Case: ASSET RECONSTRUCTION CO. (INDIA) LTD Vs. CHIEF CONTROLLING REVENUE AUTHORITY

that the above reasoning can be accepted. First of all, what was presented for registration by the appellant was a single document namely an Assignment Agreement. Clause 11.12 of the Assignment Agreement contained recitals to the effect that the seller (assignor, namely the OBC) had agreed to execute simultaneously with the execution of the deed of assignment, an irrevocable PoA, substantially in the form set out in Schedule 3. What was contained in Schedule 3 to the Assignment Agreement was the format of an irrevocable PoA. 9. 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. Section 2(zd) of the Securitisation Act, 2002 defines a secured creditor to mean and include an Asset Reconstruction Company. The appellant has acquired the financial assets of OBC in terms of Section 5(1)(b) of the Securitisation Act, 2002. Therefore, under sub--section (2) of Section 5 of the Securitisation Act, 2002, the appellant shall be deemed to be the lender and all the rights of the Bank vested in them. In fact, under Amendment Act 44 of 2016, sub--section (1A) was inserted in Section 5 of the Securitisation Act, exempting from stamp duty, any document executed by any bank under Section 5(1) in favour of an Asset Reconstruction Company acquiring financial assets for the purposes of asset reconstruction or securitization. Though the said amendment may not be applicable to the case of the appellant, as the deed of assignment, in this case, was executed long prior to the amendment, we have just taken note of the amendment to show how far the Parliament has gone. 10. Article 45(f) of Schedule I to Act, reads as follows:- (f) (i) when given for consideration and authorizing the attorney to sell any immovable property The same duty as is leviable on a conveyance under Article 20 for the amount of the consideration or, as the case may be, the market value of the immovable property whichever is greater; 11. 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. 12. 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. 13. But what has happened in this case was that under a Notification bearing No.GHM/2002--5--M STP--102000--2749/H--1 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. This Notification reads as follows:- In exercise of the powers conferred by clause (a) of Section 9 of the Bombay Stamp Act, 1958 (Bom LX of 1958) and in supersession of Government Orders Revenue Department No. GHM--98--22--M--STP--1096--2527--H--1 dated 26.02.1998, the Government of Gujarat hereby reduces from the date of publication of this order the duty with which an instrument of securitization of loans or assignment of debt with underlying securities chargeable under Article 20 (a) of Schedule I to the said Act to 75 paise for every rupees 1000 or part thereof the loan securitised or debt assigned with underlying securities. By order and in the name of the Governor of Gujarat. 14. The above Notification was amended by a subsequent Notification bearing No. GHM/2003/28/STP/102002/2065/H--1 dated 1st April, 2003. The said Notification reads as follows:- In exercise of powers conferred by clause (a) of section 9 of the Bombay Stamp Act, 1958 (Bom LX of 1958), the Government of Gujarat hereby amends Government Order No. GHM/2002/5/M/STP/102000/ 2749/H--1, dated 25th January, 2002 as follows, namely:- In the said order, for the words and figures to seventy five paise for every rupees 1000 or part thereof the words and figures subject to maximum of rupees one lakhs, seventy--five paise for every rupees 1000 or part thereof shall be substituted. By order and in the name of the Governor of Gujarat. 15. 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 3--A. 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). 16. 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.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]8. But we do not think that the above reasoning can be accepted. First of all, what was presented for registration by the appellant was a single document namely an Assignment Agreement. Clause 11.12 of the Assignment Agreement contained recitals to the effect that the seller (assignor, namely the OBC) had agreed to execute simultaneously with the execution of the deed of assignment, an irrevocable PoA, substantially in the form set out in Schedule 3. What was contained in Schedule 3 to the Assignment Agreement was the format of an irrevocable PoA.9. 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. Section 2(zd) of the Securitisation Act, 2002 defines a secured creditor to mean and include an Asset Reconstruction Company. The appellant has acquired the financial assets of OBC in terms of Section 5(1)(b) of the Securitisation Act, 2002. Therefore, under sub--section (2) of Section 5 of the Securitisation Act, 2002, the appellant shall be deemed to be the lender and all the rights of the Bank vested in them. In fact, under Amendment Act 44 of 2016, sub--section (1A) was inserted in Section 5 of the Securitisation Act, exempting from stamp duty, any document executed by any bank under Section 5(1) in favour of an Asset Reconstruction Company acquiring financial assets for the purposes of asset reconstruction or securitization. Though the said amendment may not be applicable to the case of the appellant, as the deed of assignment, in this case, was executed long prior to the amendment, we have just taken note of the amendment to show how far the Parliament has gone.11. 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.12. 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 20.13. But what has happened in this case was that under a Notification bearing No.GHM/2002--5--M STP--102000--2749/H--1 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.15. 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 3--A. 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).16. 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.