Ambuja Cements gets notice of Delhi HC in stamp duty platoon in Holcim merger

New Delhi: The Delhi High Court has issued a notice to Ambuja Cement of the Adani Group at the request of the Delhi Stamp Office, which aims to restore ₹21887 million stamp duty and ₹The fine for the merger with Holcim (India) Pvt Ltd. is 690 million.

The judge, composed of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela, heard the matter briefly on April 2. It instructs Ambuja to master its response, but no deadline is given.

The next hearing is scheduled to take place on July 17.

The request was filed by income attorney Lalltaksh Joshi and reviewed Mintattempting to overturn a ruling ruled by a single judge of the Delhi High Court in November 2024, which exempted Ambuja Cement from paying stamp duty obligations ₹218.87 million, and the tax authorities issued a notice of reasons for the performance was rejected.

Judge Single’s ruling is considered a landmark decision, which is urgently needed for mergers and stamp tariffs in mergers.

The core legal debate revolves around whether the merger of Ambuja Cements and Holcim (India) should be classified as “transport” under the Indian Stamp Act of 1899, thus placing it under stamp duty.

The key factor in this legal struggle was the validity of the 1937 government notice, which exempted the merger between wholly-owned subsidiaries of ordinary parent companies and exempted the stamp duty obligation.

However, the tax department is challenging such immunity in its plea before judges in the department, believing that the 1937 notice has become obsolete by the law amendments over the years, especially those enacted by the Stamp Act in 1958 and 2001.

The department argues that when the company merges, its assets and liabilities are transferred, constituting a transfer of property that violates stamp duty.

The Taxation Department also believes that Judge Single ruled misunderstanding of the Stamp Act and set a precedent for risk for future income. It insists that the merger involves a large amount of asset transfers and should not be classified as an internal restructuring tax exemption.

According to the Revenue Agency, the case is very important because it may affect future revenue from the company’s merger.

“The long-term revenue impact of the order is serious and essentially threatens a significant source of income for the government, which uses it to fund various development projects within the territory of the Delhi National Capital Territory,” the department said in its request.

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The petition further states: “The above financial burden is considerable and a large amount of consultation was conducted before the damaged order was studied and its impact on public revenue was required. Various queries were answered and the advantages of the appeal were discussed before the necessary approval was issued.”

On the other hand, Ambuja Cement believes that the merger does not involve the transfer of immovable property, and the transfer of dehydrated shares is not subject to stamp duty. The company also believes that previous judgments upheld the exemption under the 1937 notice, thus strengthening its legal position.

History of stamp duty requirements

The dispute dates back to 2012, when Holcim (India) Private Limited (a wholly owned subsidiary of Holderind Investment Co., Ltd.) of Mauritius merged with Ambuja Cements India Pvt Ltd (ACIPL). Another subsidiary of Acipl is primarily an investment company that has not actively operated. After the merger, Holcim issued shares to shareholders of Acipl based on a court-approved share trading ratio, resulting in the dissolution of Acipl.

In 2014, the Stamp Duty Department sent a performance notice to Holcim, alleging that stamp duty was not paid in the merger. The department imposes 3% responsibility on the combined value ₹729594 million, total ₹218.87 million, and ₹A fine of 6.9 billion. Ambuja challenged by a written petition in the Delhi High Court.

The single judgment ruling in November 2024 was related to the company, exempting liability and canceling the show reason notice.

The judgment was considered a landmark decision, making it urgently clear to the stamp duty laws regarding corporate mergers and acquisitions. It explicitly maintained the 1937 notice, stating that any merger within its scope would be exempt from the stamp duty in Delhi.

Before this ruling, uncertainty revolved around stamp duty claims on such mergers, where stamp authorities attempted to collect the value of the stock during the merger.

The case could have a profound impact on the merger of companies in India as the tax authorities filed a ruling with the Judiciary. If the High Court upheld the exemption, it would enhance legal clarity for companies that have undergone similar reorganizations. However, if the exemption is overturned, it could lead to an increase in tax revenue on corporate mergers.

In September 2022, Adani Group completed the acquisition of Ambuja Cements and its subsidiary ACC Ltd from the Swiss Holcim Group for US$6.4 billion.

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