Aarti Drugs Faces Supreme Court Challenge as GST Department Appeals High Court Victory
Aarti Drugs Limited faces a Supreme Court challenge as the GST Department has filed a Special Leave Petition against the company's favorable Bombay High Court ruling from October 2025. The dispute involves a demand for Rs. 20.72 crore as erroneous IGST refund plus interest and penalty, stemming from an original show cause notice of Rs. 230.70 crore for FY 2017-18 to FY 2021-22. The company states it will defend its position and update exchanges on developments as the matter remains sub-judice before the Supreme Court.
*this image is generated using AI for illustrative purposes only.
Aarti Drugs Limited has informed stock exchanges that the GST Department has escalated its tax dispute to the Supreme Court of India by filing a Special Leave Petition challenging the company's recent legal victory at the Bombay High Court.
Background of the GST Dispute
The legal battle originated from a show cause notice issued to Aarti Drugs for alleged contravention of Rule 96(10) of CGST Rule, proposing to demand IGST of Rs. 230.70 crore along with applicable interest and penalty for the period spanning FY 2017-18 to FY 2021-22.
Following the show cause notice, the CGST & C.Ex. Authority passed an order with the following key components:
| Component: | Details |
|---|---|
| IGST Refund Demand: | Rs. 20.72 crore under Section 74(9) of CGST Act, 2017 |
| Dropped Demand: | Rs. 209.98 crore under Section 74 of CGST Act, 2017 |
| Interest: | At prescribed rates under Section 50(1) of CGST Act, 2017 |
| Penalty: | Rs. 20.72 crore under Section 74(9) and 122(2)(b) of CGST Act, 2017 |
High Court Victory and Supreme Court Challenge
Aarti Drugs had successfully challenged the CGST authority's order by filing a writ petition at the Bombay High Court. In October 2025, the High Court ruled in favor of the company, setting aside the order issued by the CGST & C.Ex. Authority.
However, the GST Department has now challenged this favorable High Court order by filing a Special Leave Petition before the Supreme Court of India, as disclosed in the company's regulatory filing dated March 16, 2026.
Current Legal Status and Financial Implications
The company has provided the following details regarding the ongoing litigation:
| Parameter: | Information |
|---|---|
| Opposing Party: | GST Department |
| Court/Tribunal: | Hon'ble Supreme Court of India |
| Matter Status: | Sub-judice |
| Financial Impact: | Difficult to assess pending Supreme Court outcome |
Company's Position and Next Steps
Aarti Drugs has stated that a potential demand has been put forth which remains subject to the outcome of the Supreme Court proceedings. The company emphasized that it is currently difficult to assess the financial impact until the Supreme Court delivers its judgment.
The pharmaceutical manufacturer has committed to taking appropriate legal steps to defend its position in the matter. Additionally, the company has assured stakeholders that it will update stock exchanges of any material developments in the case as it progresses through the Supreme Court.
This disclosure was made under Regulation 30 of the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015, ensuring transparency with investors regarding the potential financial and legal implications of the ongoing GST dispute.
Historical Stock Returns for Aarti Drugs
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +1.82% | +3.40% | -3.90% | -27.73% | +2.80% | -50.92% |
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