Stamp duty of Rs.7,38,99,000/– Scheme of Arrangement of TTML & Demerger with Airtel
Scheme of Arrangement for demerger of consumer mobile business of TTML into the Petitioner Bharti Airtel Ltd was approved and the date was fixed as 1.7.2019.
On 19.8.2019, TTML filed the Scheme and sought orders for adjudication of stamp duty under Section 31 of the Maharashtra Stamp Act, 1958.
By the letter dated 24.8.2022, the Collector of Stamps held that the Scheme would be chargeable under Article 25(da) of the Schedule to the Stamp Act and determined the stamp duty at Rs.7,38,99,000/- at 0.7% market value taken as net worth of Rs.1.500.70 crores of the demerged company.
The Collector of Stamps issued notice dated 21.12.2023 for Rs.7,38,99,000/- and interest of Rs.8,12,88,900/-.
HELD that considering the provisions of Article 25(da)(ii) of the Stamp Act, the Collector ought to have determined the market value of the shares issued and allotted in exchange by the petitioner. The Collector seems to have erroneously concentrated on the “enterprise value” or “net worth” of consumer mobile business unit of TTML while computing the stamp duty.
Article 25(da)(ii) does not contemplate levy of stamp duty on the net worth of the demerged undertaking. Since no separate consideration is paid under the Scheme, the value of shares allotted by the petitioner to the equity shareholders of TTML would alone form the entire consideration of the Scheme.
Despite availability of figures of market value of shares allotted by the petitioner in exchange, the Collector of Stamps erroneously proceeded to determine stamp duty payable on the basis of net worth of TTML’s consumer mobile business.
The Collector of Stamps cannot sit in appeal over the commercial wisdom of shareholders of both the companies and which is accepted by the NCLT and assume that the TTML was actually worth more than what is accepted by the share holders and the NCLT.
Judgment dated 9.5.2025 of the High Court of Bombay in Writ Petition No.15746 of 2024 of Bharti Airtel Ltd Vs. The Chief Controlling Revenue Authority and others
