Pachaas Crore Ki Stamp Duty….
Do you mean Pachaas tola…?????
For those who have watched movie Vaastav, the dialogue immediately brings back the iconic scene where Sanju’s character proudly talks about the 50 tola gold chain.
But in the world of corporate restructuring, “pachaas tola” can have a very different meaning.
Here, it was not 50 tola of gold. It was ₹50 crore of stamp duty.
Stamp duty on merger / demergers is that climax which often can be unexpected twist in the story, while it’s thrilling to see such twist in Movies and OTT series but in real life corporate transactions it comes with consequences in terms of cost. One of such case where climax of the transaction was difficult to agree upon was taken up before Hon’ble Bombay High Court in Schaeffler India Limited v. Chief Controlling Revenue Authority, decided on 18 February 2026.
Schaeffler India Limited (“SIL”) filed a composite scheme under Sections 230–232 of the Companies Act, 2013, involving the amalgamation of two transferor companies, INA Bearings India Private Limited (“INA”) and LuK India Private Limited (“LuK”), with SIL.
SIL and INA were within the jurisdiction of the NCLT, Mumbai, whereas LuK was within the jurisdiction of the NCLT, Chennai. Consequently, the same composite scheme was placed before both Benches. The NCLT, Chennai sanctioned the scheme on 13 June 2018, followed by the NCLT, Mumbai sanctioning the scheme on 8 October 2018.
Maharashtra stamp authorities (MSA) while adjudicating the matter considered the stamp duty payable of ₹ 50 Cr subject to cap of ₹ 25 Cr pursuant to notification of 6 May 2002 and relied on section 5 of Maharashtra stamp act (herein after “the Act”) i.e,
“Any instrument comprising or relating to several distinct matters or transactions shall be chargeable with the aggregate amount of the duties with which separate instruments, each comprising or relating to one of such matters or transactions, would be chargeable under this Act.”
MSA considered following points of arguments:
- NCLT, Mumbai in its order had considered the composite scheme which included the amalgamation of INA with SIL as well as LUK with SIL and therefore, the same constituted two different transactions.
- Scheme of Amalgamation is Instrument since it considers two different transactions and not the order of NCLT
- Implementation of the scheme is in Maharashtra, it would give jurisdiction to the Maharashtra stamp authorities to levy stamp duty on NCLT, Chennai order.
Arguments on behalf of SIL were
- Section 3 of the Act contemplates payment of stamp duty on Instrument and not the underlying transaction and in given case instrument is NCLT Order and not Scheme of amalgamation (Relied on Chief Controlling Revenue Authority, Pune And Another vs Reliance Industries Limited, Mumbai And Another)
- Multiple transactions in same scheme cannot be charged for Stamp duty separately (Relied on Ambuja Cement Limited vs Chief Controlling Revenue Authority 2)
Bombay High Court Relied on the judgements in case of Reliance Industries Limited and Ambuja cement limited and validated following points
- Stamp duty is on the instrument, not the underlying transaction: The Court held that the stamp authorities cannot assess stamp duty by dissecting the underlying commercial transactions when the statute makes the NCLT sanction order the chargeable instrument. Therefore, the fact that two transferor companies were being amalgamated into SIL did not, by itself, mean that the single NCLT Mumbai order could be treated as two separate transaction /instruments for stamp-duty purposes.
- Section 5 cannot be used to split a composite NCLT order: The Court examined Section 5 and held that its application requires an examination of whether an instrument comprises several distinct matters or transactions. However, applying Section 5 in the present circumstances would necessarily require the stamp authorities to look behind the NCLT order and segregate the underlying amalgamations.
The Court held that such an approach was impermissible because the instrument chargeable to stamp duty is the order of sanction, and not the underlying scheme or each individual amalgamation contained within it.
The Bombay High Court quashed the orders demanding stamp duty of ₹50 crore. It held that stamp duty was payable on the NCLT Mumbai order dated 8 October 2018, under Article 25(da) of the Maharashtra Stamp Act, 1958, subject to the applicable maximum cap of ₹25 crore.
It is interesting to learn following Principles out of this case and the cases referred therein
- Stamp Duty is always levied on Instrument and in case of Merger & Demergers Instrument is Order Sanctioned by NCLT, so if scheme and Order differs in any way, NCLT Order will be considered as Instrument for Stamp Duty Purpose.
- Two Different NCLT Orders will result in Stamp Duty in Two Different States and neither of the state stamp Authorities has power to levy stamp duty on the NCLT order of other state.
- Where Multiple Transactions are involved through one document it needs to be looked into in the context of whether each transaction is leviable for Stamp Duty and that may not be possible in case of scheme matters.
For composite schemes of merger and Demergers, the judgment provides important protection against artificially multiplying stamp-duty liability merely because more than one transferor company is involved.
The Article is written by Partner – Mr. Omkar Dindorkar.