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Issues: (i) Whether, for levy of stamp duty on a scheme of demerger under Article 25(da) of the Maharashtra Stamp Act, 1958, the duty could be computed on the net worth or enterprise value of the demerged undertaking instead of the market value of shares issued or allotted in exchange and the consideration paid. (ii) Whether the gross debt reflected in the valuation exercise was liable to be deducted from the enterprise value for determining the stamp duty payable on the scheme.
Issue (i): Whether, for levy of stamp duty on a scheme of demerger under Article 25(da) of the Maharashtra Stamp Act, 1958, the duty could be computed on the net worth or enterprise value of the demerged undertaking instead of the market value of shares issued or allotted in exchange and the consideration paid.
Analysis: The statutory scheme under Article 25(da) fixes duty with reference to the market value of shares issued or allotted in exchange and the amount of consideration paid, subject to the higher of the two prescribed caps linked to the value of immovable property and the share consideration. The Collector and the appellate authority, however, proceeded on the net worth of the demerged business and treated that figure as the basis for assessment. That approach travelled beyond the method mandated by the statute, because the provision does not authorise levy on enterprise value or net worth as such. The adjudicating authority may ascertain the true nature of the transaction, but it cannot substitute a different charging basis for the one enacted by the legislature.
Conclusion: The duty could not be computed on the net worth or enterprise value of the demerged undertaking and had to be determined on the statutory basis prescribed in Article 25(da); this issue is decided in favour of the assessee.
Issue (ii): Whether the gross debt reflected in the valuation exercise was liable to be deducted from the enterprise value for determining the stamp duty payable on the scheme.
Analysis: The valuation material showed that the enterprise value had to be understood with liabilities taken into account, and the commercial arrangement between the companies proceeded on that basis. The adjudicating authority could not ignore the valuation structure adopted by the parties and sanctioned in the scheme, nor could it assume a higher taxable base by treating the gross debt figure as irrelevant. In any event, once the statute required computation on market value of shares issued or allotted and consideration paid, the exercise could not be shifted to a standalone assessment of the demerged unit's enterprise value without statutory warrant.
Conclusion: The gross debt was not to be disallowed in the manner adopted by the revenue authorities, and the petitioner's computation prevailed; this issue is decided in favour of the assessee.
Final Conclusion: The impugned stamp duty assessment based on the demerged undertaking's net worth was unsustainable, and the proper duty was the lower amount linked to the immovable property cap already discharged by the petitioner.
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