No rebate for Stamp Duty to be paid in another State in case of scheme of arrangement

Bombay High Court: Deciding a case on amalgamation between two companies the Reliance Industries Limited and Reliance Petroleum Limited, Jamnagar the bench of S .C. Dharmadhikari, K.R. Shriram, B.P. Colabawalla, J.J., held that the order involving different High Courts of various states are separate instruments in themselves in case of scheme under Section 391 to 394 of the Companies Act, 1956 so the stamp duty will be payable on all orders without the benefit of remission, set-off or rebate.

In a case where Reliance Industries Limited, having its registered office in Maharashtra and Reliance Petroleum Limited, having its registered office in Gujarat entered into a scheme of amalgamation under Sections 391 to 394 of the Act,  wherein the Act required the scheme of amalgamation to be approved by High Courts having territorial jurisdiction over the transferor company and the transferee company, the Bombay HC on June 7, 2002 passed an order sanctioning the scheme. RPL paid stamp duty of INR 10 Crores on the Gujarat Order in the state of Gujarat. The RIL on October 16, 2002 submitted the Bombay Order for adjudication of stamp duty and further contended that the maximum payable Stamp duty under Bombay Stamp Act, 1958 was INR 25 Crores and since RPL had already submitted 10 Crores, it only has to pay 15 crores.

However this contention was rejected by the revenue authorities and RIL and RPL were directed to deposit the entire stamp duty which is INR 25 crores on the Bombay Order. RPL and RIL appealed against the order of the revenue authorities but the appeal was rejected by Chief Controlling Revenue Authority, Maharashtra and a reference was filed before the Bombay High Court for its opinion on Section 54 of Bombay Stamp Act as it involved a substantial question of law.

Citing the case of Hindustan Lever v. State of Maharashtra (2004) 9 SCC 438, the Supreme Court decided in favor of the Revenue Authorities and held:

  • the stamp duty is not charged on the ‘transaction’ effected by the instrument rather, it will be charged on the instrument.
  • There cannot be a liability to pay Stamp Duty if a transaction is not supported by the execution of an instrument.
  • Although two orders of different High Courts relate to the same scheme, they cannot be said to be the same document and are independent and different instruments.
  • The order sanctioning scheme of arrangement is the chargeable instrument under the stamp duty laws and not the scheme.
  • the benefit of Section 4 of Bombay Stamp Act will not be available on Orders passed by different high courts sanctioning the scheme of arrangement as they do not constitute several instruments used in a single transaction. [  Chief Controlling Revenue Authority, Maharashtra State v. Reliance Industries Limited, Mumbai, 2016 SCC OnLine Bom 1428, decided on March 3, 2016].

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