Composite Reconstruction Scheme Not Split for Stamp Duty | HC

Case Details: SchaeFFler India Ltd. vs. Chief Controlling Revenue Authority - [2026] 184 taxmann.com 57 (HC-Bombay)

Judiciary and Counsel Details

• Sharmila U. Deshmukh, J.
• Nikhil Sakhardande, Ms Nafisa Khandeparkar, Dhaval Shethia & Ms Mrudula Dixit, Advs. for the Petitioner.
• O.A. Chandurkar, Addl GP & Ms Tanu Bhatia, AGP for the Respondent.

Facts of the Case

In the instant case, the petitioner undertook a “composite scheme of amalgamation” to merge two other companies, the INA Bearing India and the LuK India, into itself, in consideration whereof the Petitioner was to issue equity shares to shareholders of the INA Bearings and the LuK India.

The LuK India was based in Tamil Nadu. The Company Petition was filed before the NCLT, Chennai, which had jurisdiction to sanction the scheme qua LuK India.

The National Company Law Tribunal (NCLT), Chennai, sanctioned the scheme vide order dated 13.06.2018, the Petitioner and INA Bearings being located in the Maharashtra filed a similar Company Petition before the NCLT, Mumbai, which sanctioned the scheme vide order dated 08.10.2018.

The Order of the NCLT, Mumbai, directed the lodging of a certified copy of the order along with a copy of the Scheme for adjudication. In pursuance thereof, the Petitioner lodged an order of sanction dated 08.10.2018 for adjudication.

By the impugned order, the respondents held that the scheme consists of two different transactions and that stamp duty was to be paid separately. The order relied upon the stamp duty notification dated 06.05.2002, which capped the maximum duty payable at Rs. 25 crore and accordingly, stamp duty was adjudicated at Rs. 50 crore, considering the instrument comprises two different transactions.

It was noted that the impugned order was legally unsustainable as it assessed the stamp duty payable on the underlying transaction and not the order of the NCLT, Mumbai, which was the instrument to be assessed for the stamp duty.

Further noted that, since the NCLT, Chennai had also sanctioned the same composite scheme, the stamp authorities in Mumbai would not have jurisdiction to assess the stamp duty on the NCLT, Chennai order, as it was not an order that originated in Maharashtra.

High Court Held

The High Court observed that the duty had been paid on the NCLT, Chennai order, which was an issue to be considered by the concerned authorities in Chennai, and the same was immaterial for the purpose of assessing the stamp duty on the NCLT, Mumbai order

Further, the High Court observed that a composite scheme of reconstruction could not be inter-se segregated for the stamp duty purposes, as held by the Gujarat High Court in Ambuja Cement Ltd. v. Chief Controlling Revenue Authority [C/SR/1/2020, dated 10-2-2023].

The High Court held that the impugned orders were to be quashed and set aside, and the petitioners were liable to pay the stamp duty on the instrument, being an order of the NCLT, Mumbai, dated 08.10.2018, under provisions of Article 25 (da) of the Stamp Act, 1958, with a cap of Rs. 25 crore and amount which had already been paid under protest by the Petitioner, Respondents were to refund the excess stamp duty of Rs. 25 crore.

List of Cases Reviewed

• Chief Controlling Revenue Authority v. Reliance Industries Ltd. [2016] 68 taxmann.com 140/136 SCL 437 (Bombay) (para 18)
• Ambuja Cement Ltd. v. Chief Controlling Revenue Authority [C/SR/1/2020, dated 10-2-2023] [Para 29] followed

List of Cases Referred to

• Chief Controlling Revenue Authority v. Reliance Industries Ltd. [2016] 68 taxmann.com 140/136 SCL 437 (Bombay) (para 8)
• Ambuja Cement Ltd. v. Chief Controlling Revenue Authority [C/SR/1/2020, dated 10-2-2023] (para 8)
• Member, Board of Revenue v. Arthus Paul Benthall AIR 1956 SC 35 (para 26).