a sub-registrar.

Points to Consider Before Paying Stamp Duty in Gujarat

There are certain points that property owners must remember before stamp duty in Gujarat. These are,

• If property owners pay stamp duty on time, it remains valid for 6 months.
• If stamp duty is paid on foreign documents, it remains valid for 3 months.
• The buyer must pay stamp duty, not the seller.

What Are the Factors That Affect Stamp Duty in Gujarat?

Here is a list of factors that affect stamp duty in Gujarat,

• Age of the property
• Age of the owner
• Gender of the owner

Are Tax Benefits Available on Stamp Duty and Registration Charges in Gujarat ?

Property owners can claim tax benefits under Section 80C of the Income Tax Act on the stamp duty and registration charges paid in Gujarat.

Read the details on fees regarding registration and stamp duty in Gujarat and pay them accordingly to legalize your property within the state.

FAQs Stamp Duty and Property Registration Charges in Gujarat

What is the penalty for delaying stamp duty payment.

Delaying stamp duty payments in Gujarat can lead to a penalty ranging from 2% to 200% of the total payable amount.

What are the required documents for paying stamp duty in Gujarat?

The required documents for paying stamp duty in Gujarat includes Sale agreement and deed, Builder-buyer agreement, Identity proofs such as PAN Card, passport, driver’s license, etc. of both buyer and seller, Proof of payment made to the seller, Original copy of a power of attorney, Khata certificate.

Is e-stamping effective in Gujarat?

Yes, e-stamping is legal or effective in Gujarat. It is also allowed in private and nationalised banks, stamp secretaries, stamp vendors, notaries, non-banking finance companies, chartered accountants and CSC centres. One can avail the e-stamping facility through Stock Holding Corporation of India Ltd.

Is it required to pay a stamp duty on transfer of property between family members in Gujarat?

Yes, deeds regarding exchange of property are chargeable. For instance, for the sale or gift deed and exchange deed on the value of the property, the applicable stamp duty in Gujarat is 6% and 3%.

What is the difference between registration charges and stamp duty in Gujarat?

Stamp duty is calculated depending on the property’s market value. On the contrary, registration charges are the total cost of documenting the property ownership. In case of Gujarat, the applicable registration charge is 1% of the property value. At the same time, the applicable basic and total stamp charge is 3.5% and 4.9% respectively.

Please try one more time!

Stamp Duty in Different States & Cities in India

Other articles about property tax.

Disclaimer: This information is added only for informative purposes and collected from different sources across the Internet. Digit Insurance is not promoting or recommending anything here. Please verify the information before making any decisions.

• Digit Insurance
• Property Tax Online
• Stamp Duty and Registration Charges in Gujarat

Last updated: 2024-03-14

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Explore Stamp Duty And Registration Charges In Gujarat

by Godrej Properties Limited

Every state has different rules for stamp duty and registration charges. Understanding the relevant registration and stamp duty fees is essential for real estate transactions in Gujarat. The state government levies these fees, which significantly impacts the financial and legal elements of property ownership. You will find a summary of Gujarat registration and stamp duty charges in this blog.

Latest Update: Stamp Duty in Gujarat

As of September 23, 2023, property registration in Gujarat has undergone a change. The Inspector General of Registration and Superintendent of Stamps in Gujarat has implemented a new rule, streamlining the process. Now, property registration requires only the last four digits of the Aadhaar card, eliminating the need for the entire Aadhaar card copy. However, parties involved in property registration and witnesses must still provide copies of their Aadhaar cards at the sub-registrar's office. This move aims to prevent misuse of the Aadhaar-enabled payment system. Consequently, sub-registrar offices have been instructed to abstain from collecting Aadhaar card copies as part of property registration documents.  

Exploring Stamp Duty And Registration Charges in Gujarat

What Is Stamp Duty in Gujarat?

Stamp duty is a tax imposed on several legal documents, particularly those involving real estate transactions. Stamp duty rates change in Gujarat based on the type of real estate, the area, and the transaction value. Stamp duty in Gujarat is often determined by comparing the higher of two values, such as the transaction or market value. For industrial, commercial, and residential properties, the rates could vary. Additionally, in 2023, gift deed stamp duty in Gujarat is subject to the prevailing rates and regulations set by the state government.

What Are Registration Fees in Gujarat?

Fees paid to the government to record a property transaction are known as registration fees. The registration charges in Gujarat are calculated as a percentage of the transaction value or the property's market value, whichever is larger. These fees are designed to give the transaction legal standing and safeguard the buyer's interests. Registration fees are the costs associated with registering the document, whereas stamp duty is the tax placed on the paper. For a property transaction to be completed, both fees must be paid.  

