Regulatory / Tax Notice
Sri Lotus Developers Receives GST Show Cause Notice for Multiple Financial Years
NSE
lotusdev
BSE
544469
Sri Lotus Developers and Realty Limited (formerly AKP Holdings Limited) has received a GST Show Cause Notice from the Maharashtra State Tax authority for FY 2020-21, 2021-22, and 2023-24 involving tax, interest, and penalty components. The company has stated that tax has already been paid under protest and no material impact is expected
PRICE-SENSITIVE TRIGGER
Event: Receipt of GST Show Cause Notice (DRC-01)
Type: Regulatory / Tax Notice
Impact: Neutral
Immediate Effect: Short-term sentiment caution due to tax litigation; however, no operational or financial disruption expected as per company statement
Key Metrics:
- FY21 Tax (CGST+SGST): ₹6.89 lakh
- FY22 Tax (CGST+SGST): ₹3.59 crore
- FY24 Tax (CGST+SGST): ₹0.56 lakh
- Interest (FY22): ₹2.62 crore
- Penalty (FY22): ₹3.59 crore
Highlight:
- Major exposure concentrated in FY 2021-22 with significant tax, interest, and penalty components
What Happened ?
Sri Lotus Developers and Realty Limited disclosed that its merged entity, Veer Savarkar Projects Private Limited, has received a Show Cause Notice in Form GST DRC-01 from the Office of the Assistant Commissioner of State Tax, Mumbai.
The notice pertains to alleged GST liabilities under Section 74 of the CGST and MGST Acts for multiple financial years.
key highlights
Regulatory Disclosure – Tax Proceedings:
- Authority: Assistant Commissioner of State Tax, Investigation-B, Mumbai
- Nature: Show Cause Notice under GST (Section 74)
- Periods involved: FY 2020-21, 2021-22, 2023-24
- Allegation: Tax liability along with interest and penalties
- Major financial exposure in FY 2021-22
- Tax component already paid under protest
- No violation accepted by the company
- Company to file detailed response within prescribed timeline
Note:
Section 74 applies to cases involving alleged fraud, suppression, or wilful misstatement, making this a legally sensitive matter despite company denial.
Risk Analysis
Key Risks
- Large penalty exposure, especially for FY 2021-22
- Legal uncertainty under Section 74 (serious classification)
- Potential cash outflow if interest and penalties upheld
- Reputational risk and regulatory scrutiny
Worst Case Scenario
- If the tax authority’s claims are upheld, the company may face substantial financial liability including penalties and interest, impacting profitability and cash flows
Risk Level: High
Company Commentary
- No tax liability admitted; company contests allegations
- Tax component already paid under protest
- No violation of GST provisions as per management
- Appropriate response to be filed with supporting documents
- No material impact expected on operations or financials
Official Exchange Filing: Sri Lotus Developers and Realty Limited