New Delhi: The Delhi high court has issued a notice to Adani Group’s Ambuja Cements on a plea by the Delhi stamp duty department, which seeks to recover ₹218.87 crore in stamp duty and ₹69 crore in penalties for its merger with Holcim (India) Pvt Ltd.
A division bench comprising chief justice Devendra Kumar Upadhyaya and justice Tushar Rao Gedela briefly heard the matter on 2 April. It directed Ambuja Cements to file its response but did not give a deadline.
The next hearing is scheduled for 17 July.
The plea, filed by revenue counsel Lalltaksh Joshi and reviewed by Mint, seeks to overturn a November 2024 ruling by a single-judge bench of the Delhi high court, which had exempted Ambuja Cements from paying stamp duty of ₹218.87 crore and dismissed the show-cause notice issued by revenue authorities.
The single-judge ruling was considered a landmark decision, providing much-needed clarity on the imposition of stamp duties in mergers and amalgamations.
The core legal debate revolves around whether the merger of Ambuja Cements and Holcim (India) should be classified as a “conveyance” under the Indian Stamp Act, 1899, thereby making it subject to stamp duty.
A key factor in this legal battle is the validity of a 1937 government notification that exempts mergers between wholly owned subsidiaries of a common parent company from stamp duty obligations.
However, the revenue department, in its plea before the division bench, is now challenging this exemption, arguing that legal amendments over the years—particularly those made to the Stamp Act in 1958 and 2001—have rendered the 1937 notification obsolete.
The department contends that when companies merge, their assets and liabilities are transferred, which constitutes a property transfer subject to stamp duty.
The revenue department also argues that the single-judge ruling misinterpreted the Stamp Act and set a risky precedent for future revenue collection. It maintains that the merger involved significant asset transfers and should not be classified as mere internal restructuring exempt from taxation.
According to the revenue department, the case is of public importance, as it could impact future revenue collection from corporate mergers.
“The long-term revenue implications of the Impugned Order are grave and substantially threaten an important revenue stream for the government, which uses it to fund various developmental works within the National Capital Territory of Delhi,” the department stated in its plea.
The petition further noted that “the aforementioned financial burden is considerable and required extensive consultations at senior levels as the Impugned Order was studied and its effects on public revenue examined. Various queries were answered, and the merits of the appeal were discussed before necessary approvals were issued.”
On the other hand, Ambuja Cement contends that the merger did not involve the transfer of immovable property and that dematerialized share transfers are not subject to stamp duty. The company also argues that previous judgments have upheld the exemption under the 1937 notification, reinforcing its legal position.
History of the stamp duty demand
The dispute dates back to 2012, when Holcim (India) Private Limited, a wholly owned subsidiary of Holderind Investments Ltd., Mauritius, merged with Ambuja Cements India Pvt Ltd (ACIPL). ACIPL, another Holderind subsidiary, was primarily an investment company with no active operations. Following the merger, Holcim issued shares to ACIPL’s shareholders based on a court-approved share exchange ratio, leading to ACIPL’s dissolution.
In 2014, the stamp duty department issued a show-cause notice to Holcim, alleging non-payment of stamp duty on the merger. The department imposed a 3% duty on the merger value of ₹7,295.94 crore, amounting to ₹218.87 crore, along with a ₹69 crore penalty. Ambuja challenged this decision through a writ petition in the Delhi High Court.
The single-judge ruling in November 2024 sided with the company, exempting it from liability and quashing the show-cause notice.
The judgment was seen as a landmark decision, bringing much-needed clarity to stamp duty laws concerning corporate mergers and acquisitions. It explicitly upheld the 1937 notification, stating that any merger within its scope would be exempt from stamp duty in Delhi.
Before this ruling, uncertainty surrounded the application of stamp duty on such mergers, with stamp authorities attempting to levy duty on the value of shares cancelled during mergers.
With the revenue department challenging the ruling before a division bench, the case could have far-reaching consequences for corporate mergers in India. If the high court upholds the exemption, it will reinforce legal clarity for companies undergoing similar restructuring. However, if the exemption is overturned, it may lead to increased taxation on corporate mergers.
In September 2022, the Adani Group completed its acquisition of Ambuja Cements and its subsidiary ACC Ltd from Switzerland’s Holcim Group for $6.4 billion.
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