Stamp Duty and Registration Charges in Gujarat 2023

When registering property in Gujarat, it's essential to be aware of stamp duty and registration charges levied by the state government. Here are the key details:  

Stamp Duty Charges in Gujarat

Property Registration Charges in Gujarat in 2023

Additionally, homebuyers must be aware of other charges, including:  

• Rs 10 as folio fees (subject to government revisions)
• Rs 50 per copy as an index fee
• Advocate fee

How to Calculate Stamp Duty and Registration Charges in Gujarat in 2023?

To calculate stamp duty and registration charges in Gujarat, follow these steps:  

• Visit the dedicated portal 'Garvi' at https://garvi.gujarat.gov.in/.
• Click on the 'Calculator' tab on the homepage.
• Select 'Stamp Duty Calculator' or 'Registration Fee Calculator' as your requirement.
• Choose the appropriate article from the drop-down list.
• Click the 'Calculate Stamp Duty' or 'Calculate Registration Fee' button to view the charges.

How to Pay Stamp Duty and Registration Charges in Gujarat

Property buyers can conveniently pay stamp duty and registration charges in Gujarat through both online and offline modes:  

Pay Stamp Duty and Registration Charges in Gujarat Offline

• Visit the nearest bank or franking centre to make payments.
• Purchase stamp papers from authorised stamp sellers for these charges.

Pay Stamp Duty and Registration Charges in Gujarat Online

Use the online payment method, e-stamping, for a seamless and digital payment experience.  

Discounts And Exemptions

There may be exemptions or discounts available for stamp duty and registration charges in Gujarat 2023   for certain groups of people, including women, senior citizens, or first-time buyers. These rewards are meant to encourage home ownership and offer financial assistance to specific populations. Therefore, at the time of property registration, asking about any available exemptions or reductions is advised.  

The final word

When buying or selling property in Gujarat, stamp duty and registration fees should be considered. Your ability to efficiently arrange your money and stay out of legal trouble depends on your ability to comprehend the present rates, exemptions, and discounts. For the most precise and current information on stamp duty and registration charges in Gujarat, it is advised to speak with a legal expert or visit the government's official website. You can guarantee a simple and trouble-free real estate purchase in the state if you know these fees and various charges associated with property purchases.  

Frequently asked questions

1. Are registration fees and stamp duty the same?

Ans: The fees for registration and stamp duty are distinct. Registration fees are the costs associated with registering the document, whereas stamp duty is the tax placed on the paper.  

2. Why is comprehending registration charges in Gujarat and stamp duty crucial?

Ans: Registration fees and stamp duty affect property owners' legal and financial facets. Hence, understanding them is essential when engaging in real estate transactions.

Stamp Duty & Registration Charges in Gujarat

Stamp duty is a tax levied on property transactions when a seller sells his property to a third party, or a buyer buys some specific asset from a third party. As the state government levies stamp duty and registration charges, they vary region-wise in India, and the stamp duty in Gujarat is also different.

The rate of stamp duty on property is determined based on the property category, such as plot, agricultural land, etc. This article will provide information on how much stamp duty and registration are levied on various properties and documents in Gujarat. 

Stamp Duty in Gujarat for Current financial year 

Gujarat's state government levies stamp duty and registration charges in Gujarat under the Gujarat Stamp (Amendment) Act, 2018. The payment of stamp duty is mandatory for every citizen on property transfer between the two parties - the seller and the buyer. The buyer must pay the amount of stamp duty when registering his property.

As of 2022, the stamp duty in Gujarat has increased to 4.9% of the total property, while the registration charge is 1% for males only. Here, women are not required to give registration charges, and Gujarat's stamp duty and registration charges are explained in the table underneath.

  Stamp Duty & Registration  Charges in Gujarat, 2022

Stamp duty on different types of deeds in gujarat.

Different percentages of stamp duty are levied on different types of deeds. For example, on sale deed or gift deed stamp duty is 6%, whereas on partnership deed stamp duty is ₹25. Let's see in the following table what percentage stamp duty has been imposed on which deed.

How can we calculate Stamp Duty for different types of properties? 

The amount of stamp duty on the property varies state-wise. How is stamp duty calculated in Gujarat? We are clarifying this point with an example. Suppose there are two different properties in Gujarat worth Rs 30 lakh. A joint buyer purchases the specific properties by both a male and a female. So, the total stamp duty cost will be calculated in the manner shown below:

Stamp duty charges payable by male buyer = 30,00,000 x 4.9/100 = Rs 1,47,000

Here, registration charges = 30,00,000 x 1/100 = Rs 30,000

So, total cost of the property for male buyer is = Rs 30,00,000 + Rs 1,47,000 + Rs 30,000 = Rs 31,77,000

Now, Stamp duty payable by female buyer = 30,00,000 * 4.9/100 = Rs 1,47,000

The second female buyer being a woman is exempted from the registration fee.

