Supreme Court upholds Gujarat HC relief to Vodafone Idea, strikes down Rs 7.64 cr stamp duty penalty

The Supreme Court on Tuesday upheld a Gujarat High Court order that had quashed Gujarat stamp department's Rs 7.64 crore penalty imposed on Vodafone Idea Telecom Infrastructure, formerly known as Vodafone Towers, under Section 39(l)(b) of the Gujarat Stamp Act, 1958.

The HC had set aside the penalty imposed by the Chief Controlling Revenue Authority as being disproportionate, excessive, unreasonable, illegal, and unjust.

The genesis of the dispute lies in the Scheme of Arrangement sanctioned between Vodafone Idea (Transferor Company) and Vodafone Towers (Transferee Company) by the National Company Law Tribunal, Ahmedabad Bench, in September 2019. The scheme facilitated the transfer and vesting of the fiber infrastructure undertaking of Vodafone Idea into Vodafone Idea Telecom on a going concern basis.

Before approval of the merger scheme by the National Company Law Tribunal, Vodafone Idea had sought adjudication of the proper stamp duty payable on the tribunal’s order. In March 2021, the Additional Superintendent of Stamps determined stamp duty chargeable on the NCLT order at Rs 25 crore and also alleged non-payment of stamp duty and then imposed a penalty under the Act, according to the appeal in the SC.

Vodafone said that despite the company having expressed its readiness and willingness to pay the stamp duty, notices were issued by the stamp department imposing a penalty on it.

Ultimately, in October 2021, the Office of deputy Superintendent of Stamps, Gujarat, determined that the company was liable to pay a fine of Rs 7.64 crore. This was challenged by the company before the Chief Controlling Revenue Authority, which rejected its application in 2022. However, the Gujarat High Court, on appeal, favoured Vodafone.