TaxTMI 
TaxTMI 
2009 (12) TMI 525
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....eeds of sale". This is on the premise that a certificate of sale does not require registration compulsorily, in view of the provisions of section 17(2)(xii) of the Indian Registration Act, 1908. There appears to be a school of thought that such certificates of sale do not also attract stamp duty, in view of the obligation cast upon the Registering Officer under section 89(2) and (4) of the Indian Registration Act, 1908, to file such certificates of sale in book-I, upon being forwarded to them. 5. The above view has found acceptance in a recent decision of this Court in Shree Vijayalakshmi Charitable Trust v. Sub-Registrar [2010] 155Comp. Cas. 549. Therefore, the Official Liquidator has come up with this application, seeking a clarification, citing the said decision of this Court in Shree Vijayalakshmi Charitable Trust's case (supra). 6. In Shree Vijayalakshmi Charitable Trust'scase (supra ), the purchaser of a property in public auction conducted by the Official Liquidator, sought to get the certificate of sale filed with the Registering Officer. But the Registering Officer demanded stamp duty as per the provisions of the Indian Stamp Act, 1899. Challenging the demand, the tr....
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....stamp duty as payable on a sale deed, is payable even on a sale certificate, has arisen, primarily on account of the omission to take note of the fundamental distinction between the field of operation of the Indian Stamp Act, 1899 and the Indian Registration Act, 1908, the foundation of both of which, are to be traced to the Transfer of Property Act, 1882. While the Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instruments, the Indian Registration Act strikes only at documents and not at transactions, as is done by the Transfer of Property Act, 1882. Therefore, a comparative study of the provisions of all the three enactments alone would clear the congestion in the mind. From the perspective of Transfer of Property Act, 1882 : 9. Let me analyse the issue on hand, first from the perspective of the provisions of the Transfer of Property Act, 1882. Section 3 of the Transfer of Property Act, 1882, defines the words (i) "immovable property", (ii) "instrument" and (iii) "registered". Section 4 of the Transfer of Property Act, declares that paragraphs 2 and 3 of section 54 and sections 59, 107 and 123 of the Act, are to be read as supple....
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....tion 3 of the Act to mean "registered in any part of the territories to which the Act extends, under the law for the time being in force regulating the registration of documents". The law regulating the registration of documents is the Indian Registration Act, 1908 and, hence, the definition of the word "registered" appearing in paragraph 2 of section 54 has to be understood in the light of that Act. That it is so, is also made clear by section 1 of the Transfer of Property Act, 1882, which reads as follows : "1. Short title.-This Act may be called the Transfer of Property Act, 1882. Commencement.-It shall come into force on the first day of July, 1882. Extent.-It extends in the first instance to the whole of India except the territories which, immediately before the 1st November, 1956, were comprised in Part B States or in the States of Bombay, Punjab and Delhi. But this Act or any part thereof may by notification in the Official Gazette be extended to the whole or any part of the said territories by the State Government concerned. And any State Government may from time-to-time, by notification in the Official Gazette, exempt, either retrospectively or prospectively....
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....t, by the Transfer of Property (Amendment) Act, 1885 and the Transfer of Property (Amendment) Supplementary Act, 1929 (Act 21 of 1929), respectively. By the former Amendment Act, the second part of section 4 was inserted into the Transfer of Property Act, 1882. It reads as follows : "And sections 54, paragraphs 2 and 3, 59, 107 and 123 shall be read as supplemental to the Indian Registration Act, 1877." 16. By the Transfer of Property (Amendment) Supplementary Act, 1929, the year "1908" was substituted for "1877". Similarly, the phrase "by any provision of the Transfer of Property Act, 1882" and a proviso were inserted to section 49 of the Indian Registration Act, by the very same Amendment Act 21 of 1929. 17. Section 49 of the Indian Registration Act, 1908, prior to its amendment in 1929, reads as under : "No document required by section 17 to be registered shall- (a)affect any immovable property comprised therein, or (b)confer any power to adopt, or (c)be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered." 18. By section 10 of the Transfer of Property (Amendment) Supplementary Act, 1929,....
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....he Full Bench of the Allahabad High Court in Sohan Lal v. Mohan Lal (ILR 50 All. 986). The same view was expressed in a Madras case Rama Sahu v. Gowro Ratho ILR 1921 44 Mad. 55 and by MacLeod, C.J., in a Bombay case Dawal v. Dharma ILR 1918 41 Bom. 550. We are, however, absolved in the present case from examining the correctness of these decisions. For these decisions have been superseded by subsequent legislation, i.e., by the enactment of Act 21 of 1929, which by inserting in section 49 of the Registration Act the words 'or by any provision of the Transfer of Property Act, 1882', has made it clear that the documents in the supplemental list, i.e., the documents of which registration is necessary under the Transfer of Property Act but not under the Registration Act fall within the scope of section 49 of the Registration Act and if not registered are not admissible as evidence of any transaction affecting any immovable property comprised therein, and do not affect any such immovable property. We are, accordingly, of the opinion that exhibit A26 being unregistered is not admissible in evidence." (p. 501) 21. Thus, the three-member Bench of the Apex Court made it clear in Raghunat....