So, the total cost of the property for female buyer is = Rs 30,00,000 + Rs 1,47,000 = Rs 31,47,000

 Any tax benefits on Stamp Duty from the government 

Gujarat property owners get tax benefits on stamp duty from the Gujarat government. This tax benefit is provided to the property owners under Section 80C of the Income Tax Act. 

How can we stamp duty online?  

Stamp duty in Gujarat can be paid online by the property owners. Using an online payment method, e-stamping, you can pay your stamp duty and registration charges on your purchased property. You can receive e-stamping certificates by visiting any taluka headquarter in any district of Gujarat. After paying the stamp duty online, your next step will be to pay to register your property under the Indian Registration Act.

How much time do we have to pay stamp duty, and what are the penalties we have to pay in case of delay?

There is no provision for stamp duty exemption. You must pay the stamp duty within about 30 days, and stamp duty must be paid on time. If you delay your stamp duty payment, you will be fined 2% to 200% of your total stamp duty amount.

What is the document required to pay Stamp Duty?

● Sale agreement and deed

● Identity proofs of the property buyer, such as PAN Card, Aadhar card, passport, driver's license, and so on

● Builder-buyer agreement on property transaction

● Proof of payment made of the property to the seller

● Khata certificate

● Original copy of a power of attorney, 

What happens when you have not paid stamp duty?

Stamp duty bearing is mandatory in Gujarat. If you haven't paid your stamp duty while the property is transferred, your purchased property may be in legal dispute later, and you will have to pay a specific amount as a penalty.

About Author

Jatin Dubey

An enthusiastic content writer who is a law graduate and has been working as Real Estate Consultant for around 9 years. He has worked with top Real Estate Agencies and Builders in Delhi, Bangalore and Pune. His skills to perform market analysis and explore high potential localities has helped many clients in the past.

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Reduction in stamp duty cannot lead to revenue splitting an instrument into two once it has already been charged under a correct charging provision: Supreme Court 

Supreme Court: While dealing with a case under the Gujarat Stamp Act, 1958, the bench of Hemant Gupta and V. Ramasubramanian*, JJ has held that

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Supreme Court : While dealing with a case under the Gujarat Stamp Act, 1958, the bench of Hemant Gupta and V. Ramasubramanian *, JJ has held that 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 the case at hand, the Oriental Bank of Commerce (OBC) granted certain facilities to a borrower and the borrower committed default in repayment. Unable to recover the loan, the Bank assigned the debt in favour of the appellant, an Asset Reconstruction Company registered with the Reserve Bank of India under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

An audit objection was raised by the Office of the Accountant General on the ground that the deed of assignment contained a reference to a Power of Attorney (PoA) in Schedule 3 and that the said PoA was chargeable to stamp duty under Article 45(f) of Schedule-I to the Act. A demand for deficit stamp duty to the tune of Rs.23,53,800/¬ was raised pursuant to the audit objection.

The Gujarat High Court examined the recitals contained in the deed of assignment and found that the Bank had agreed to execute an irrevocable PoA in favour of the appellant, substantially in the form set out in Schedule 3 of the deed of assignment. The form set out in Schedule 3 contained recitals empowering the assignee, as the agent of the Bank, to sell any immovable property. Therefore, considering the fact that Article 45(f) of Schedule I to the Act makes a PoA given for a consideration and containing an authority to sell any immovable property chargeable to stamp duty as a conveyance, the High Court came to the conclusion that the appellant has to pay stamp duty as fixed by Article 45(f). The 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.

The Supreme Court was, however, of the opinion that 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 SARFAESI Act and not out of an independent instrument of PoA.

Section 2(zd) of the SARFAESI Act defines a ‘secured creditor’ to mean and include an Asset Reconstruction Company. The appellant had acquired the financial assets of OBC in terms of Section 5(1)(b) of the SARFAESI Act. Therefore, under sub-section (2) of Section 5 of the SARFAESI Act, the appellant shall be deemed to be the lender and all the rights of the Bank vested in them. In fact, under Amendment Act 44 of 2016, sub-section (1A) was inserted in Section 5 of the SARFAESI Act, exempting from stamp duty, any document executed by any bank 5 under Section 5(1) in favour of an Asset Reconstruction Company acquiring financial assets for the purposes of asset reconstruction or   securitization.

It was further explained that for invoking Article 45(f), two conditions have to be satisfied. They are,

• the PoA should have been given for a consideration; and
• 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.

The Court, hence, held that 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).

Hence, the judgment of the High Court and the demand made by the Chief Controlling Revenue Authority was set aside.

