Bharti Airtel Ltd vs The Chief Controlling Revenue Authority, Maharashtra State

This case revolves around a dispute regarding the stamp duty payable under a Scheme of Arrangement involving the demerger of the consumer mobile business of Tata Teleservices (Maharashtra) Limited (TTML) into Bharti Airtel Limited (BAL).

- Anirudha Jain

The critical legal question was whether the enterprise value (or net worth) of the demerged undertaking could be treated as the "market value of shares issued" for computing stamp duty under Article 25(da)(ii) of the Maharashtra Stamp Act, 1958.

Facts of the Case:

BAL filled a petition challenging an order dated 2nd August 2024 passed by the Chief Controlling Revenue Authority (CCRA), Maharashtra State which assessed a stamp duty liability of INR 7,38,99,000.

A Scheme of Arrangement for demerger of consumer mobile business of TTML into BAL was sanctioned by Hon'ble Mumbai Bench of National Company Law Tribunal (NCLT) vide order dated 4th December 2018 and by Hon'ble Delhi Bench of NCLT dated 30th January 2019.

NCLT, Mumbai also directed TTML to lodge certified copy of the order allowing Scheme of Arrangement and the sanctioned scheme with the Collector of Stamps, Mumbai, within 60 days. Accordingly, application was made by TTML to the office of Collector of Stamps on 19 August 2019 lodging the Scheme of Arrangement and sought necessary orders for adjudication of stamp duty payable under Section 31 of the Maharashtra Stamp Act, 1958 (Stamp Act).

By letter dated 24 August 2022, the Collector of Stamps conveyed that the Scheme of Arrangement would be chargeable under Article 25 (da) of the Schedule to the Stamp Act and that the stamp duty was determined at Rs. 7,38,99,000/- at the rate of 0.7% market value taken as net worth of Rs. 1055.70 crores of the to the demerged company.

Petitioner preferred Appeal before the CCRA under provisions of Section 53(1A) of the Stamp Act against the order dated 14 November 2022. However, by order dated 2 August 2024, the Appeal preferred by the Petitioner has been dismissed by the CCRA confirming the order passed by the Collector of Stamps dated 14 November 2022. Petitioner View:

Valuation Basis: