Zodiac Energy Limited received a favorable judgment from the Hon'ble High Court of Gujarat at Ahmedabad, which quashed and set aside a Goods and Services Tax (GST) show cause notice for the financial year 2018-19. The decision eliminates the alleged tax demand, interest, and penalties associated with composite contracts for solar power systems.

The judgment, dated September 29, 2026, was received by the company via email on October 17, 2026. It overturns the Show Cause Notice issued by the Assistant Commissioner of State Tax, Unit-5, Ahmedabad, on June 30, 2025, along with the consequential order passed in Form GST DRC-07 on December 24, 2025.

Legal Basis for Quashing

The dispute centered on the valuation of goods and services within composite contracts for the supply and installation of solar power generating systems. The tax authorities had alleged short payment of GST during FY19, specifically challenging the application of the 70:30 ratio for valuation purposes.

In its ruling, the High Court held that the ingredients of Section 74 of the applicable GST legislation were not attracted in the circumstances of the case. Consequently, the impugned notice and the subsequent order were declared void.

Impact on Operations and Finance

The company disclosed that there is no quantifiable monetary impact on its financial or operational activities resulting from this development. The resolution of this litigation removes a contingent liability related to the disputed tax period.

Disclosure Compliance

This update was filed under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The disclosure adheres to Clause 20 of Para A of Part A of Schedule III, read with SEBI Circular No. SEBI/HO/CFD/CFD-PoD-1/P/CIR/2023/123 dated July 13, 2023, and subsequent circulars including SEBI/HO/CFD/PoD2/CIR/P/0155 dated November 11, 2024.

Zodiac Energy Limited has incorporated Zodiac Energy IPP-4 Private Limited, a wholly owned subsidiary, to undertake solar power generation and engineering, procurement, and construction (EPC) activities. The move aligns with the company's strategy to expand its renewable energy portfolio.

The Certificate of Incorporation was issued by the Registrar of Companies on October 6, 2026. The subsidiary operates as a Special Purpose Vehicle (SPV) designed to strengthen operational capabilities and facilitate the execution of specific solar projects.

Subsidiary details

The newly formed entity is fully owned by Zodiac Energy. The parent company subscribed to 100% of the initial paid-up share capital through cash consideration. Key details regarding the incorporation are outlined below:

The subsidiary has a nominal share capital of ₹10,00,000, with an initial paid-up capital of ₹1,00,000 comprising 10,000 equity shares of ₹10 each. As the entity was incorporated on October 6, 2026, it currently reports nil turnover.

Strategic intent

Zodiac Energy stated that the incorporation is in line with its business expansion strategy. The SPV structure allows for focused execution of solar power generation and EPC contracts, aiming to enhance the company's operational footprint in the renewable energy sector. No governmental or regulatory approvals were required for this specific incorporation step, and the transaction does not involve any related party interests beyond the holding relationship.