No Stamp Duty On Sale Certificate Issued By Banks/Revenue Authorities To Auction Purchaser : Kerala High Court

A Division Bench consisting of Dr. Justice A.K. Jayasankaran Nambiar and Justice P.M. Manoj was considering a batch of writ appeals preferred by the government against the Single Bench's decision that held that stamp duty ought not be levied on such sale certificates.

The Division Bench considered the interplay between the provisions under the Registration Act, 1908 and the Kerala Stamp Act, 1959 and held,

“…even the original of the sale certificate concerned will not attract the levy of stamp duty under the Kerala Stamp Act, save in the exceptional circumstances when it qualifies to be an instrument as defined under the Kerala Stamp Act.”

While considering the State's plea, the Court looked into the law laid down by the Supreme Court deciding on the question as to whether a sale certificate can be an 'instrument' for the purpose of the Stamp Act.

In State of Punjab v. Ferrous Alloy Forgings (P) Ltd and other cases, the Supreme Court had observed that transfer of the title of the property is not upon the issuance of sale certificate but it occurs at the time of completion of sale and its confirmation by the competent authority.

Considering the question of when a sale certificate becomes an instrument, the Division Bench observed:

“…it is only if and when the sale certificate in question creates, transfers, limits, extends, extinguishes or records a right or liability in praesenti that it becomes an 'instrument' for the purposes levy of stamp duty.”

The Court noted that since a sale certificate does not perform any of the above but merely records the fact of a transaction of sale, without adjudicating or expressing any opinion the rights or liabilities of the parties, it cannot be an 'instrument'.

It also considered the question of whether a sale certificate can take the character of an instrument subsequent to its issuance. After considering the precedents of the Apex Court, it was of the opinion that there are circumstances when the sale certificate is presented for registration, it can become an instrument and thereafter, attract levy of stamp duty.

The Court opined:

“…a sale certificate, which is not an 'instrument' at the time of its issuance, can nevertheless metamorphose into one when its original is presented for registration before a registering authority. In that event, the registering authority would be called upon to examine the nature of the rights flowing to the person seeking registration of the certificate, after examining the document and satisfying himself that the document was properly executed, and thereafter copy the contents of the document into Book No.1 maintained for that purpose. It is only when the sale certificate thus becomes an 'instrument' that it will attract the charge of stamp duty under the Kerala Stamp Act, and the duty chargeable in terms of Article 16 thereof becomes payable by the auction purchaser concerned.”

However, it also added that the validity of the document would not be affected even when the stamp is insufficient and only its admissibility in evidence is. Reliance was placed on In Re Interplay Between Arbitration Agreements Under The Arbitration And Conciliation Act 1996 And The Indian Stamp Act 1899.

Thus, the Court dismissed the appeals.

Case No: WA No. 2008 of 2024 and connected cases

Case Title: RDO and Anr. v. Thomas Daniel and connected cases

Citation: 2025 LiveLaw (Ker) 449

Counsel for the appellants: Mohammed Rafiq, Special Government Pleader (Taxes)

Counsel for the respondent: Philip T. Varghese, Thomas T. Varghese, Achu Subha Abraham, V.T. Litha, K.R. Monisha

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