[Asset Reconstruction Co. (India) Ltd v. Chief Controlling Revenue Authority, 2022 SCC OnLine SC 515 , decided on 26.04.2022]

*Judgment by: Justice V. Ramasubramanian

For appellant: Senior Advocate V. Chitambaresh

For State of Gujarat: Advocate Archana Pathak Dave

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Decoding Indian Stamp Duty Requirement for IP instruments

As per the Indian Law, stamp duty is payable on every instrument [1] . It is an indirect tax paid to the government. The Indian Stamp Act, 1899 (2 of 1899) was enacted to consolidate and amend the law relating to stamps. It extends to the whole of India.

The Indian Stamp Act, 1899 (2 of 1899) is a fiscal statute prescribing the rates of Stamp Duty as specified in Entry 91 of List-I (Union list) of the Seventh Schedule to the Constitution of India List (viz. Bills of Exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts)  The States are empowered under Entry 63 of List-II (State list) of the Seventh Schedule to the Constitution of India to prescribe the rate of stamp duty on instruments other than the instruments specified in Entry 91 of Union list.

The Indian Stamp Act, 1899 is a Central enactment and the state have the powers to adopt the Indian Stamp Act, 1899 with amendment to same, to suit the transaction peculiar to each state. Accordingly certain states have introduced Schedule 1 to the Indian Stamp Act, 1899 being the stamp duty payable in each state. State such as Maharashtra (The Bombay Stamp Act, 1958), Gujarat (The Gujarat Stamp Act, 1958), Karnataka (The Karnataka Stamp Act, 1957), Kerela (The Kerela Stamp Act, 1959) and Rajasthan (The Rajasthan Stamp Act, 1998) have their separate Stamp Act, while many State follows the Indian Stamp Act, 1899 [2] .

There are mainly two types of stamp paper.

• Judicial stamp papers: As the name suggest, it is used for Court proceedings.  It is called Court fees.
• Non-Judicial stamp papers: This is used for contractual kind of activities between the parties e.g., contracts, agreements, registration of documents, entering leases /sale purchase transactions etc.

Stamp duty serves as a legal requirement for certain types of transactions to be considered valid and enforceable. For example, a sale agreement for a property must be executed on a stamp paper of appropriate value and stamped according to the relevant state’s stamp duty laws. Failure to pay the appropriate stamp duty on a transaction can result in penalties or fines and may render the document invalid in a court of law.

Stamp Duty payable on instruments specified by the statute is fixed or on ad valorem basis i.e., on basis of value of property. The stamp duty charges are mainly based upon the values which are mentioned in the documents.  e.g., Articles of Association, Mortgage deed etc. However, for few documents e.g., Affidavits, Power of Authorization, indemnity bond, the stamp duty payable is always fixed regardless of the value which is mentioned in the document or the instrument. For certain other instrument, stamp duty is based on the consideration value mentioned in the document or the market value, whichever is higher. e.g.  Conveyance, Sale Agreement, Partnership Deed etc

The payment of Stamp Duty is mostly done before the execution of the document.   Failing to make the necessary payment will result in penalty charges.  Documents which are inadequately stamped are not admitted as evidence in the court.  The stamp papers are to be purchased in the name of one of the parties to the transaction. The validity of a stamp paper is six months from the date of purchase.

Patents, trademarks, and other forms of intellectual property are included within the meaning of movable property under the stamp laws. As such, state specific stamp laws are applicable for the IP rights.  Stamp Duty pertaining to IP rights is levied at various stages of registration, licensing and transferring.

In general, stamp duty is applicable on various types of instruments, including;

• POWER OF ATTORNEY (POA): – If an application for trademark/patent/design or any other Intellectual property rights, is filed in India by a person other than the Applicant, it is mandatory to submit a duly stamped Power of Attorney.  The POA can be signed by the Authorized Signatory of the Applicant. The Stamp duty payable being state specific may approximately be up to 10 USD. There is no requirement for notarization and/or legalization.
• AFFIDAVITS:  In various proceedings, be it at Court or Registry level it is required to file an Affidavit. Basically, an affidavit is a sworn statement put in writing. With respect to trademark, if the Applicant claims prior use of the mark, in such case it is a mandatory requirement to submit the Affidavit of use. The Applicant shall file an affidavit testifying to such use along with supporting documents. [3] .  The Stamp duty payable being state specific, may be up to 5 USD for Affidavit. The Affidavit of use must be duly notarized.
• ASSIGNMENT AGREEMENT : Assignment refers to actual transfers of ownership of intellectual property from the assignor to the assignee.  In this, the rights of the assignor is permanently transferred. It is an absolute transfer.  Such transfer of Intellectual Property rights is carried out by way of an assignment deed. It is pertinent to note that payment of stamp duty is not required for the assignment of Copyrights. Stamp duty is payable on the monetary consideration stated in the assignment deed.  Stamp duty payable varies in each State. The Assignor and Assignee can check for the stamp duty rates in its particular state and thereby execute a assignment deed in which the lower stamp duty is applicable.  The applicable stamp duty rates in India varies from 3% to 7% of the consideration amount, depending on the state wherein it is executed.
• LICENSING AGREEMENT (REGISTERED USER AGREEMENT ): – In a Licensing agreement, the IP holder (€œlicensor€) licenses its IP rights to any third party and allows a third-party to use the said rights for a limited time period.  A licensing agreement is subject to stamp duty. Stamp duty is paid by the licensee to the licensor. 
• BUSINESS AGREEMENTS (e.g., Non-disclosure Agreement, Endorsement Agreement, memorandum of Understanding, Master Service Agreements, Franchise Agreement etc.) Stamp Papers are not mandatory for all the agreements but are necessary only for a few kinds of or instruments or agreements as specified by the State government.  Generally, no stamp duty is payable on MOUs or NDA€™s.  However, as a general practice, people are putting it on stamp paper to make it enforceable in the Court of Law.  A document which is stamped acts as valid evidence in a court of law.

