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IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. ANAND VENKATESH, J.
Kota Mahindra Bank Ltd., Rep. By its Vice President G. Ramachandran Srikanth, Chennai - Appellant
Versus
Chief Controlling Revenue Authority & Inspector General of Registration, Chennai & Others - Respondent
W.P. No. 14500 of 2009 & MP. Nos. 1 to 3 of 2009
Decided On : 17-08-2022
Stamp Duty - Banking - Indian Stamp Act, 1899 - Article 62(c)(ii), Article 23(a) - Summary: The court discussed the applicability of stamp duty under Article 62(c)(ii) and Article 23(a) of the Indian Stamp Act, 1899 in a case involving the assignment of non-performing assets by a bank. The court held that the stamp duty payable should be based on the consideration paid by the petitioner and not on the total debts transferred. The court quashed the orders confirming the collection of deficit stamp duty, penalty, and registration fees, and directed the respondents to refund the amounts to the petitioner.
Fact of the Case:
The petitioner, a bank, challenged the orders confirming the collection of deficit stamp duty, penalty, and registration fees for the registration and release of a deed of assignment involving non-performing assets. The petitioner contended that the stamp duty payable was based on the consideration paid, while the respondents claimed it should be based on the total debts transferred.
Finding of the Court:
The court held that the stamp duty should be based on the consideration paid by the petitioner for the assignment of non-performing assets, and not on the total debts transferred. The court quashed the orders confirming the collection of deficit stamp duty, penalty, and registration fees, and directed the respondents to refund the amounts to the petitioner.
Issues: The main issue was the determination of the stamp duty payable for the assignment of non-performing assets, whether it should be based on the consideration paid by the petitioner or on the total debts transferred.
Ratio Decidendi: The court held that the stamp duty payable for the assignment of non-performing assets should be based on the consideration paid by the petitioner, and not on the total debts transferred. The court also emphasized that the charging provision and the computation provision under the Indian Stamp Act should be interpreted to aid each other.
Final Decision: The court allowed the writ petition, quashed the impugned orders, and directed the respondents to refund the amounts collected from the petitioner by way of deficit stamp duty, penalty, and registration fees.
JUDGMENT
(Prayer: Writ Petition under Article 226 of the Constitution of India, praying for the issuance of a Writ of Certiorarified Mandamus, to call for the records of the 1st and 2nd respondent pertaining to the orders of the 1st respondent dated 29.05.2009 in its proceedings D.D is No:13862/P.1/2008 confirming the orders of the 2nd respondent dated 23.02.2008 in proceedings No.1038/B1/2008, quash the same and consequently direct the respondents to refund to the petitioner the sum of Rs.76,43,920/- collected by way of deficit Stamp Duty and Rs.5,000/- by way of Penalty and Rs.13,24,000/- collected by way of Registration Fees applicable on the said Stamp Duty being excess Stamp Duty and Registration Fees that had been compulsorily collected from the petitioner without the Authority of Law for release of the Deed of Assignment dated 07.01.2008 between Kotak Mahindra Bank Ltd., and ICICI Bank Ltd., in Doc.No.4231 of 2008.)
1. This Writ Petition has been filed challenging the order passed by the 1st respondent through proceedings dated 29.05.2009 confirming the order passed by the 2nd respondent through proceedings dated 23.02.2008 and for a consequential direction directing therespondents to refund the excess stamp duty, registration fees and the penalty collected from the petitioner for the registration and release of the deed of assignment dated 07.01.2008.
2. The case of the petitioner is that they are carrying on the business of banking and also engaged in the business of purchasing non-performing assets (NPA) from other banks with proper statutory sanction and approval of the Reserve Bank of India (RBI).
3. The ICICI Bank Ltd., through a deed of assignment dated 07.01.2008 assigned to the petitioner bank some of its non-performing assets for a consideration of a sum of Rs. 1,50,01,000/- along with the underlying securities. This document was presented for registration before the 3rd respondent and the petitioner tendered a stamp duty of Rs. 12,00,080/- by computing the duty under Article 23 (a) of the Indian Stamp Act, 1899 (hereinafter referred to as ‘the Stamp Act’) along with the applicable registration charges. The stamp duty was computed ad valorem on the actual consideration.
4. According to the petitioner, the transaction is liable to stamp duty under Article 62 (c) (ii) of the Stamp Act and hence, the stamp duty payable was only Rs.40/-. However, the petitioner chose to pay the stamp duty under Article 23 (a) of the Stamp Act.
5. The petitioner received a show cause notice dated 28.01.2008 from the 2nd respondent demanding, inter alia, a sum of Rs.76,43,920/- with a penalty of Rs.5000/- by claiming the stamp duty based on the market value of the deed of assignment at Rs.14.74 crores. This was the total principal outstanding for all the four debts that were assigned to the petitioner bank. The petitioner was also informed that the 3rd respondent has impounded the document of the petitioner and the communication from the 2nd respondent was based on the letter which was said to have been sent by the 3rd respondent to the 2nd respondent, seeking for the opinion/clarification.
6. The petitioner on receipt of the show cause notice gave a reply on 11.02.2008 and they took a stand that the actual duty applicable would be as provided under Article 62(c)(ii) of the Stamp Act, and even then the petitioner paid the stamp duty under Article 23(a) of the Stamp Act and that the deed of assignment through which the debts were assigned cannot be attributed with any market value and the only basis on which the stamp duty can be ascertained would be the consideration that was paid by the petitioner to the ICICI Bank. The petitioner also reported that the copy of the communication made by the 3rd respondent to the 2nd respondent was not furnished to the petitioner and hence, the petitioner reserved their right to give an additional reply as and when the copy is furnished. The petitioner also filed written submissions along with the relevant
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