Amalgamations between wholly owned subsidiaries of a common parent are exempt from stamp duty under the 1937 Notification.

Freecharge Payment Technologies Private Limited (“Freecharge”) and Accelyst Solutions Private Limited (“ASPL”) were wholly owned subsidiaries of Axis Bank.

The National Company Law Tribunal sanctioned a scheme amalgamating ASPL with Freecharge; following the scheme, ASPL’s shares were cancelled and Freecharge issued fresh shares to Axis Bank.

Freecharge applied under Section 31 of the Indian Stamp Act, 1899 for adjudication of stamp duty and claimed exemption under Notification No. 13 dated 25 December 1937.

The Sub-Divisional Magistrate treated the amalgamation order as a conveyance under Article 23 of Schedule IA, imposed stamp duty of ₹35,47,94,349 and an equal penalty, and did not address the claimed exemption.

Freecharge challenged that order, relying on Ambuja Cement Ltd. v. Collector of Stamps, 2024 SCC OnLine Del 7710. The respondent argued that the 1937 Notification no longer operated in Delhi and that the issue was pending before a Division Bench.

Whether Notification No. 13 dated 25 December 1937 exempted the amalgamation order from stamp duty where the transferor and transferee companies were wholly owned subsidiaries of a common parent company.

Whether the Court was bound to follow the Coordinate Bench decision in Ambuja Cement Ltd. despite the respondent’s contention that the Notification had been repealed and that the decision was under challenge.

Section 31 of the Indian Stamp Act, 1899 provides for adjudication of the proper stamp duty on an instrument; Article 23 of Schedule IA governs duty on conveyances, and Section 40 concerns the consequences of an instrument being chargeable with duty.

Notification No. 13 dated 25 December 1937 exempts instruments evidencing transfers of property between subsidiary companies where at least 90% of each company’s share capital is beneficially owned by a common parent company.

In Ambuja Cement Ltd. v. Collector of Stamps, 2024 SCC OnLine Del 7710, the Delhi High Court rejected the contention that the Notification had been repealed and held that a qualifying amalgamation between wholly owned subsidiaries of a common parent was exempt from stamp duty.

Judicial discipline requires a Single Judge to follow a Coordinate Bench decision on identical facts unless it has been set aside or stayed.

The Court found no material distinction between Freecharge’s case and Ambuja Cement Ltd.: both involved an amalgamation between subsidiaries wholly owned by a common parent, cancellation of the transferor’s shares, and a stamp-duty demand made without giving effect to the Notification.

The respondent’s argument that the Notification had ceased to operate had already been rejected by the Coordinate Bench. The fact that the judgment was under challenge did not displace its binding effect because it had neither been set aside nor stayed.

Applying judicial discipline, the Court held that Freecharge was entitled to the same exemption.

It quashed and set aside the impugned order dated 26 May 2022 imposing stamp duty and an equal penalty; pending applications were also disposed of.