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....in a receiver on insolvency there is a transfer by operation of law, but when the receiver transfers the property to an alienee, the alienation is a voluntary transfer and is as much an 'act of parties' as any transfer by a private individual". (p. 8) The separate but concurring opinion of the fifth Judge Curgenven, J., hits the nail on the head and is as follows : "No difficulty seems to be presented by the words 'transfer by operation of law' which, however, widely they may be construed, cannot cover a sale by a receiver of an insolvent's property. Such a sale is frequently a matter of discretion and so a voluntary act on the part of the receiver, as the purchase is on the part of the buyer, and although the receiver may be a public officer, the transaction is not less than an act of parties on that account. The ordinary rules relating to stamps and registration apply to such sales". (p. 9) The last line of the above passage, to the effect that ordinary rules relating to stamps and registration apply to such sales, is of significance. 25. Again in Kamsala Narasappa v. Hussain Sab AIR 1935 Mad. 55, a Division Bench held that an Official Receiver selling the property of....
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....t and not a certificate of sale or any instrument executed by the official assignee himself. In such circumstances, it is not possible to think that a certificate of sale issued by the official assignee was held in S. Arumugham's case (supra), to be a transfer by operation of law or by or in execution of a decree. As a matter of fact, in S. Arumugham's case ( supra ), the Division Bench actually professed to follow the ratio laid down by the Full Bench in Pinnamameni Basava Sankaran's case ( supra). 27. In Official Liquidator of Globe Associate (P.) Ltd. (In Liquidation) v. H. P. Sharma ILR 1971 Delhi 49, a Full Bench of the Delhi High Court went into the question whether the sale by a liquidator is a sale by the Court or by operation of law. Referring to section 456(2) of the Companies Act, 1956, the Full Bench held that it is only the custody of the property of the company that is being wound up, which is deemed to vest and that the property as such, does not vest in the Court. The Full Bench also referred to section 529 of the Companies Act, 1956 and held that unlike in the case of bankruptcy, the estate of the company being wound up, does not vest either in the Court or in t....
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....as Stamp (Amendment) Act, 1922 (Madras Act VI of 1922) or the Madras Stamp (Increase of Duties) Act, 1943 (Madras Act XVI of 1943), shall not have the effect of increasing the duty payable in respect of instruments specified in clause (a) or clause (c) of this section and executed before the first day of April, 1922 : Provided further that any increase in the amount of duty chargeable under the Madras Stamp (Increase of Duties) Act, 1962, shall not have the effect of increasing the duty payable in respect of instruments specified in clause (a) or clause (c) of this section and executed before the date of commencement of that Act : Provided also that any increase in the amount of duty chargeable under the Indian Stamp (Tamil Nadu Amendment) Act, 1973, shall not have the effect of increasing the duty payable in respect of instruments specified in clause (a) or clause (c) of this section and executed before the 1st July, 1973 : Provided also that any increase in the amount of duty chargeable under the Indian Stamp (Tamil Nadu Amendment) Act, 1975, shall not have the effect of increasing the duty payable in respect of instruments specified in clause (a) or clause (c) of this s....
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....ct. 34. Article 18 under Schedule I to the Indian Stamp Act, 1899, fixes the stamp duty on a certificate of sale as follows : "18. Certificate of sale.-(In respect of each property put up as a separate lot and sold), granted to the purchaser of any property sold by public auction by a Civil or Revenue Court or Collector or other revenue officer- (a ) Where the purchase money does not exceed Rs. 10 : one rupee, (b ) Where the purchase money exceeds Rs. 10 but : two rupees, does not exceed Rs. 25 (bb ) Where the purchase money exceeds Rs. 25 does : three rupees. not exceed Rs. 50 (c ) In any other case. The same duty as a conveyance (No. 23) for a market value equal to the amount of the purchase money only." 35. Article 23 under Schedule I to the Indian Stamp Act, 1899, fixes the stamp duty on a deed of conveyance as follows : "23. Conveyance.-[as defined by section 2(10)], not being a transfer charged or exempted under No. 62 (a ) of immovable p....
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....pro-perty". It does not define the word "sale". Section 17(1) of the Act provides a list of documents, of which registration is compulsory. Section 17(2) makes it clear that the provisions of section 17(1)(b ) and (c) are not applicable to certain documents. One of the documents listed in section 17(2) is a certificate of sale granted to the purchaser of any property sold by public auction by a civil or revenue officer. Section 17 requires reproduction, since the issue on hand revolves around the same. Therefore, it is reproduced as follows : "17. (1) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely : (a)instruments of gift of immovable property ; (b)other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one ....
