Transaction Structuring Not A Means To Evade Payment Of Stamp Duty

• Supreme Court holds that even a single mortgage deed between a borrower and security trustee on behalf of several lenders may be considered as distinct matters for determination of stamp duty.
• Distinct matters under Section 5 and "description" under Section 6 of the Gujarat Stamp Act, 1958 have different connotations.
• Parties should be mindful in composite transactions as courts may look beyond the form of the instrument and consider collateral documents and surrounding circumstances for imposition of stamp duty.

Background

The Supreme Court of India ("Supreme Court") in its recent decision of Chief Controlling Revenue Authority v. Coastal Gujarat Power Limited & Others¹ held that a mortgage executed by a borrower in favour of a security trustee would not be treated as a single document for determining the liability under the Gujarat Stamp Act, 1958 ("Act"), in the event the Security Trustee holds the security for the benefit of multiple lenders.