The Kerala High Court (Ernakulam Bench) has held that the Sub Registrar had no statutory authority under the Kerala Stamp Act, 1959, as it stood in 2016, to issue a demand for deficit stamp duty from the petitioner. The only provision that could potentially empower such action is Section 33A which was introduced only in 2019 and could not have retrospective application to an order passed in 2016. Essentially, the Court ruled that a Sub Registrar cannot recover deficit stamp duty from a registered document’s parties in the absence of an enabling statutory provision.
Furthermore, the impugned demand was essentially a consequence of the DIG’s direction to the Sub Registrar to make up the loss to the exchequer, which was then passed on to the petitioner solely because the Sub Registrar was a low-paid employee unable to bear the financial burden. The Court therefore ruled that the Sub Registrar’s personal inability to pay the deficit amount cannot constitute a valid legal ground to recover the same from the petitioner.
A Single Judge Bench of Justice P. V. Balakrishnan noted that the petitioner was challenging the order passed by the Sub Registrar demanding payment of the deficit stamp duty of Rs.37,500/-, which was based on the lease deed covering installation of an ATM in the premises, with stamp duty at the rate of Rs.2,500/- per year as per the amendment brought into the Stamp Act by the Kerala Finance Bill, 2015. When the Court posed specific queries regarding the power of the Sub Registrar to issue such order, the Government Pleader fairly conceded that there were no provisions under the Stamp Act, other than Section 33A, enabling the Sub Registrar to do so.
However, the Court found upon perusal of Section 33A that it was introduced only by the Kerala Finance Act, 2019, and came into effect only on April 01, 2019. Since the order was issued in the year 2016, there could be no application of that provision to the instant case. The Court further observed that the counter affidavit of the 2nd respondent revealed that the Deputy Inspector General of Registration, after noticing the deficit in stamp duty, had directed the Sub Registrar who registered the lease deed to make up the loss caused to the exchequer.
The DIG had effectively ordered the then Sub Registrar to pay the said amount, and it was only because she, being a low-paid employee, was unable to pay such a huge amount that the order of Sub-Registrar came to be issued to the petitioner requesting him to pay the amount. The Court held that this reason, i.e., the Sub Registrar’s inability to pay, could not be treated as a valid ground to issue order against the petitioner.
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Briefly, the petitioner, State Bank of Travancore, had taken premises on lease for starting a branch, as per a registered lease deed executed before the Sub Registrar. The lease deed entitled the lessee to use the premises for installation of ATM(s), with no separate rent fixed for the same. After registration, the Sub Registrar (2nd respondent) issued a communication calling upon the petitioner to remit a further sum of Rs.37,500/- as stamp duty with respect to the ATM counter provided in the lease deed. This was based on an audit objection raised by the District Registrar (Audit), which in turn relied on Article 5(e) of the Kerala Stamp Act, 1959, introduced by the Kerala Finance Act, 2015, prescribing stamp duty of Rs.2,500/- per year for documents relating to installation of ATM counters.
The lease deed was for a period of 15 years, and the deficit was calculated at Rs.2,500/- per year for 15 years, totalling Rs.37,500/-. The document had been registered by the then Sub Registrar on the presumption that it was duly stamped. Subsequently, on scrutiny by the Deputy Inspector General of Registration (South Zone), a deficiency in stamp duty was noticed. The DIG directed the Sub Registrar who had registered the document to make up the loss caused to the exchequer. Since the Sub Registrar was a low-paid employee and unable to pay such a huge amount, notice was issued to the petitioner requesting payment of the deficit stamp duty.
