Amalgamation schemes treated as transfers for stamp duty, with West Bengal exemption notification held inapplicable.

A scheme of amalgamation or arrangement sanctioned under Section 391 of the Companies Act, 1956 is treated as a transfer of property between distinct juristic persons and not merely an internal reorganisation. On that basis, it falls within the stamp law as an inter vivos transfer with the trappings of a sale, so appropriate stamp duty is attracted in West Bengal. The 1937 exemption notification was held inapplicable because it referred to Schedule 1, not Schedule 1-A, and therefore did not govern the West Bengal regime. The corporate holding-subsidiary relationship did not alter the legal character of the transfer for stamp purposes.

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Issues: Whether a scheme of amalgamation or arrangement sanctioned under Section 391 of the Companies Act, 1956 amounts to a conveyance or transfer attracting stamp duty under the Indian Stamp Act, 1899 in West Bengal, and whether the 1937 notification exempted such transfer.

Analysis: The Court held that the sanction of a scheme of amalgamation is not a mere internal re-alignment of business but results in a transfer of property between juristic persons. Relying on the binding effect of the Supreme Court's exposition that such a transaction has the trappings of a sale and constitutes an inter vivos transfer, the Court held that the scheme falls within the scope of the stamp law and attracts appropriate duty. The Court further held that the 1937 notification could not be applied because it referred to Schedule 1 and not to Schedule 1-A, and therefore did not govern the West Bengal regime. The Court also rejected the contention based on a holding-subsidiary relationship, holding that corporate entities remain distinct in law and the transfer is nonetheless a transfer for stamp purposes.

Conclusion: The scheme of amalgamation is liable to stamp duty, the exemption notification does not apply, and the challenge by the appellants fails.

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