Bombay HC Grants Relief To Airtel In ₹7.38 Crore Stamp Duty Dispute Over Tata Teleservices Demerger

Mumbai: In a major relief for Bharti Airtel, the Bombay High Court has quashed orders passed by the Chief Controlling Revenue Authority (CCRA) and the Collector of Stamps that had levied a stamp duty of Rs 7.38 crore on the telecom major in connection with the demerger of Tata Teleservices (Maharashtra) Ltd’s (TTML) consumer mobile business into Airtel.

Justice Sandeep Marne recently observed that the authorities had “grossly erred” by computing stamp duty based on the net worth or enterprise value of the demerged unit, rather than on the market value of shares issued as mandated by law.

The dispute pertained to the valuation of the Scheme of Arrangement between Airtel and TTML, sanctioned by the National Company Law Tribunal (NCLT) in 2018-2019. Airtel had issued shares to TTML shareholders in exchange for the consumer mobile business. TTML then submitted the scheme to the Collector of Stamps, who in 2022 assessed the stamp duty at Rs 7.38 crore based on TTML’s net worth of Rs 1,055.70 crore.

Airtel challenged the assessment, arguing that stamp duty should be calculated at 0.7% of the actual market value of shares issued, which stood at Rs 105.70 crore—leading to a stamp duty of Rs 1.86 crore. Airtel’s counsel Amit Jamsandekar argued, “The Collector has erroneously treated enterprise value as equivalent to the market value of shares, disregarding Rs 950 crore in gross debt shown in the valuation report.”

The court concurred, observing that Article 25(da) of the Maharashtra Stamp Act did not permit computation of duty on the basis of net worth. “The Collector of Stamps has grossly erred… Article 25(da)(ii) does not contemplate levy of stamp duty on net worth,” the court held.

Rejecting the State’s contention that spectrum-related liabilities were wrongly shown as debt, the court noted that no attempt was made by the authorities to determine the actual market value of shares issued in the transaction.

Justice Marne set aside both the Collector’s and the CCRA’s orders and ruled that Airtel was liable to pay stamp duty of only Rs 1.86 crore.

“Order dated 14 November 2022 passed by the Collector of Stamps, as well as order dated 2 August 2024 passed by the CCRA are set aside… It is held that the amount of stamp duty payable on the Scheme of Arrangement is Rs 1,86,70,450,” Justice Marne said.