Summary
An asset reconstruction company paid concessional conveyance duty on a bank’s debt-assignment agreement. Revenue then demanded additional duty by treating the draft power of attorney in its schedule as a separate taxable instrument. The Court held that the schedule was incidental to the single assignment instrument and that sale rights flowed from statute. Having charged the assignment under the correct entry, Revenue could not split it to negate the notification’s concession. The additional demand was set aside.
Issues
- Whether an incidental draft power of attorney in a debt-assignment agreement attracted separate conveyance-equivalent stamp duty.
Provisions considered
- Schedule I, Articles 20(a) and 45(f), read with notifications dated 25 January 2002 and 1 April 2003 under Section 9(a), Gujarat Stamp Act, 1958The single assignment had been correctly charged as a conveyance at the notified concessional duty and could not be split for a second charge on the incidental draft power. (¶ 10-16)
- Section 5(1)(b) and (2), Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002Acquisition vested the bank’s rights in the asset reconstruction company as deemed lender; the sale power did not depend on a separate power-of-attorney instrument. (¶ 9)
Held
- Only one assignment agreement was presented for registration. Its schedule contained a form of the contemplated irrevocable power of attorney, not an independent instrument. The power to realise the secured asset flowed from the statutory acquisition and vesting of the bank’s rights. (¶ 8-9)
- Article 45(f) required a power given for consideration and authorising sale of immovable property. Here, consideration purchased financial assets, while the scheduled draft was incidental to an assignment already charged under Article 20(a). (¶ 10-12)
- The applicable notifications reduced assignment duty and capped it at Rs.1 lakh; an additional Rs.40,000 had also been paid. Revenue could not split the correctly charged single instrument and levy duty again under Article 45(f) merely because the assignment benefited from the notified reduction. (¶ 13-16)
- The later statutory stamp-duty exemption introduced in 2016 was noted as context, rather than applied retrospectively to this 2008 assignment. The decision rested on the character of this instrument and the applicable charging provisions and notifications. (¶¶ 9, 12-16)
Result
Appeal allowed without costs. The High Court’s opinion and the Chief Controlling Revenue Authority’s additional stamp-duty demand were set aside.