Please feel free to consult us at [email protected]   for drafting and advising and representing any commercial transaction.

[1] €œInstrument€ includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or record;”

[2] https://www.e-stampdutyreadyreckoner.com/faq-stamps-duty.php

[3] Rule 25 of Trade Marks Rule, 2017- Statement of user in applications€” (1) An application to register a trademark shall, unless the trademark is proposed to be used, contain a statement of the period during which, and the person by whom it has been used in respect of all the goods or services mentioned in the application.

In case, the use of the trademark is claimed prior to the date of application, the applicant shall file an affidavit testifying to such use along with supporting documents.

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Stamp Duty on Deed of assignment

CS Snehal (Compliance Manager) (346 Points)

BOMBAY STAMPS ACT, 1958 (As applicable to the State of Gujarat)

ORDER DATED 25 TH FEBRUARY, 1998

No. GHM - 98-221H.STP/1096/2527/H.1. In exercise of the powers conferred by Clause (a) of Section 9 of the Bombay Stamp Act, 1958 (Bom.LX of 1958), the Government of Gujarat hereby reduces the duty with which an instrument of securitisation of Loans or the Assignment of Debt with underlying securities is chargeable under Article 20(a) of Schedule 1 to the said Act, to ten paise for every rupees 100 or part thereof of the loan securitised or debt assigned with underlying securities.

 2 Replies

CourseCart.in (Mentor at SHAYVIDZ Academy)   (3756 Points) --> Replied 02 October 2010

thanks for this query Snehal.. I also wanna know the same..

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devcharan (sr.ex) (22 Points) --> Replied 28 October 2011

pls let me know the stampduty on deed of assignment in andhra pradesh? And also let me know relevant clause which deals with stampduty on deed of assignment?

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Stamp Duty on Debt Assignment

Home | Knowledge Center | Thought Papers Stamp Duty on Debt Assignment

13th Feb, 2018

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Introduction

Assignment of debt is one of the most common forms of transactions in financial markets. It essentially entails transfer of a debt from a creditor (assignor) to a third-party (assignee). One of the biggest challenges faced in debt assignment transactions in India is the significant stamp duty implication on the deed of assignment. Considering the volume of assignment transactions undertaken generally by banks and financial institutions or by asset reconstruction companies (“ ARCs ”), the stamp duty levied becomes a significant cost in such transactions. The Constitution of India (“ Constitution ”) confers upon the Parliament and each State Legislature the power to levy taxes and other duties. The subjects on which the Parliament or a State Legislature or both can legislate are specified in the Seventh Schedule of the Constitution. The Seventh Schedule is divided into 3 (three) lists:

• Union List;
• State List; and
• Concurrent List.

The Parliament has the exclusive power to legislate on the subjects enumerated in the Union List. The State List enumerates the subjects on which each State Legislature can legislate and such laws operate within the territory of each State. The Parliament, as well as the State Legislatures, have the power to legislate over the subjects listed in the Concurrent List.

The entry pertaining to levy of stamp duty in the Union List is as follows: -

“91. Rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts.”

The entry pertaining to levy of stamp duty in the State List is as follows: -

“63. Rates of stamp duty in respect of documents other than those specified in the provisions of List I with regard to rates of stamp duty.”

