Brief Overview:
A sale certificate issued pursuant to an auction sale under an IBC liquidation is not compulsorily registrable. Nor does it attract stamp duty merely by being filed in Book No. 1 under Section 89(4) of the Registration Act, 1908. This is because the IBC is a revival mechanism and not a recovery law, and provisions governing sale certificates under recovery statutes therefore cannot be invoked to demand stamp duty in such cases.
Technical Details:
Whether stamp duty is payable on a sale certificate issued pursuant to an auction in liquidation under IBC when the sale certificate is only filed in Book No. 1 under Section 89(4) of the Registration Act?
1) A sale certificate issued pursuant to a public auction is exempt from registration under Section 17(2)(xii) of the Registration Act; only a copy is required to be filed in Book No. 1 under Section 89(4).
2) So long as the sale certificate remains as it is, it neither requires registration nor attracts stamp duty (following State of Punjab v. Ferrous Alloy Forgings).
3) Section 17(1)(g) of the Registration Act (Maharashtra Amendment), which relates to compulsory registration of a sale certificate issued by a competent officer or authority under any ‘recovery act’, has no application as IBC is not a “recovery act”.
4) Stamp duty payment would arise only if the auction purchaser uses the sale certificate for some other purpose.
JC Takeaways:
For purchasers of distressed assets, this ruling removes an upfront cost hurdle by clarifying that mere filing of the sale certificate does not attract requirements of registration or payment of stamp duty (unless the sale certificate is used for some other purpose).
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