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Asset Reconstruction Co. (India) Ltd. vs Chief Controlling Revenue Authority

Civil Appeal · 2022 INSC 477Decided 26 Apr 2022
Civil Appeal No. 3070 of 2022
Hemant Gupta · V. Ramasubramanian

Background

Oriental Bank of Commerce assigned a defaulting borrower's debt to Asset Reconstruction Co. (India) Ltd. under a registered Assignment Agreement, which had already been charged stamp duty as a "conveyance." Years later, an audit objection claimed that a Power of Attorney (PoA) format contained as a schedule within that same assignment deed was separately chargeable to stamp duty as an authority to sell immovable property, and the Chief Controlling Revenue Authority of Gujarat demanded an additional Rs. 23,53,800 in stamp duty. The Gujarat High Court's Full Bench upheld this demand, prompting the appeal to the Supreme Court.

Decision Breakdown

The Supreme Court held that only one document, the Assignment Agreement, was presented for registration, and the PoA was merely a format annexed as a schedule, not an independent instrument. It found that the power to sell a secured asset actually flows from the Securitisation Act, 2002 itself (which deems an Asset Reconstruction Company the "lender" with all the original lender's rights), not from any separate PoA. Since the deed of assignment had already been charged and duty paid under the correct provision (Article 20(a), as reduced by government notifications), the Revenue could not split the single instrument and tax it again under a different article merely because a concessional rate had applied. The High Court's order was set aside and the extra demand quashed, with no order as to costs.

Lesson Learnt

A single composite document cannot be taxed twice under different stamp-duty heads just because one clause within it also describes a power that could, standalone, attract a different rate. Once a document is correctly charged under its applicable provision, tax authorities cannot re-characterise part of it to demand more revenue.

Official source (sci.gov.in)View Judgment (PDF)

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