The entry pertaining to levy of stamp duty in the Concurrent List is as follows: -

“44. Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty.” [emphasis supplied]

From the aforementioned entries, it is clear that the power to legislate on the rate of stamp duty chargeable on instruments of debt assignment (since it is not covered under Entry 91 of the Union List) is with the State Legislature. However, the power to determine whether stamp duty can be charged or not on a specific instrument is in the Concurrent List. In this regard, it may be noted that pursuant to the Enforcement of Security Interest and Recovery of Debt Laws and Miscellaneous Provisions (Amendment) Act, 2016 (“ Amendment Act ”), the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“ SARFAESI ”) and the Indian Stamp Act were amended to provide for an exemption from stamp duty on a deed of assignment in favour of an ARC.

As mentioned above, the power to legislate on whether stamp duty is payable or not on an instrument is in the Concurrent List. Therefore, the Parliament has the power to legislate on the aforesaid subject.

Pursuant to the Amendment Act, section 5(1A) was inserted in SARFAESI which provides that any agreement or document for transfer or assignment of rights or interest in financial assets under section 5(1) of SARFAESI in favour of an ARC is not liable to payment of stamp duty.

In several States, notifications have been issued for remission and/ or reduction of stamp duties on debt assignment transactions. For instance, in Rajasthan, the stamp duty chargeable on any agreement or other document executed for transfer or assignment of rights or interests in financial assets of banks or financial institutions under section 5 of SARFAESI in favour of ARCs 1 has been remitted. Further, in Maharashtra, the stamp duty on instrument of securitization of loans or assignment of debt with underlying security has been reduced to 0.1% (zero point one percent) of the loan securitized or the debt assigned subject to a maximum of Rs. 1,00,000 (Rupees one lac) 2 .

Certain State Governments, such as those of Rajasthan and Tamil Nadu have reduced the stamp duty based on the nature of the financial asset being assigned. In Rajasthan, the stamp duty has been reduced for assignment of standard assets whilst in Tamil Nadu, the stamp duty has been reduced for assignment of non-performing assets and assignment in favour of ARCs.

This paper discusses a recent decision by the Allahabad High Court in the case of Kotak Mahindra Bank Limited v. State of UP & Ors. 3 (“ Kotak case ”), where it was held that an instrument of assignment is chargeable with stamp duty under Article 62(c) (Transfer) of Schedule 1B of the Indian Stamp Act, as applicable in Uttar Pradesh (“ UP Stamp Act ”), as opposed to Article 23 (Conveyance) of Schedule 1B of the UP Stamp Act.

The stamp duty payable in various States under Article 23 or the relevant provision for conveyance is on an ad valorem basis whereas the stamp payable under Article 62(c) or relevant provision for transfer of interest secured, inter alia, by bond or mortgage deed, is a nominal amount. For instance, in Uttar Pradesh, the stamp duty payable under Article 62(c) is Rs. 100 (Rupees one hundred).

Decision in the Kotak case

In the Kotak case, Kotak Mahindra Bank Limited (“ Kotak ”) had purchased and acquired certain loans from State Bank of India (“ Assignor ”) along with the underlying securities.

The question for consideration before the full bench of the Allahabad High Court was whether the deed executed by the applicant with the underlying securities would be chargeable with duty under Article 62(c) or Article 23 of Schedule 1B of the UP Stamp Act.

The court observed that in order to determine whether an instrument is sufficiently stamped, one must look at the instrument in its entirety to find out the true character and the dominant purpose of the instrument. In this case it was observed that the dominant purpose of the deed of assignment entered into between Kotak and the Assignor (“ Instrument ”), was to transfer/ assign the debts along with the underlying securities, thereby, entitling Kotak to demand, receive and recover the debts in its own name and right.

Article 11 of Schedule 1B of the UP Stamp Act provides that an instrument of assignment can be charged to stamp duty either as a conveyance, a transfer or a transfer of lease. The court observed that since the Instrument was not a transfer of lease, it would either be a conveyance or a transfer.

The court referred to the definition of conveyance in the UP Stamp Act, which reads as follows:

““ Conveyance ”. — “Conveyance” includes a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos and which is not otherwise specifically provided for [by Schedule I, Schedule IA or Schedule IB] [as the case may be];” [emphasis supplied]

The court held that the term conveyance denotes an instrument in writing by which some title or interest is transferred from one person to other and that the use of the words “on sale” and “is transferred” denote that the document itself should create or vest a complete title in the subject matter of the transfer, in the vendee. In this case since under the Instrument, the rights of the Assignor to recover the debts secured by the underlying securities had been transferred to Kotak, it was held that the requirement of conveyance or sale cannot be said to be satisfied.

The court further observed that debt is purely an intangible property which has to be claimed or enforced by action and not by taking physical possession thereof, in contrast to immovable and movable property. Where a transaction does not affect the transfer of any immovable or movable property, Article 23 of Schedule 1B cannot have any applicability.

The court’s view was that since debt along with underlying securities is an interest secured by bonds and/ or mortgages, transfer of such debt would be chargeable under Article 62(c).

