Stamp duty chargeable on inter-state amalgamations

By Vivek Vashi and Shreya Ramesh, Bharucha & Partners
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In a recent reference to a full bench of Bombay High Court in Chief Controlling Revenue Authority v Reliance Industries Ltd, the levy of stamp duty in inter-state amalgamations and schemes, under sections 391 to 394 of the Companies Act, 1956, was considered.

Background

The assets and undertakings of Reliance Petroleum (RPL), registered in Gujarat, were transferred to Reliance Industries (RIL), registered in Maharashtra, by way of a scheme of amalgamation under sections 391 to 394 of the 1956 act. Pursuant to the scheme, company petitions were preferred before Gujarat High Court and Bombay High Court by RPL and RIL respectively, to seek the courts’ sanction of the scheme. The scheme received the approval and sanction of Bombay High Court on 7 June 2002 and Gujarat High Court on 13 September 2002.

Vivek Vashi
Vivek Vashi

RIL and RPL contended that stamp duty would not be payable on the sanctioning order of Bombay High Court, as the scheme took effect only upon the subsequent sanction granted by Gujarat High Court. RIL thus paid stamp duty of ₹100 million in Gujarat, and then contended that of the stamp duty of ₹250 million owed in Maharashtra, only the balance, i.e. ₹150 million, remained payable. In essence, RIL claimed a set-off under section 19 of the Bombay Stamp Act, 1958, for the amount of ₹100 million which was paid to the revenue authorities in Gujarat.

RIL’s contention was rejected by the revenue authorities, who instead directed that full stamp duty be paid in Maharashtra as well, in the amount of ₹250 million. A series of appeals ensued, leading up to the reference to the full bench of Bombay High Court under section 54 of the Bombay Stamp Act.

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Vivek Vashi is the mainstay of the litigation team at Bharucha & Partners, where Shreya Ramesh is an associate.

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