Bombay High Court Quashes Excess Stamp Duty Demand in Bharti Airtel–TTML Demerger Case

In a judgment delivered on May 9, 2025, the Bombay High Court set aside the orders of the Collector of Stamps, which had imposed a stamp duty of INR 7.39 crore on Bharti Airtel Limited (Bharti Airtel) in connection with its demerger arrangement with Tata Teleservices (Maharashtra) Ltd. (TTML).

Background of the Dispute

The case arose from a Scheme of Arrangement sanctioned by the National Company Law Tribunal (NCLT), which involved the demerger of TTML’s consumer mobile business into Bharti Airtel as a going concern. As part of this arrangement, Bharti Airtel issued its shares to TTML’s shareholders.

Following the NCLT’s approval, the scheme was lodged with the Chief Controlling Revenue Authority, Maharashtra (CCRA) for adjudication of stamp duty under Section 31 of the Maharashtra Stamp Act, 1958. The stamp duty for this transaction was calculated by the CCRA on TTML’s full enterprise value, but Bharti Airtel argued it should be based on the lower of market value of shares issued or value of the immovable property.

The Authorities’ Approach

The Collector assessed the stamp duty at INR 7.38 crores, calculating 0.7% of the “net worth” of the demerged consumer mobile business unit of TTML, which was valued at INR 1,055.7 crores. This assessment was subsequently upheld by the CCRA.

Bharti Airtel challenged this calculation, arguing that the authorities had erroneously based the duty on the enterprise value of the business, without deducting TTML’s substantial debts (notably, INR 950 crores in spectrum license fees owed to the government).

According to Bharti Airtel, the actual market value of the shares issued as consideration was INR 105.7 crores, and the correct stamp duty should have been INR 1.86 crores, which represents 5% of the market value of TTML’s immovable property in Maharashtra—a figure higher than 0.7% of the market value of shares issued.

Key Findings of the Court

Justice Sandeep V. Marne, presiding over the matter, held that:

• The authorities misapplied Article 25(da) of the Maharashtra Stamp Act by levying stamp duty on the net worth or enterprise value of the demerged business, rather than on the aggregate market value of shares issued and any consideration paid, as prescribed by law.
• The valuation reports prepared by independent chartered accountants for both companies had considered TTML’s debts in arriving at the equity value, which formed the basis for the share exchange ratio approved by the NCLT and the shareholders.
• The Collector of Stamps and CCRA had no jurisdiction to disregard the commercial wisdom of the companies and the NCLT’s approval by substituting their own basis for valuation.

Court’s Directions

The High Court set aside the orders of the Collector of Stamps (dated November 14, 2022) and the CCRA (dated August 2, 2024), holding that the correct amount of stamp duty payable on the Scheme of Arrangement is INR 1.86 crores. Since Bharti Airtel had already paid this amount, the petition was allowed in its favor.