Kalpataru Projects International Limited announced on October 13, 2026, that the Principal Commissioner (Appeals) partially allowed its appeal, reducing the GST penalty demand to ₹0.14 crore.

The revised penalty stems from a dispute covering FY18 through FY20 regarding alleged excess Input Tax Credit (ITC) claims and mismatches between GSTR-3B and GSTR-2A filings. The original order, issued by the GST Authority on January 11, 2024, had imposed a penalty of ₹0.21 crore alongside a tax demand of ₹1.83 crore and applicable interest under Section 50(3) of the GST Act.

Appeal Outcome and Financial Impact

The appellate authority’s order was received by the company at 5:12 pm IST on October 12, 2026. While the penalty amount decreased, the company maintains that the order was issued without adequately considering its submitted replies and documentary evidence. Consequently, Kalpataru Projects intends to file a further appeal before the higher appellate authority within the prescribed timelines.

In its initial disclosure, the company stated that the tax and penalty levied did not have any significant impact on its operations or financial position. The reduction in the penalty further mitigates this minor exposure.

Dispute Details

The regulatory dispute originated from discrepancies identified by the GST and Central Excise Department during audits for the fiscal years 2017-18 to 2019-20. The authorities cited two primary grounds for the initial demand:

• Alleged excess claim of Input Tax Credit (ITC)
• Mismatch between ITC availed in GSTR-3B and ITC available in GSTR-2A

What the Numbers Show

The penalty reduction represents a decrease of ₹0.07 crore from the original ₹0.21 crore demand. However, the source document does not specify the exact quantum of the reduced tax demand, only stating it was "partially allowed." This leaves the total financial liability ambiguous beyond the explicit penalty figure. The company’s assertion that the matter has no significant impact suggests the absolute value remains immaterial relative to its overall balance sheet, despite the ongoing litigation risk.

Kalpataru Projects International reported that the Hon'ble Delhi High Court upheld its earlier order partially setting aside an arbitral award in favor of its joint venture, Kurukshetra Expressway Private Limited (KEPL), against the National Highways Authority of India (NHAI). The court's decision, dated September 28, 2026, specifically denies KEPL's claim for Termination Payment and associated interest, while upholding awards on other claims.

The dispute stems from a concession agreement executed in July 2010 for the four-laning of the Rohtak-Bawal section of NH-71 in Haryana. KEPL terminated this agreement in October 2021, citing force majeure due to farmer protests that halted toll collection. Following termination, KEPL initiated arbitration, securing awards against NHAI which included the disputed Termination Payment. NHAI challenged these awards under Section 34 of the Arbitration and Conciliation Act, 1996.

Legal Proceedings Timeline

The legal battle has seen multiple developments since the initial arbitration awards were received in August 2024. The table below outlines the key procedural milestones disclosed by the company:

Impact on Joint Venture

KEPL, in which Kalpataru holds a 49.57% equity stake, stated that it believes it has a strong case to challenge the current order. The company is taking appropriate legal steps, including filing an appeal under Section 37 of the Arbitration and Conciliation Act, 1996. The financial impact on Kalpataru Projects International remains uncertain until the awarded claims are crystallized and any further legal outcomes are determined.

The termination of the concession agreement previously led to KEPL's account being classified as a Non-Performing Asset (NPA) under RBI guidelines after it failed to pay interest to lenders in October 2021. This classification occurred because the company could not honor lender payments following the cessation of toll revenue due to the force majeure event.

What the Numbers Show

While specific monetary values of the arbitral award are not disclosed in the filing, the judicial distinction between claim types is significant. The court upheld awards on all claims except the Termination Payment and interest thereon. This suggests that the judiciary recognized certain liabilities of NHAI towards KEPL but rejected the compensation mechanism for the project's early termination. For investors, the concentration of the dispute around the Termination Payment highlights that the primary financial recovery expected from this litigation has been legally blocked at the appellate stage, shifting focus to the strength of KEPL's further appeal.