The court further clarified that under the Instrument, merely the right under the contract to recover the debts had been transferred. Since the borrower(s) had never transferred the title in the immovable property given in security to the Assignor, the Assignor could merely transfer its rights i.e. mortgagee's rights in the property to recover the debts. It was further observed that the Assignor never had any title to the underlying securities and that it merely had the right to enforce the security interest upon default of the borrower(s) in repayment. The right transferred to Kotak was primarily the right to recover the debts, in accordance with law, by proceeding against the underlying security furnished by the bonds/ mortgage deed(s).

Therefore, the court held that the Instrument was chargeable with stamp duty under Article 62(c) of Schedule 1B of the UP Stamp Act.

Whilst coming to the conclusion that assignment of debt would not constitute a conveyance, the court referred to the definition of conveyance to state that debt is an intangible property which has to be claimed or enforced by action and not by taking physical possession thereof, in contrast to immovable and movable property.

In this regard, it may be noted that there are various judicial precedents 4 , where it has been held that an interest (including mortgage interest) in immovable property is itself immovable property.

However, even assuming assignment of debt with underlying securities over immovable property amounts to a conveyance, it

may be pertinent to refer to the definition of conveyance in the UP Stamp Act which specifically excludes a conveyance which is otherwise provided for by the Schedule to the UP Stamp Act.

Article 62(c) of the UP Stamp Act reads as follows:

“62. Transfer (whether with or without consideration) – … (c) of any interest secured by a bond, mortgagedeed or policy of insurance--”

In view of the above, transfer of any interest secured by a mortgage deed, which is covered under Article 62(c), would be excluded from the meaning of conveyance and would be chargeable to stamp duty under Article 62.

In this regard it may be pertinent to refer to the definitions of ‘bond’ and ‘mortgage deed’ under the UP Stamp Act, which is as follows:

“" Bond " includes

(a) any instrument whereby a person obliges himself to pay money to another, on condition that the obligation shall be void if a specified act is performed, or is not performed, as the case may be;

(b) any instrument attested by a witness and not payable to order or bearer, whereby a person obliges himself to pay money to another; and

(c) any instrument so attested, whereby a person obliges himself to deliver grain or other agricultural produce to another

“" Mortgage-deed ". — "mortgage-deed" includes every instrument whereby, for the purpose of securing money advanced, or to be advanced, by way of loan, or an existing or future debt, or the performance of an engagement, one person transfers, or creates, to, or in favour of another, a right over or in respect of specified property;”

In view of the above, where a debt secured by a bond or a mortgage deed is assigned under a deed of assignment, the stamp duty payable on such deed of assignment will be under Article 62(c) of the UP Stamp Act or corresponding provisions of the Stamp Act of other States.

However, in cases of unsecured loans or loans secured by an equitable mortgage (where there is no mortgage deed), the deed of assignment would attract ad valorem stamp duty chargeable on conveyance, since the same will not get covered under Article 62(c) or similar provisions in other states.

The market practice until now has been to stamp the deed of assignment of debt under the relevant article for Conveyance in the applicable Stamp Act. In fact, in States such as Maharashtra, the State Government has issued notifications for reduction of stamp duty on a deed of assignment under the article for Conveyance.

The judgment passed by the Allahabad High Court in the Kotak case may prove to be a welcome step in reducing the incidence of stamp duty on debt assignment transactions. However, it would need to be seen whether in other States a similar view is taken by stamp duty authorities.

This update has been prepared by Aastha (Partner), Debopam Dutta (Managing Associate) and Abhay Jain (Associate).

1 Notification No. F4(3)FD/Tax/2017-110 dated March 8, 2017 issued by Finance Department (Tax Division) Government Of Rajasthan.

2 Notification No.Mudrank-2002/875/C.R.173-M-1 dated May 6, 2002 issued by Revenue & Forests Department, Government of Maharashtra.

3 Reference Against MISC. Acts. No. 1 of 2016, order dated February 9, 2018.

4 Bank of Upper India Ltd. (in liquidation) v. Fanny Skinner and Ors., AIR 1929 All 161. See also Prahlad Dalsukhrai and Ors. v. Maganlal Muljibhai Tewar, AIR 1952 Bom 454 and Harihar Pandey v. Vindhayachal Rai and Ors., AIR 1949 Pat 170.

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Stamp Duty on Assignment of Receivables

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The table below provides the rate of stamp duty applicable on assignment of receivables in major states across India:

[1] Notification G.O.Ms. No.305 dated 29.03.2004 issued by Registration and stamps Department, Government of Andhra Pradesh. This shall apply to ARC’s.

[2] Notification S.O.No.-1/M1-126-2004/2904 dated 29.12.2004 issued by Department of Registration, Government of Bihar. This shall apply to ARC’s.

