2009 (9) TMI 580 - HC - Companies Law

Deficit stamp duty for entering the sale certificate demanded - Held that - In view of the exemption granted under section 17(2), the copy of the document is only required to be filed in Book No. 1 under the special procedure under section 89 of the Act. If stamp duty is required even for filing of the copy of instrument under section 89 of the Act, the exemption given under section 17(2) of the Act would become meaningless. In view of provisions given in the Registration Act, the court holds that court auction sale certificate sent to the Registration for filing in Book No. 1 would not attract stamp duty. The respondent has got no power and jurisdiction to issue the impugned order because of sections 17(2)(xii) and 89(2) of the Registration Act and cannot demand stamp duty. Hence the impugned order is liable to be set aside.

Issues Involved:
1. Deficit stamp duty demand for filing a sale certificate.
2. Applicability of Section 17(2)(xii) and Section 89 of the Registration Act, 1908.
3. Requirement of registration for a sale certificate issued by a court or authorized officer.
4. Legislative intent and historical context of Section 17(2) exemption.

Issue-wise Detailed Analysis:

1. Deficit Stamp Duty Demand for Filing a Sale Certificate:
The petitioner challenged the order dated July 29, 2009, demanding Rs. 10,39,122 towards deficit stamp duty for filing the sale certificate dated December 22, 2006, in Book No. 1. The petitioner argued that the demand was in contravention of Section 17(2)(xii) and Section 89 of the Registration Act, 1908.

2. Applicability of Section 17(2)(xii) and Section 89 of the Registration Act, 1908:
Section 17(2)(xii) exempts sale certificates issued by a court or authorized officer from compulsory registration. Section 89 mandates that copies of such certificates be filed in Book No. 1 by the Registrar. The court emphasized that these sections provide a special procedure distinct from the general registration requirements, and no stamp duty is necessary for filing under Section 89.

3. Requirement of Registration for a Sale Certificate Issued by a Court or Authorized Officer:
The court cited the Supreme Court judgment in B. Arvind Kumar v. Government of India [2007] 5 SCC 745, which held that sale certificates issued by a court do not require registration. The sale becomes absolute upon confirmation by the court, and the sale certificate is merely evidence of title. The court also referenced the Division Bench judgment in K. Chidambara Manickam v. Shakeena [2008] 1 CTC 660, which reiterated that sale certificates under the SARFAESI Act do not require registration.

4. Legislative Intent and Historical Context of Section 17(2) Exemption:
The court discussed the historical context of Section 17(2), suggesting that the exemption was intended to encourage participation in court auctions, which were considered distress sales. The court noted that the Indian economy has evolved, and the rationale for the exemption may no longer be relevant. The court suggested that the Legislature/Parliament consider amending Sections 17 and 89 to address potential revenue losses from the exemption.

Conclusion:
The court held that the respondent's demand for stamp duty was ultra vires the Registration Act, 1908, and quashed the impugned order. The court directed the respondent to file the copy of the sale certificate in Book No. 1 without requiring stamp duty, as per Sections 17(2)(xii) and 89. The writ petition was allowed, and the court emphasized the need for legislative amendments to address the exemption's impact on state revenue.

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