Regulatory / Tax Benefit

Paradeep Phosphates Gets ₹20.61 Crore Tax Demand Quashed; Income Tax Department Grants ₹20.57 Crore Refund

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BSE

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Paradeep Phosphates Limited informed stock exchanges that the Assistant Commissioner of Income Tax, Circle-1(1), Bhubaneswar has passed a rectification order under Section 154 of the Income-tax Act, 1961, quashing the earlier tax demand of ₹20.61 crore for AY 2020-21 and granting a refund of ₹20.57 crore to the company. The development relates to a previously disclosed material litigation concerning adjustment of carry forward losses and MAT credit.

PRICE-SENSITIVE TRIGGER

Event: Rectification order received in ongoing income tax litigation

Type: Regulatory / Tax Benefit

Impact: Positive

Immediate Effect: The earlier income tax demand of ₹20.61 crore raised against Paradeep Phosphates for AY 2020-21 has been fully quashed, while the company has also been granted a refund of ₹20.57 crore, improving litigation outlook and reducing financial uncertainty.

Key Metrics:

Earlier Income Tax Demand: ₹20.61 crore
Refund Granted: ₹20.57 crore
Assessment Year: AY 2020-21
Relevant Section: Section 154 of the Income-tax Act, 1961
Authority Passing Order: Assistant Commissioner of Income Tax, Circle-1(1), Bhubaneswar

Highlight Metric:

Paradeep Phosphates secured a favorable rectification order that completely quashed the disputed tax demand and resulted in a substantial refund from the Income Tax Department.

What Happened ?

Paradeep Phosphates Limited updated exchanges regarding an ongoing material litigation related to income tax proceedings for AY 2020-21.

The original assessment order dated February 28, 2025 had raised an additional tax demand of ₹20.61 crore due to higher adjustment of carry forward losses and MAT credit from earlier years.

The company had filed an appeal before the First Appellate Authority on April 3, 2025. Pending disposal of the appeal, the company also filed an application under Section 154 before the Assistant Commissioner of Income Tax, Circle-1(1).

The Income Tax Department has now passed a rectification order dated May 20, 2026, quashing the entire demand of ₹20.61 crore and granting a refund of ₹20.57 crore to Paradeep Phosphates Limited.

Key Details

GST ITC Dispute and Supreme Court Proceedings:

The original assessment order dated February 28, 2025 had imposed an additional income tax demand of ₹20.61 crore for AY 2020-21.
The tax demand arose due to higher adjustments relating to carry forward losses and MAT credit for earlier financial years.
Paradeep Phosphates challenged the assessment order by filing an appeal before the First Appellate Authority on April 3, 2025.
Pending disposal of the appeal, the company also submitted an application under Section 154 before the Assistant Commissioner of Income Tax, Circle-1(1), Bhubaneswar.
The rectification order dated May 20, 2026 fully quashed the ₹20.61 crore demand raised against the company.
The Income Tax Department additionally granted a refund of ₹20.57 crore to Paradeep Phosphates Limited.
The litigation matter does not involve key managerial personnel, promoter group members, or controlling shareholders.
No settlement terms, compensation, or penalty-related payouts were disclosed by the company in relation to the matter.

Note:

The disclosure was made under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 concerning material litigation developments.

Risk Analysis

Summary:

The rectification order substantially reduces immediate tax litigation risk for Paradeep Phosphates. However, tax-related proceedings may still remain exposed to future appellate or procedural developments.

Key Risks:

Tax authorities may continue procedural scrutiny in future assessment cycles.
Pending appellate proceedings may continue despite rectification relief.
MAT credit and carry forward loss adjustments can remain areas of future tax interpretation disputes.
Future reassessment or departmental review cannot be completely ruled out.

Worst Case Scenario:

If future appellate or departmental proceedings reverse or challenge the rectification order, Paradeep Phosphates could again face contingent tax liabilities, interest obligations, or prolonged litigation.

Risk Level: Low

Company Commentary

Paradeep Phosphates stated that the Assistant Commissioner of Income Tax, Circle-1(1), Bhubaneswar has passed a rectification order quashing the earlier tax demand.
The company confirmed that the rectification order dated May 20, 2026 resulted in cancellation of the ₹20.61 crore demand and approval of ₹20.57 crore refund.
Management clarified that the development pertains to the previously disclosed material litigation concerning AY 2020-21.
The company disclosed the update in compliance with Regulation 30 of SEBI LODR Regulations.

Official Exchange Filing: Paradeep Phosphates Limited