Whether a sale certificate, issued by a bank or revenue authority to a purchaser of immovable property following a public auction by a bank/financial institution/court/revenue authority, attracts the levy of stamp duty under the Kerala Stamp Act, 1959.
(2025) 7 KCD 211 : 2025 KER 53343 : 2025 KLT OnLine 2452
High Court of Kerala
Dr. Justice A.K. Jayasankaran Nambiar & Mr. Justice P.M. Manoj
W.A.NO.2008 OF 2024 & Connected Cases; July 21, 2025
Arguments of the State (Appellant):
The State contended that a certificate of sale constitutes a title deed and is an “instrument” as defined by Section 2(j) of the Kerala Stamp Act, 1959, as it records and evidences the right of ownership, discharge of liability, receipt of sale price, handing over possession, and termination of security interest.
It was argued that Article 16 of the Schedule to the Stamp Act specifically mentions ‘certificate of sale’ as an instrument chargeable to duty at rates applicable to conveyances.
The State asserted that Section 17 of the Stamp Act mandates stamping at or before execution, with non-compliance leading to penalty or prosecution under Section 62.
Furthermore, the State claimed that a sale certificate, whose copy is filed in Book No. 1 under Section 89(4) of the Registration Act, 1908, should be treated as a registered document, thus an unstamped copy cannot be acted upon, citing precedents like Sub Registrar v. Nadirsha and Gopalan Nair v. Government of Kerala.
Arguments of the Respondent Banks/Financial Institutions/Auction Purchasers:
The respondents maintained that the Single Judge’s impugned judgment, which held that sale certificates do not attract stamp duty and that the registering authority’s role under Section 89(4) of the Registration Act is limited to filing a copy without insisting on stamp duty, was legally sound and consistent with Supreme Court precedents.
Court’s Analysis and Decision:
The High Court emphasized the distinction between the Kerala Stamp Act, 1959 (fiscal legislation), and the Registration Act, 1908 (regulatory legislation), stating that the enforcement of fiscal provisions must occur through the machinery provided by the fiscal legislation itself, not a general regulatory one.
Definition of ‘Instrument’ under Kerala Stamp Act, 1959: The court noted that Section 2(j) of the Kerala Stamp Act defines “instrument” as including documents that create, transfer, limit, extend, extinguish, or record a right or liability.
Nature of Sale Certificate at Issuance: Citing State of Punjab & Another v. Ferrous Alloy Forgings (P) Ltd. & Ors [(2024 SCC Online SC 3372)], the court reiterated that a sale certificate is merely evidence of title and does not transfer title in the property; title is transferred upon the successful completion and confirmation of the sale. Therefore, at the time of its issuance, a sale certificate only records the fact of a completed transaction and does not, in itself, create, transfer, or record a right or liability in praesenti. Consequently, a sale certificate, at the time of its issuance, will not attract the levy of stamp duty under the Kerala Stamp Act.
Transformation into an ‘Instrument’: The court clarified that a sale certificate can “metamorphose” into an “instrument” for stamp duty purposes only when its original is presented for full registration before a registering authority. In such a scenario, the registering authority would then be required to examine the nature of rights and ensure proper execution before copying the document into Book No.1, at which point stamp duty chargeable under Article 16 of the Kerala Stamp Act becomes payable by the auction purchaser.
Distinction between ‘Registration’ and ‘Filing’: The court differentiated between the “registration” of a document and the “mere filing” of its copy under Section 89(4) of the Registration Act, citing Smt. Shanti Devi L. Singh v. Tax Recovery Officer and Others [(1990) 3 SCC 605]. The filing of a copy under Section 89(4) is intended merely to inform the public about the circumstances under which the property came into the current title holder’s hands.
Scope of Registering Authority’s Powers regarding Copies: The registering authority cannot exercise powers under Sections 33 (impounding) or 34 (inadmissibility in evidence) of the Kerala Stamp Act regarding the copy of a sale certificate sent for filing under Section 89(4) of the Registration Act. The court affirmed that while an insufficiently stamped instrument may affect its admissibility in evidence, it does not invalidate the document itself.
Conclusion: The court found the judgments of the Single Judge to be legally sound. The original sale certificate will not attract stamp duty unless it qualifies as an “instrument” as defined under the Kerala Stamp Act (i.e., when presented for full registration).
Outcome: The High Court dismissed the writ appeals preferred by the State, upholding the judgments of the writ court.
