P V VIJAYAKUMARAN Vs. STATE OF KERALA

JUDGEMENT

(1.) Petitioner is (sic) Ext.P2 order whereunder the Government has ordered recovery of stamp duty from employees of the Kerala Water Authority who were granted House Building loan by the Water Authority on execution of documents without charging stamp duty. It is seen that Government vide Ext.P1 order dated 23-3-1998 exempted the employees of Water Authority from payment of stamp duty for executing documents to avail House Building loan from the Water Authority. Petitioners have executed documents without payment of stamp duty and availed loan based on Ext.P1. However, Government vide Ext.P2 dated 7-1-2002 cancelled the exemption granted vide Ext.Pl and directed recovery of stamp duty. Counsel for the petitioner contended that Ext.P2 is arbitrary, discriminatory and is against the principle of promissory estoppel. He has relied on the decision of the Supreme Court in Union of India v. Godfrey Philips India Ltd., 1985 4 SCC 369 and contended that petitioners cannot be called upon to pay stamp duty through retrospective withdrawal of exemption originally granted. Though not in the same context, the Supreme Court in the above decision held as follows:

(2.) Stamp duty is an additional liability to the borrower. The stamp duty in this case is said to be five per cent of the loan amount, which is substantial. Petitioners have rightly pointed out that they have taken into account the exemption from stamp duty as an incentive for availing loan and the liability presently created through retrospective withdrawal of exemption is the result of a clear breach of promise. Even though liability for stamp duty is incurred at the time of availing the loan, it adds to increase the cost of debt-servicing because loan amount virtually gets reduced by cost of loan incurred by the borrower and therefore rate of interest has to be reduced on net loan amount. A comparable (sic) for borrowers of house-building-loan is retrospective withdrawal of income tax incentives on house building loans by Government of India which will be equally illegal and unwelcome. In the circumstances, Ext.P2 order demanding stamp duty contrary to the promise made out by Government based on which petitioners availed loan is declared arbitrary and discriminatory and hence unenforceable. W.P. is therefore allowed directing the respondents not to recover any stamp duty from the petitioners for the loan documents and release deeds executed prior to 7-1-2002 when Ext.P2 came into force.