Bannari Amman Sugars Limited has received a show cause notice from the Office of the Deputy Commissioner of Commercial Taxes (Audit)-3, Mysuru, regarding alleged discrepancies in Input Tax Credit (ITC) claims for the fiscal year 2020-21.

The notice, dated August 18, 2026, cites an alleged excess availment of ITC as reported in Form GSTR-9 compared to the ITC reflected in relevant GST records. The Department of Commercial Taxes, Government of Karnataka, has proposed a total financial demand of ₹29,75,98,313 against the company.

Breakdown of Proposed Liability

The show cause notice details the proposed charges as follows:

The interest component is subject to computation up to the date of payment, as applicable under prevailing regulations.

Company Response and Status

Bannari Amman Sugars stated that it had submitted detailed replies to the GST authorities prior to the issuance of the notice, explaining the nature of the ITC and providing reconciliation data. The company is currently examining the notice in detail and intends to submit an appropriate reply within the prescribed timeframe.

The company plans to defend the proceedings and contest the proposed tax, interest, and penalty. It disclosed that no final adjudication or order has been passed yet and does not anticipate any material impact on its operations at this stage.

What the Numbers Show

The penalty proposed by the authority is equal to the tax amount (₹10.14 crore each), indicating a standard 100% penalty structure often applied in cases of alleged ITC mismatch without sufficient justification. The interest component (₹9.48 crore) constitutes approximately 32% of the total proposed liability, highlighting the significant time-value cost associated with the disputed period of FY21.

Bannari Amman Sugars reported a sharp decline in profitability for the first quarter of FY26, posting a standalone net loss of ₹109 million. This marks a significant reversal from the ₹152 million profit recorded in the same period of the previous fiscal year (Q1FY25). The Board of Directors approved the unaudited financial results for the quarter ended June 30, 2026, in its meeting held on August 14, 2026.

Revenue for the quarter fell to ₹1.72 billion, down from ₹4.2 billion year-on-year. The contraction in top-line performance was accompanied by a deterioration in operating margins, with the company recording an EBITDA loss of ₹52 million compared to an EBITDA gain of ₹366 million in the prior year’s corresponding quarter.

Financial Performance

The following table outlines the key financial metrics for the quarter:

What the Numbers Show

The data reveals a complete inversion in the company's financial trajectory. While revenue contracted by more than half, the operating loss widened significantly relative to the previous profitability. The shift from a ₹366 million EBITDA gain to a ₹52 million loss indicates that cost pressures or margin compression outpaced the reduction in revenue volume, leading to a broader impact on the bottom line than the revenue decline alone would suggest.

The results were filed in terms of Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The financial results along with the limited review reports of the statutory auditors are available on the company website and stock exchange portals.