[3] Notification No./F10-9-2004-C.T.-(R) –V-(32) dated 28.02.2004 issued by Financial and Planning Department {Commercial Tax (Registration) Department}, Government of Chhattisgarh.

[4] http://delhi.gov.in/wps/wcm/connect/DoIT_Revenue/revenue/home/registration+acts+and+rules/manuals%2Cnotifications%2Corders/reg260209

[5] https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?ID=166

[6] https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?ID=166

[7] https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?ID=166

[8] 1.  Notification No. Stamp-6/05/35723/R. dated 31.08.2005 issued by Revenue Department, Government of Orrisa. 2. Notification No. Stamp-6/05/35723/R. dated 31.08.2005 issued by Revenue Department, Government of Orrisa.

[9] http://igrs.rajasthan.gov.in/writereaddata/Portal/Images/pdf/notification-dated-26062015.pdf

[10] Notification No.K.N.5-1023/11-2005-500(137)-2003 dated 15.03.2005 as amended by No.K.N.5-1389/11-2005-500(137)/2003 dated 29.03.2005 issued by Kar Evam Nibandhan Anubhag-5, Government of Uttar Pradesh.

[11] Notification No.2307-F.T. dated 02.07.2004 issued by Finance (Revenue) Department, Government of West Bengal.

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can you please provide copy of the Notification No.2307-F.T. dated 02.07.2004 issued by Finance (Revenue) Department, Government of West Bengal.

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Home » Blog » Power of attorney executed with assignment deed under SARFAESI Act wasn’t liable for separate stamp duty: SC

Power of attorney executed with assignment deed under SARFAESI Act wasn’t liable for separate stamp duty: SC

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• Last Updated on 4 May, 2022

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Judiciary and Counsel Details

• Hemant Gupta and V. Ramasubramaniam , JJ.

Facts of the Case

In the instant case, the Oriental Bank of Commerce (OBC) assigned a debt in favour of appellant – an Asset Reconstruction Company (ARC) registered u/s 3 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

Along with the assignment deed, the Bank had executed an irrevocable Power of Attorney (PoA) in favour of the company, empowering the assignee, as an agent of the Bank, to sell any immovable property. The assignment deed was registered with the Sub-Registrar and the stamp duty was paid on it.

However, an audit objection was raised by the Office of Accountant General on the ground that the assignment deed contained a reference to a Power of Attorney (PoA) and hence PoA was chargeable to stamp duty under the Bombay Stamp Act, 1958. Thereafter, the Stamp Duty Collector referred the matter to the Chief Controlling Revenue Authority, who in turn issued a notice to the appellant.

After considering the reply submitted by the appellant, the Chief Controlling Revenue Authority passed an order setting aside the order of adjudication and directed recovery of the deficit stamp duty.

Further, on the submission of the application, the Chief Controlling Revenue Authority referred to two questions for opinion of the Court:

(a) Whether the objection raised by the accountant general proper or not?

(b) Whether the appellant is liable to pay the stamp duty as per the Bombay Stamp Act or not?

Accordingly, a full Bench of the Gujarat High Court held that separate stamp duty has to be paid on the PoA as well. Further, the full Bench of HC relied on Article 45(f) of Schedule I to the Bombay Stamp Act, 1958 which makes a PoA given for a consideration and containing an authority to sell any immovable property chargeable to stamp duty. The ARC approached the SC against the full Bench verdict.

Supreme Court Held

On appeal, the Supreme Court held that the reasoning of the High Court cannot be accepted as for invoking Article 45(f) of Schedule I to the Bombay Stamp Act, 1958, two conditions have to be satisfied i.e. the PoA should have been given for a consideration and an authorization to sell any immovable property should flow out of the instrument. In the present case, the consideration was paid by the ARC to the bank for the purpose of acquisition of the financial assets. Further, the authorization to sell any immovable property didn’t flow out of the PoA instead flows out of the provisions of the SARFAESI Act.

In this regard, a bench observed that the HC overlooked the fact that there was no independent instrument of PoA and that the power of sale of a secured asset flowed out of the provisions of the SARFAESI Act, 2002 and not out of an independent instrument of PoA.

The Court noted that under Amendment Act 44 of 2016, subsection (1A) was inserted in section 5 of the SARFAESI Act, exempting from stamp duty, any document executed by any bank in favour of ARC. Though the amendment was not applicable to this particular case, the Court said that it has taken note of the amendment to show how far the Parliament has gone.

Further, the Court observed that once a single instrument has been charged under a correct charging provision of the Statute, the Revenue Authority cannot split the instrument into two, because of the reduction in the stamp duty facilitated by a notification issued by the Government.

Accordingly, the appeal was allowed and the demand of stamp duty on PoA was set aside.

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