Filing of SARFAESI Sale Certificate Copy U/S 89(4) of Registration Act Does Not Attract Stamp Duty: Kerala High Court - 2025-08-19

Kerala High Court Quashes Circular Demanding Stamp Duty on Filing of SARFAESI Sale Certificates

Ernakulam, Kerala - In a significant ruling providing relief to auction purchasers, the Kerala High Court has unequivocally held that no stamp duty is payable for the filing of a copy of a sale certificate, issued under the SARFAESI Act, with the Sub-Registrar's office as mandated by Section 89(4) of the Registration Act, 1908.

The common judgment, delivered by Justice C. Jayachandran , quashed a controversial circular issued by the Joint Inspector General of Registration that directed Sub-Registrars to levy stamp duty for this procedural filing.

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Case Background

The Court was hearing a batch of writ petitions filed by individuals and companies who had purchased properties in auctions conducted by banks and financial institutions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act.

After receiving the sale certificates from the authorized officers, the petitioners sought to have a copy of these certificates filed in "Book No. 1" at the respective Sub-Registrar's Offices (SROs). This is a mandatory step under Section 89(4) of the Registration Act, intended to maintain a public record of such sales. However, Sub-Registrars across the state, citing a circular (No. IGR/571/2023-RR9) dated April 17, 2023, refused to file the documents without the payment of stamp duty as if it were a regular property registration. This led the aggrieved auction purchasers to approach the High Court.

Arguments of the Parties

The petitioners argued that the demand for stamp duty was illegal and contrary to established legal precedent. Their counsel highlighted that the procedure under Section 89(4) is merely a "filing" of a copy of the sale certificate by the authorized officer, not the "registration" of the original document by the purchaser. They relied on a series of judgments from the Supreme Court and various High Courts which have settled this issue.

The Special Government Pleader (Taxes), representing the state, initially contended that the matter was under consideration by a Division Bench of the Kerala High Court in an appeal against a similar single-judge ruling in Nowfal Salam @ Mohammed Nowfal v. The Principal Sub Registrar .

Court's Analysis and Reliance on Precedent

Justice C. Jayachandran observed that the legal position on this matter is "too well settled." The court noted that the challenge to the Nowfal Salam judgment, which held that no stamp duty is payable, had since been dismissed by a Division Bench on July 21, 2025.

The Court's decision was heavily fortified by established precedents, including: * Esjaypee Impex Pvt. Ltd. v. Asst. General Manager and Authorised Officer, Canara Bank : A three-judge bench of the Supreme Court clarified the distinction between registration of the sale certificate and the filing of its copy. * Inspector General of Registration v. G.Madhurambal : The Supreme Court affirmed that the filing process under Section 89(4) is a duty of the officer and does not attract stamp duty.

Citing the Division Bench's findings, the court reiterated a crucial distinction:

"The Division Bench, inter alia, found in paragraph no.11 that the sale certificate at the time of its issuance is not an 'instrument' and hence would not attract the stamp duty. It may metamorphose into an instrument when the original is presented for registration before the registering authority. The incidence of stamp duty on such a situation is to be decided by the Registering Authority at that point of time."

The court emphasized that the petitioners' prayer was limited to the filing of a copy of the certificate, not its formal registration. In one specific case (W.P(C) No.20219/2024), where the sale certificate was issued under the Insolvency and Bankruptcy Code, 2016, the court held that the same legal principle applies.

Final Decision and Directions

The High Court allowed all the writ petitions and delivered a decisive verdict:

1. Circular Quashed : The circular dated April 17, 2023 (No. IGR/571/2023-RR9), was quashed.
2. Direction to Sub-Registrars : The respective Sub-Registrars were directed to file the copies of the sale certificates in Book No. 1 in accordance with Section 89(4) of the Registration Act without demanding stamp duty.
3. Direction to Authorized Officers : In cases where the copy has not yet been forwarded, the authorized officers of the financial institutions were directed to send the copies to the Sub-Registrar, who must then file them as per law.

This judgment provides clarity and reinforces the legal framework governing sales under the SARFAESI Act, ensuring that auction purchasers are not burdened with unlawful tax demands for a procedural requirement.