The Delhi High Court quashed a stamp duty demand of over ₹70 crore on Freecharge Payment Technologies, holding that Notification No.13 of 1937 under the Indian Stamp Act, 1899 continues to operate in Delhi and exempts intra-group amalgamations between wholly owned subsidiaries of a common parent. The court followed the coordinate bench decision in Ambuja Cement Ltd. v. Collector of Stamps, emphasizing judicial discipline.
Background & Facts
The Dispute
The petitioner, Freecharge Payment Technologies Private Limited (Freecharge), a wholly owned subsidiary of Axis Bank, challenged an order dated 26.05.2022 passed by the learned SDM (Collector of Stamps) which imposed stamp duty of ₹35,47,94,349 under Article 23 of Schedule IA of the Indian Stamp Act, 1899, an equal penalty under Section 40 of the same Act, and directed payment of total duty of ₹70,95,88,698 on account of a scheme of amalgamation between Freecharge and Accelyst Solutions Private Limited (ASPL), also a wholly owned subsidiary of Axis Bank.
Key Facts
- Freecharge and ASPL are wholly owned subsidiaries of Axis Bank.
- A scheme of amalgamation under Sections 230-232 of the Companies Act, 2013 was sanctioned by NCLT, Delhi on 22.10.2019 and by NCLT, Mumbai on 28.02.2020, as modified by the NCLAT judgment dated 24.03.2021.
- Upon the scheme coming into effect, Freecharge cancelled the equity shares of ASPL and issued fresh equity shares to Axis Bank.
- On 04.05.2021, Freecharge applied to the Collector of Stamps under Section 31 of the Indian Stamp Act, 1899 for adjudication of stamp duty payable on the amalgamation order and claimed exemption under Notification No.13 dated 25.12.1937.
- The learned SDM held the scheme to be a conveyance chargeable under Article 23 of Schedule IA, levied duty at 3% on a consideration of ₹11,82,64,78,290, imposed an equal penalty, and did not record any finding on the applicability of the Notification.
- The impugned order dated 26.05.2022 thus demanded ₹35,47,94,349 as stamp duty and an equal amount as penalty, totalling ₹70,95,88,698.
Procedural History
- 22.10.2019: NCLT, Delhi sanctions the amalgamation scheme.
- 28.02.2020: NCLT, Mumbai sanctions the scheme.
- 24.03.2021: NCLAT modifies the scheme with respect to the appointed date.
- 04.05.2021: Freecharge files application for stamp duty adjudication and claims exemption under Notification No.13 of 1937.
- 26.05.2022: Learned SDM passes impugned order imposing stamp duty and penalty.
- 15.10.2026: Division Bench lists similar matters (including W.P.(C) 6613/2014) for hearing.
- 08.10.2026: Judgment delivered by Justice Amit Mahajan.
Relief Sought
Freecharge sought quashing of the impugned order dated 26.05.2022, refund of any amount paid, and a direction that no stamp duty or penalty be levied on the amalgamation scheme in reliance on Notification No.13 of 1937.
The Legal Issue
The central question was whether Notification No.13 dated 25.12.1937, issued under the Indian Stamp Act, 1899, continues to have legal force in the National Capital Territory of Delhi and exempts from stamp duty instruments evidencing the amalgamation of two wholly owned subsidiaries of a common parent company, where the transferor company’s shares are cancelled and fresh shares issued to the parent.
Arguments Presented
For the Petitioner
The petitioner contended that Notification No.13 of 1937 expressly exempts stamp duty on transfers of property between two subsidiary companies each having not less than 90% of their share capital in the beneficial ownership of a common parent. It emphasized that Freecharge and ASPL are wholly owned subsidiaries of Axis Bank, satisfying the 90% threshold. The petitioner relied on the coordinate bench judgment in Ambuja Cement Ltd. v. Collector of Stamps (2024 SCC OnLine Del 7710), which held that the Notification was not repealed and applied to identical facts. It argued that the Notification was specifically pleaded before the SDM but ignored, and that the pendency of a challenge to the Ambuja Cement judgment does not affect its binding effect.
For the Respondent
The respondent asserted that the Notification dated 25.12.1937 had been repealed and no longer operated in Delhi after the enactment of the Indian Stamp Act, 1899 as applicable to the NCT. It submitted that the department’s stand is that earlier stamp-law notifications ceased to have effect, and that the question of the Notification’s continued operation is pending before the Division Bench in a batch of similar matters, including W.P.(C) 6613/2014, next listed on 15.10.2026. The respondent further contended that the Freecharge case is not covered by the Ambuja Cement judgment and that the said decision is under challenge and thus not binding.
The Court's Analysis
The Court observed that the facts of the present case are indistinguishable from those considered in Ambuja Cement Ltd. v. Collector of Stamps. In that judgment, the Coordinate Bench had held that the argument that Notification No.13 of 1937 has been repealed lacks legal force and was rejected. The Court quoted the relevant passage:
"10.4. Accordingly, the argument advanced by the Standing Counsel for the respondent that the Notification no. 13 dated 25.12.1937 has been repealed and is not applicable, does not have any legal force and is accordingly rejected. The petitioner and ACIPL were wholly owned subsidiaries of a common parent company - Holderind and therefore, the scheme of amalgamation and the merger order are squarely covered under the Notification no. 13 dated 25.12.1937 which exempts the said instruments from payment of stamp duty. 11. The present petition is allowed in view of above discussion. Accordingly the show-cause notice dated 20.03.2014 and the impugned order dated 07.08.2014 issued by the respondent are quashed and set aside along with all consequential proceedings."
The Court noted that the respondent could not point out any factual distinction between the two cases. It emphasized the principle of judicial discipline: a judgment of a Coordinate Bench rendered on identical facts must be followed unless set aside or stayed. Since the Ambuja Cement judgment remains operative without any stay, the Court held that the same reasoning applies to Freecharge. Consequently, the Notification continues to operate in Delhi and exempts the amalgamation scheme from stamp duty and penalty. The Court therefore allowed the petition and set aside the impugned order.
The Verdict
The petitioner succeeded. The Court quashed the impugned order dated 26.05.2022, thereby cancelling the stamp duty demand of ₹35,47,94,349 and the equal penalty of ₹35,47,94,349, resulting in no liability to pay the total amount of ₹70,95,88,698. The Court held that Freecharge is exempt from stamp duty and penalty under Notification No.13 of 1937. The pending applications, if any, were also disposed of. No costs were expressly awarded.
What This Means For Similar Cases
Notification No.13 of 1937 Remains Operative in Delhi
The judgment reinforces that the 1937 notification has not been repealed and continues to exempt stamp duty on intra-group transfers where each subsidiary has at least 90% of its share capital beneficially owned by a common parent. Practitioners should plead this exemption explicitly when filing for adjudication under Section 31 of the Indian Stamp Act, 1899.
Coordinate Bench Judgments Bind Single Judges
The decision underscores judicial discipline: a single judge must follow a coordinate bench’s ruling on identical facts absent a stay or reversal. This principle applies across tax and corporate matters, reducing the risk of contradictory orders.
Practical Steps for Amalgamation Schemes
- Verify that both transferor and transferee are wholly owned subsidiaries of a common parent with ≥90% beneficial shareholding.
- Claim exemption under Notification No.13 of 1937 at the stage of Section 31 application.
- Keep documentary proof of shareholding patterns and the NCLT/NCLAT orders sanctioning the scheme.
- If challenged, rely on the binding precedent of coordinate bench judgments unless overturned.
