Stamp Duty Not Payable on Auction Sale Certificate Merely Filed Under Section 89(4) of Registration Act, Holds Kerala High Court
- REEDLAW
- Aug 1
- 3 min read
Updated: Aug 12
REEDLAW Legal News Network reports that the Kerala High Court has held that stamp duty is not payable on an auction sale certificate that is merely filed under Section 89(4) of the Registration Act, 1908.
The Kerala High Court Division Bench comprising Justice A.K. Jayasankaran Nambiar and Justice P.M. Manoj, while adjudicating a batch of writ appeals, recently held that a sale certificate issued pursuant to an auction sale does not attract stamp duty under the Kerala Stamp Act merely by virtue of its filing under Section 89(4) of the Registration Act, 1908, as it does not qualify as an “instrument” at the time of issuance unless the original is voluntarily presented for registration.
The Kerala High Court adjudicated a batch of writ appeals filed by the State, challenging the common judgment of a Single Judge who had held that sale certificates issued to auction purchasers were not liable to stamp duty under the Kerala Stamp Act, 1959, when merely filed under Section 89(4) of the Registration Act, 1908. The controversy arose when registering authorities declined to file such certificates unless the original document was duly stamped, treating them as instruments evidencing transfer of title.
The State contended that the sale certificates constituted "instruments" under Section 2(j) of the Kerala Stamp Act and attracted stamp duty under Article 16 of the Schedule as they operated to transfer ownership upon issuance. It was argued that failure to affix proper stamp duty at the time of execution could render the executant liable for penalty or prosecution. However, the respondents, including banks and auction purchasers, placed reliance on multiple Supreme Court decisions to contend that such certificates were not liable to stamp duty unless voluntarily presented for registration, and mere filing of a copy under Section 89(4) did not trigger a stamp duty obligation. They maintained that the duty of the registering authority under that provision was purely ministerial and not contingent on verification of stamp compliance.
The High Court affirmed the Single Judge’s view and dismissed the State’s appeals, holding that fiscal statutes must be enforced through express statutory mechanisms, and the Registration Act could not be used indirectly to collect stamp duty. The Court held that the sale certificate, at the time of its issuance, did not qualify as an instrument for the purposes of the Stamp Act as it neither created nor transferred rights in praesenti. Instead, the title passed upon confirmation of the sale, and the certificate merely served as evidence of such an event.
It was further held that although a sale certificate could acquire the character of an instrument if its original was presented for registration by the purchaser, that stage had not arisen in the present cases. The act of filing a copy under Section 89(4), as required of courts or revenue officers, did not amount to registration and did not require the original certificate or attract the procedural or fiscal requirements applicable to registered documents. The Registering Officer was statutorily bound to file such copies in Book No. 1 without insisting on stamp duty.
The Court ultimately concluded that the insistence of the registering authorities on prior stamping of the original sale certificate before accepting a copy for filing was unsustainable in law. It reiterated that the sale certificate would attract stamp duty only upon voluntary registration as an instrument and not otherwise. Accordingly, the Court upheld the judgments of the Single Judge and dismissed the writ appeals filed by the State.
Mr. Mohammed Rafiq, Special Government Pleader (Taxes), represented the Appellants.
Mr. Philip T. Varghese, Thomas T. Varghese, Mrs. Achu Subha Abraham, Mrs. V.T. Litha and Mrs. K.R. Monisha, Advocates, appeared for the respondent.
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