Tata Steel on Sunday said it has received a show-cause-cum-demand notice from the tax department over an alleged irregular use of input tax credit worth over INR 1,000 crore
MUMBAI — Tata Steel on Sunday said it has received a show-cause-cum-demand notice from the tax department over an alleged irregular use of input tax credit worth over INR 1,000 crore for the financial years 2018-19 to 2022-23.
In a filing to the stock exchanges, the company said that the notice was issued by the Office of the Commissioner (Audit), Central Tax, Ranchi, on June 28.
"On June 28, Tata Steel Limited received a Show Cause cum demand Notice dated June 27, issued by the Office of the Commissioner (Audit), Central Tax, Ranchi, proposing to disallow/demand primarily on account of alleged irregular availment of Input Tax Credit in contravention of the provisions of Section 74(1) of the Central Goods and Services Tax Act, 2017/State Goods and Services Act, 2017 read with Section 20 of the Integrated Goods and Services Tax Act, 2017, for the period FY2018-19 through FY2022-23," the firm said in its filing.
The tax authority asked Tata Steel to explain, within 30 days, why the GST amounting to INR 1,007.54 crore should not be demanded and recovered from the company.
The explanation has to be submitted before the Additional or Joint Commissioner of Central GST & Central Excise in Jharkhand's Jamshedpur.
According to the notice, Tata Steel allegedly claimed input tax credit in violation of the GST rules -- specifically Section 74(1) of the Central Goods and Services Tax Act, 2017, and Section 20 of the Integrated Goods and Services Tax Act, 2017.
Tata Steel clarified that it has already paid INR 514.19 crore as GST in the normal course of business.
This amount is proposed to be adjusted in the notice, reducing the company’s actual tax exposure to about INR 493.35 crore.
The company has said it believes the notice is without merit and will present its case before the authorities within the given deadline.
Tata Steel also stated that this matter does not affect its financial, operational, or other business activities.
Under the GST system, businesses can claim input tax credit on the taxes paid for purchases used in the production of goods or services. This credit helps in reducing their overall tax liability.