Court Quashes Order Requiring Stamp Duty Payment, Upholds Exemption Under Registration Act
In a significant ruling, the Bombay High Court has held that sale certificates issued under the Insolvency and Bankruptcy Code, 2016 (IBC) for properties sold by public auction are not subject to compulsory registration and are exempt from stamp duty, provided they are not used for any other purpose. This decision came in response to a writ petition filed by Rajaram Food Products India Limited, which contested an order demanding stamp duty on a sale certificate obtained through a public auction.
The bench, comprising Justices Manish Pitale and Shreeram V. Shirsat, quashed the order of the Joint District Registrar and Collector of Stamps, Nashik, which had insisted on the payment of stamp duty. The court referred to key statutory provisions of the Registration Act, 1908, and the Maharashtra Stamp Act, 1958, alongside precedents set by the Supreme Court, emphasizing that sale certificates issued by a liquidator under the IBC do not necessitate registration and are exempt from stamp duty under Section 89(4) of the Registration Act.
The judgment clarified that the IBC is not a recovery act but rather a mechanism for corporate revival. It specifically noted that the Maharashtra Amendment to the Registration Act, which includes sale certificates under recovery acts as documents requiring registration, does not apply to IBC proceedings. Consequently, the court directed the authorities to file the sale certificate in Book No. 1 as per Section 89(4) without insisting on stamp duty.
This ruling reaffirms the legal position that unless a sale certificate is used beyond its original purpose, it remains exempt from registration and stamp duty. The court's decision is expected to have wide-reaching implications for auction purchasers under the IBC, providing clarity and relief regarding the registration and stamp duty requirements.
Bottom line:-
Sale certificates issued under the Insolvency and Bankruptcy Code, 2016 (IBC) for properties sold by public auction are not compulsorily registrable under Section 17 of the Registration Act, 1908, and are exempt from payment of stamp duty under Section 89(4) of the Act, as long as they remain unused for any other purpose.
Statutory provision(s): Registration Act, 1908 Sections 17(2)(xii), 89(4), Maharashtra Stamp Act, 1958 Article 16 of Schedule I, Insolvency and Bankruptcy Code, 2016
