Tax / Regulatory Notice

Patanjali Foods Receives GST Show Cause Notice of ₹1,352.92 Crore for FY23 Tax Discrepancy Allegations

NSE

patanjali

BSE

500368

Patanjali Foods Limited has received a GST Show Cause Notice from the Office of the Assistant Commissioner (ST), Royapuram Assessment Circle, Chennai, alleging discrepancies between GSTR-3B returns filed by the company and GSTR-7 returns filed by deductors for FY2022-23. The notice proposes a tax demand of ₹1,352.92 crore along with penalties and applicable interest under GST laws. The company stated that it currently does not expect any financial liability and is preparing an appropriate response with support from tax advisors.

PRICE-SENSITIVE TRIGGER

Event: Receipt of GST Show Cause Notice

Type: Tax / Regulatory Notice

Impact: Negative

Immediate Effect: The company has received a large GST-related Show Cause Notice involving alleged discrepancies in GST return filings for FY2022-23, resulting in proposed tax demand and penalty exposure.

Key Metrics:

Proposed Tax Demand: ₹1,352.92 crore
Penalty Amount: ₹135.29 crore
Applicable Interest: 18% on CGST and SGST components
Assessment Period: FY2022-23
Relevant GST Forms: GSTR-3B and GSTR-7
Authority: Office of Assistant Commissioner (ST), Royapuram Assessment Circle, Chennai

Highlight:

The notice alleges turnover discrepancies between company-filed GSTR-3B returns and GSTR-7 returns filed by deductors, leading to one of the larger GST-related tax claims disclosed recently.

What Happened ?

Patanjali Foods Limited informed stock exchanges that it received a Show Cause Notice in Form GST DRC-01 under Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017.

The notice was issued by the Office of the Assistant Commissioner (ST), Royapuram Assessment Circle, North Division, Chennai.

According to the disclosure, the proceedings arise from alleged discrepancies and anomalies identified by tax authorities upon comparison of GSTR-3B monthly returns filed by the company with corresponding GSTR-7 returns filed by deductors for FY2022-23.

The authorities have proposed a total tax demand of ₹1,352.92 crore together with penalties aggregating to ₹135.29 crore and applicable interest under GST laws.

Patanjali Foods stated that it is consulting tax advisors and believes it has adequate grounds to substantiate its position before the relevant authority within prescribed timelines.

The company also clarified that, at present, it does not expect any financial liability arising from the proceedings, although exact implications can only be determined after completion of the adjudication process.

Key Details

GST Show Cause Notice Details:

Show Cause Notice issued in Form GST DRC-01 under Section 73 of GST laws.
Notice pertains to FY2022-23 tax period.
Issuing authority is the Assistant Commissioner (ST), Royapuram Assessment Circle, Chennai.
Proceedings relate to alleged discrepancies in turnover reporting.
Tax department compared company-filed GSTR-3B returns with GSTR-7 returns filed by deductors.
Proposed tax demand stands at ₹1,352.92 crore.
Proposed penalty amounts to ₹135.29 crore.
Applicable interest under GST provisions may also apply.
Company is preparing responses in consultation with tax advisors.
Management believes adequate grounds exist to defend the company’s position.

Note:

The development introduces material regulatory scrutiny, although the company currently disputes the proposed liability and has not recognized any immediate financial impact.

Risk Analysis

Summary:

The large quantum of proposed tax demand introduces significant legal and financial uncertainty, although the company maintains that it has valid grounds to contest the allegations.

Key Risks:

Proposed tax exposure exceeds ₹1,350 crore excluding interest.
Adverse adjudication could materially impact profitability and cash flows.
Regulatory proceedings may extend over a prolonged period.
Additional interest liabilities could increase total exposure further.
Tax disputes of this scale may affect investor sentiment and compliance monitoring.
Final liability remains uncertain pending completion of proceedings.

Worst Case Scenario:

If authorities fully uphold the proposed demand, penalty, and interest claims, Patanjali Foods could face substantial financial outflows and elevated litigation exposure.

Risk Level: High

Company Commentary

The company stated that it currently does not expect any financial liability from the proceedings.
Patanjali Foods said the exact financial implications cannot yet be determined.
Management is preparing appropriate responses in consultation with tax advisors.
The company believes it has adequate grounds to substantiate its position before authorities.
Responses will be submitted within prescribed regulatory timelines.

Official Exchange Filing: Patanjali Foods Limited