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....y document other than the documents specified in sub-section (1A) not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest; or (vi)any decree or order of a Court except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject-matter of the suit or proceeding ; or (vii)any grant of immovable property by the Government ; or (viii)any instrument of partition made by a revenue officer ; or (ix)any order granting a loan or instrument of collateral security granted under the Land Improvement Act, 1871, or the Land Improvement Loans Act, 1883 ; or (x)any order granting a loan under the Agriculturists Loans Act, 1884, or instrument for securing the repayment of a loan made under that Act ; or (xa)any order made under the Charitable Endowments Act, 1890, vesting any property in a Treasurer of Charitable Endowments or divesting any s....
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.... other documents not required by section 17 to be registered." 40. A perusal of section 18 shows that it covers even instruments acknow-ledging the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest and leases of immovable property for any term not exceeding one year, and leases exempted under section 17. Merely because the registration of these documents have been made optional, it does not follow as a corollary that all these documents are exempt even from payment of stamp duty. Take for instance, a receipt or promissory note, which do not require registration. Despite the fact that they do not require registration, they are nevertheless chargeable with duty under the Stamp Act. Similarly, the lease of an immovable property for a term not exceeding one year does not require registration. But it does not mean that no stamp duty is payable on such a document. Therefore, it is totally incorrect to say that if a document does not require registration compulsorily, then no stamp duty is also required to be paid. The provisions of the Stamp Act and the provisions of the Registrati....
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.... order of the Court and the bid is accepted and the sale is confirmed by the Court in favour of the purchaser, the sale becomes absolute and the title vests in the purchaser. A sale certificate is issued to the purchaser only when the sale becomes absolute. The sale certificate is merely the evidence of such title. It is well-settled that when an auction-purchaser derives title on confirmation of sale in his favour, and a sale certificate is issued evidencing such sale and title, no further deed of transfer from the Court is contemplated or required. In this case, the sale certificate itself was registered, though such a sale certificate issued by a Court or an officer authorised by the Court, does not require registration. Section 17(2)(xii) of the Registration Act, 1908 specifically provides that a certificate of sale granted to any purchaser of any property sold by a public auction by a civil or revenue officer does not fall under the category of non-testamentary documents which require registration under sub-sections (b ) and (c) of section 17(1) of the said Act. We, therefore, hold that the High Court committed a serious error in holding that the sale certificate did not conve....
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....or as pointed out by the Full Bench of the Delhi High Court. 45. Section 89(2) and (4) of the Registration Act, on which reliance is placed in Shree Vijayalakshmi Charitable Trust's case ( supra), does not also say that the Sub-Registrar is duty bound to ignore the provisions of the Indian Stamp Act and file a copy of the certificate of sale issued by the Court or the revenue officer, as the case may be, in his Book No. 1. Section 89 of the Registration Act, reads as follows : "89. (1) Every officer granting a loan under the Land Improvement Loans Act, 1883, shall send a copy of his order to the Registering Officer within the local limits of whose jurisdiction the whole or any part of the land to be improved or of the land to be granted as collateral security, is situate, and such Registering Officer shall file the copy in his Book No. 1. (2) Every Court granting a certificate of sale of immovable property under the Code of Civil Procedure, 1908, shall send a copy of such certificate to the Registering Officer within the local limits of whose jurisdiction the whole or any part of the immovable property comprised in such certificate is situate, and such officer shall file t....
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....ntries in Book No. 1, in accordance with section 89(2) and (4) of the Registration Act, 1908. The Sub-Registrar and the Collector of stamps refused to have the property registered, unless the requisite stamp duty was paid on the certificates of sale. Even the Tax Recovery Officer took a stand that no stamp duty was payable. But the Sub-Registrar refused to budge in, forcing the auction purchasers to file writ petitions as was done in the case of Shree Vijayalakshmi Charitable Trust ( supra). The writ petitions were dismissed by the Delhi High Court and the issue landed up before the Supreme Court. 48. Three questions were formulated for consideration, by the Supreme Court in paragraph 5 of its decision, which read as follows : "On the above facts, three different and separate questions arise for consideration : (1) What is the action to be taken by the Sub-Registrar when the copy of a certificate of sale is forwarded to him by the Tax Recovery Officer ? (2) Is the vendee in a sale by the Tax Recovery Officer entitled to ask the Tax Recovery Officer to make entries regarding the transfer in his records on the basis of the copy of the certificate of sale sent to him by the Tax ....
