2022 (4) TMI 1248 - SC - Indian Laws

Assignment of debt to Asset Reconstruction Company - inability of bank to recover the loan granted - whether Power of Attorney is chargeable to stamp duty or not - HELD THAT - 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. 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 ₹ 1,00,000/. In addition to the said amount of ₹ 1,00,000/, the appellant was asked to pay an additional duty of ₹ 40,000/under Section 3A. The appellant has thus paid a total amount of ₹ 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 - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of stamp duty provisions under the Gujarat Stamp Act, 1958.
2. Validity of the demand for deficit stamp duty on a deed of assignment.
3. Application of stamp duty provisions to a Power of Attorney (PoA) in the context of a deed of assignment.
4. Impact of government notifications on stamp duty payable for securitization of loans or assignment of debt.

Analysis:
1. The case revolved around the interpretation of stamp duty provisions under the Gujarat Stamp Act, 1958, concerning a deed of assignment. The Asset Reconstruction Company challenged the opinion of the High Court of Gujarat on stamp duty liability.

2. The dispute arose when an audit objection was raised regarding a deed of assignment, which included a reference to a Power of Attorney (PoA). The Chief Controlling Revenue Authority demanded deficit stamp duty, leading to the appellant's appeal against the order.

3. The High Court held that the PoA referenced in the deed of assignment was chargeable to stamp duty under Article 45(f) of the Act. However, the Supreme Court disagreed, emphasizing that the deed of assignment was a single document, and the power of sale stemmed from the Securitisation Act, not an independent PoA.

4. The Supreme Court highlighted government notifications reducing stamp duty for securitization of loans. The Court ruled that once an instrument is charged under the correct provision, the Revenue cannot split it for additional duty. The appellant had already paid the duty under Article 20(a), and subjecting it to duty again under Article 45(f) was deemed unsustainable.

5. Ultimately, the Supreme Court allowed the appeal, setting aside the impugned order and the demand for deficit stamp duty. The Court emphasized the importance of correctly applying stamp duty provisions and government notifications, ensuring fair and consistent taxation practices.