ASSET RECONSTRUCTION CO. (INDIA) LTD. versus CHIEF CONTROLLING REVENUE AUTHORITY

Citation: [2022] 4 S.C.R. 1095 · Decided: 26-04-2022 · Supreme Court of India · Bench: HEMANT GUPTA · Disposal: Appeal(s) allowed

Judgment (excerpt)

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[2022] 4 S.C.R. 1095
1095
ASSET RECONSTRUCTION CO. (INDIA) LTD.
v.
CHIEF CONTROLLING REVENUE AUTHORITY
(Civil Appeal No. 3070 of 2022)
APRIL 26, 2022
[HEMANT GUPTA AND V. RAMASUBRAMANIAN, JJ.]
Gujarat Stamp Act, 1958 – ss. 9(a), 54(1)(a) – Art. 20(a),
45(f) of Schedule I – Deed of assignment containing Power of
Attorney (POA) – POA chargeable to stamp duty or not – The Full
Bench of the High Court came to conclusion that the appellant (an
asset reconstruction company, who was assigned debt by the bank)
has to pay stamp duty as fixed by Art.45(f) – 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 – On appeal, held: What was presented for
registration by the appellant was a single document namely an
“Assignment Agreement” – 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 Securitisation Act, 2002 and not out of an independent instrument
of PoA – After having accepted the deed of assignment as an
instrument chargeable to duty as a conveyance under Art. 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 u/Art. 45(f) – Once a single instrument has been charged
under a correct charging provision of the Statute, namely Art. 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 u/s. 9(a) – Since the High Court did not address
these issues and went solely on the interpretation of Art. 45(f), the
same is unsustainable – The Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 –
ss. 3, 5(1)(b)
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SUPREME COURT REPORTS
[2022] 4 S.C.R.
Allowing the appeal, the Court
HELD: 1. 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 Securitisation Act, 2002 and not out of an independent
instrument of PoA. For invoking Article 45(f), two conditions have
to be satisfied. They are, (i) the PoA should have been given for
a consideration; and (ii) 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. [Paras 9, 11 &
12][1099-E; 1100-B-D]
2. But what has happened in this case was that under a
Notification dated 25th January, 2002, the Government ordered
the reduction of stamp duty payable on an instrument of
securitization of loans or assignment of debt with underlying
securities, to 75 paise for every Rs.1000 or part thereof. The
above Notification was amended by a subsequent Notification
dated 1st April, 2003. 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 Rs. 1,00,000/
. In addition to the said amount of Rs.1,00,000/, the appellant
was asked to pay an additional duty of Rs.40,000/ under Section
3A. The appellant has thus paid a total amount of Rs.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,
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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

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