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....ted to the concerned Sub-Registrar for being filed. Apparently, the procedure of presentation is dispensed with in regard to the latter because they are issued by public authorities discharging their official duties. (iii)Additional particulars relevant to a document admitted to registration need to be got endorsed thereon from time-to-time as contemplated in sections 58 and 59 but this rule does not apply to a copy or memorandum filed under the Act. (iv)When a document is registered, the entirety of the document has to be copied out into the relevant book and the original document returned to the person who presents the document with necessary endorsements. This requirement is absent in the case of a copy or memorandum which is just filed. (v)Where a document is registered, a certificate of registration has to be issued which will be admissible to prove the due registration of the document." (p. 486) 52. After pointing out the above differences between the process of filing and the process of registration, the Court held in paragraph 9 that though the processes are different, the purchaser at a Court or revenue sale is under no disadvantage because of lack of registrat....
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....licable is section 33. Under this section, if any document (and this includes a certificate of sale) is presented to the Registrar for registration and the Registrar is of opinion that it is a document which should bear stamp duty but that it has not been stamped, it is his duty to impound the document and send it on to the Collector of Stamps for necessary adjudication (section 38). This contingency has also not happened. The third contingency also provided for in section 33 is when a party wishes to rely upon the certificates of sale as a piece of evidence before a Court or an authority entitled to take evidence. Such Court or authority will also have to impound the document and shall not admit the same in evidence unless the stamp duty chargeable and the stipulated penalty are paid. This situation has not arisen so far but may arise at sometime in the future. It is unnecessary to anticipate the same and decide the issue. We shall, therefore, leave the issue of stamp duty to be adjudicated upon in the normal course, as and when found necessary, and express no views thereon at this stage." (p. 488) 54. Thus, the Court made it clear in paragraph 11 of its decision that when a do....
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....t statutory provisions, which a Registering Officer is obliged to take note of and also comply with, are not to be traced merely to the Registration Act, but also to be traced to the Indian Stamp Act. Interestingly, the decisions in B. Arvind Kumar's case (supra) and Shanti Devi L. Singh's case ( supra ), were by 2-member Benches of the Hon'ble Apex Court. But the earlier decision of the 3-member Bench in Raghunath's case (supra), with particular reference to the amendment to section 49 of the Registration Act, was not brought to the notice of the Court in both those cases. Therefore, the decision in Raghunath's case (supra) still holds the field. 57. The provisions of the Stamp Act and the Registration Act are not inpari materia. The Stamp Act is a purely fiscal Act providing for the payment of Government revenue, while the Registration Act has as its objective, the conservation of evidence, assurance of title, publicity of documents and prevention of fraud. The provisions of the Registration Act, do not have overriding effect upon the provisions of the Indian Stamp Act or even the Transfer of Property Act. There is no non obstante clause in section 17(2) of the Registration Ac....
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.... the sale." 61. But the Madras Amendment to rules 85 and 87 brought about a change, so as to include a liability on the Court auction purchaser to pay, along with the purchase-money, the amount intended for general stamp. Therefore, in their application to the State of Tamil Nadu, Order 21, rules 85 and 87 would read as under : "85. Time for payment in full of purchase money and of stamp for certificate of sale.-The full amount of purchase-money payable and the general stamp for the certificate under rule 94 or the amount required for such stamp, shall be deposited into Court by the purchaser before the Court closes on the fifteenth day from the sale of the property : Provided that in calculating the amount of purchase money to be so deposited, the purchaser, shall have the advantage of any set-off to which he may be entitled under rule 72. 87. Notification on re-sale.- Every re-sale of immovable property, in default of payment of the amounts mentioned in rule 85 within the period allowed for such payment, shall be made after the issue of a fresh proclamation in the manner and for the period hereinbefore prescribed for the sale." 62. The State Amendments to Order 38,....
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....ficer", it will not also fall under section 89(4). 65. The term "revenue officer" is defined in Advanced Law Lexicon by P. Ramanatha Iyer as "an officer employed in or about the business of any branch of the public revenue". This definition was culled out from the Explanation to section 125 of the Indian Evidence Act, 1872. In Sheopat-singh v. Narishchandra AIR 1958 Raj. 324, it was held that the term "revenue officer" will include such officers of the income-tax, sales tax and Irrigation Department. Again in Gopi Parshad v. State of Punjab AIR 1957 Punj. 45, it was held that the expression "revenues" means "the income of the nation derived from its taxes, duties or other sources, for the payment of the nation's expenses". It is a term generally used in referring to income of a Government or Governmental sub-division and as so used means all the public moneys which the State collects and receives from whatever source and in whatever manner. In Raja Bahadur K.C. Deo Bhanj v. Raghunath MisraAIR 1959 SC 589, the village accountants were also held to be revenue officers. 66. Similarly, the term "civil officer" is defined in "Advanced Law Lexicon by P. Ramanatha Iyer" as "any offi....