A negative pledge in a banking agreement does not constitute security under the Stamp Duty (Remission) Order, allowing for remission of stamp duty.

[1] The question for our determination was whether a negative pledge in a banking facility agreement is a "security" within the meaning of para 2 of the Stamp Duty (Remission) (No 2) Order 2012 ("the Remission Order") which is couched in the following language:

"2. The amount of stamp duty that is chargeable under subsubitem 22(1)(b of the First Schedule to the Act upon a loan agreement or loan instrument without security for any sum or sums of money repayable on demand or in single bullet repayment under that subsubitem which is in excess of zero point one per cent (0.1%) is remitted."

[Emphasis Added]

[2] Sub-item 22(1)(b) of the First Schedule to the Stamp Act 1949 ("the Stamp Act") referred to in the above Remission Order stipulates as follows:

"22. BOND, COVENANT, LOAN, SERVICES, EQUIPMENT LEASE AGREEMENT OR INSTRUMENT of any kind whatsoever:

(1)(b) for any sum or sums of money, not being interest for any principal sum secured by a duly stamped instrument, nor rent reserved by a lease or tack."

[3] Read together with this subitem, what para 2 of the Remission Order means is that stamp duty that is chargeable on a loan agreement or loan instrument without security for any sum or sums of money repayable on demand or in single bullet repayment is remitted, meaning to say such loan agreement is exempted from payment of stamp duty.

[4] The facts, as set out in the Case Stated, are as follows. Maybank Islamic Berhad ("Maybank") provided banking facility to the appellant vide letter of offer dated 20 November 2013. Subsequent thereto, a facility agreement dated 2 June 2015 ("the facility agreement") was executed between the appellant and Maybank for the transfer/refinancing of the appellant's combined tradeline facilities from RM330 million to Islamic combined tradeline facilities amounting to RM595 million.

[5] The appellant paid ad valorem stamp duty on the facility agreement amounting to RM1.98 million and Maybank issued the receipt for stamping dated 3 June 2015.

[6] On 20 August 2015, the respondent received the appellant's letter dated 17 August 2015, appealing against the stamp duty and seeking application of the Remission Order to the facility agreement. By Notice of Assessment dated 15 September 2015, the respondent rejected the appellant's appeal.

[7] The appellant appealed against the Notice of Assessment by letter dated 9 October 2015, requesting the respondent to reconsider the assessment of stamp duty and to allow for remission under the Remission Order. The appellant further appealed against the Notice of Assessment by letter dated 28 December 2015, in which the appellant submitted the supplemental amendment and restatement agreement ("SARA") dated 28 December 2015 to qualify for remission under the Remission Order.

[8] On 12 December 2016, the respondent notified the appellant that the appeal was rejected and maintained its assessment of stamp duty amounting to RM1.98 million.

[9] Aggrieved by the decision, the appellant appealed to the High Court against the assessment. The learned judge dismissed the appellant's appeal, holding that the facility agreement was with security and therefore subject to payment of stamp duty. Hence, the present appeal.