Short levy of Rs 12 cr stamp duty on Kingfisher-Deccan deal: CAG

Bangalore: Government auditor CAG has revealed a short levy of stamp duty worth Rs 12.03 crore on amalgamation and demerger of three public limited firms - Kingfisher Airlines, Deccan Aviation and Deccan Charters. The CAG’s report on revenue sector for year ended March 2013, tabled in the Karnataka Legislative Assembly, said the Office of the Inspector General of Registration (IGR&CS) in August 2011 noticed a Composite Scheme of Arrangement (CSA) relating to demerger and amalgamation of three public limited companies was referred by Karnataka High Court for assessment of stamp duty payable on the instrument.[caption id=“attachment_1399225” align=“alignleft” width=“380”]  Trouble mounts. Reuters [/caption] The IGR directed the Department of Revenue (DR), Gandhinagar for assessment of the same in April 2010, the report said. In his assessment,the department arrived at stamp duty payable at Rs 48.33 lakh and conveyed it to the court and the IGR in May 2011, it said. However, the scrutiny revealed that the CSA contained two distinct transactions relating to three companies, but stamp duty was levied on only one transaction. This resulted in short levy of stamp duty of Rs 12.03 crore, the report said. As per Part-B of the CSA, the charter services operations undertaking of Deccan Aviation Limited was sold to Deccan Charters Limited for a consideration of Rs 69 crore in January 2008. On this instrument, stamp duty of Rs 48.33 lakh was levied, the report said. As per Part-C of the CSA, the Commercial Airline division undertaking of Kingfisher was transferred as a going concern to Deccan at book value in April 2008, it said. “This was materialised by issue of three fully paid-up equity shares of face value Rs 10 each of Deccan against seven fully paid-up equity shares of face value Rs 10 each of Kingfisher and one preference share of Rs 100 each of Deccan against one preference share of Rs 100 each of Kingfisher,” it said. The above two matters were distinct and had to be valued separately, the report said. The stamp duty payable under Section 5 would be the aggregate of the stamp duty payable for the two transactions. However, the DR omitted levying the stamp duty on the transaction between Kingfisher Airlines, and Deccan Aviation. The stamp duty payable on the transaction was Rs 12.03 crore, the report said. PTI