RIL goes to court over stamp duty

Reliance Industries has filed a writ petition against the state government in the Bombay High Court challenging the Rs 25 crore stamp duty on the merger of Reliance Petrochemicals with the company.

Admitting the RIL's writ petition, a division bench comprising Vishwanath Palshikar and Nishita Mhatre issued notices to the state government, superintendent of stamp duties (Mumbai region) and the inspector general of stamp duty and registration and asked them to file their affidavits in four weeks.

The boards of RIL and Reliance Petrochem had given an approval to the proposal of merger of the two companies in 2002.

Subsequently, applications were filed before the Bombay High Court and the Gujarat High Court for allowing the merger. While the Bombay HC had given approval in June 2002, the Gujarat HC gave its nod in September 2002.

At the market rates at that time Reliance Petrochem's share value was Rs 1,358.14 crore and its immovable properties were worth Rs 95.07 crore.

Though actual stamp duty on this valuation works out to Rs 99.03 crore, Reliance Industries was asked to pay upper limit of Rs 25 crore, which is charged on a single deal.

However, RIL refused to pay the stamp duty on grounds that it had already paid Rs 10 crore duty in Gujarat and matters in both Bombay and Gujarat high courts refer to the same deal.

But the Maharashtra government asked RIL to pay the duty as the Bombay High Court order was given prior to that of the Gujarat High Court. The company later paid Rs 15 crore under protest.

Subsequently Reliance Industries had written to the state government saying that both the government and it should jointly approach the Bombay High Court under section 54 of the Bombay Stamp Duty Act to appoint an arbitrator in the matter.

However, the state government turned down the request for arbitration, after which Reliance filed the writ petition against the state.

While additional government pleader Prakash Khemani appeared on behalf of the state government, solicitor firm A S Duggal & Company is representing Reliance.