The Bombay High Court has set aside a Rs 73.8 million stamp duty demand imposed on Bharti Airtel in connection with the demerger of Tata Teleservices (Maharashtra) Limited’s (TTML) consumer mobile business into Airtel.
The high court ruled that the Chief Controlling Revenue Authority (CCRA) and the Collector of Stamps had “grossly erred” by calculating the stamp duty based on the net worth or enterprise value of the demerged business, rather than the market value of shares issued, as required under the law.
The dispute stemmed from the scheme of arrangement between Airtel and TTML, which was approved by the National Company Law Tribunal (NCLT) in 2018-2019. As part of the transaction, Airtel issued shares to TTML shareholders in exchange for its consumer mobile business. The stamp duty was later assessed in 2022 by the Collector of Stamps based on TTML’s net worth of Rs 10.55 billion, resulting in a duty of Rs 73.8 million.
Airtel contested the assessment, arguing that the duty should be calculated as 0.7 per cent of the actual market value of the shares issued, Rs 1.05 billion, bringing the stamp duty liability to Rs 18.6 million.
The court agreed with Airtel, stating that Article 25(da) of the Maharashtra Stamp Act mandates calculation based on the market value of the shares and not the entity’s net worth. It also rejected the state’s argument that spectrum-related liabilities were misrepresented as debt, noting that no proper valuation of the shares had been carried out by the authorities.
Further, the court quashed both the Collector’s and the CCRA’s orders and ruled that Airtel is liable to pay only Rs 18.6 million in stamp duty.
