Orkla India faces Rs 8.41 Cr GST demand notice for FY 2023-24
Orkla India Limited received a show cause notice from the Commercial Taxes Department proposing a demand of Rs 8.41 Cr for Financial Year 2023-24. The notice involves a tax demand of Rs 5.24 Cr, interest of Rs 2.64 Cr, and a penalty of Rs 53 Lakh related to ITC issues. The company plans to file objections and evaluate legal options.
*this image is generated using AI for illustrative purposes only.
Orkla India Limited has received a show cause notice from the Commercial Taxes Department proposing a demand of Rs 8.41 Cr for Financial Year 2023-24. The notice, issued under Section 73 of the TNGST Act, 2017 and the CGST Act, 2017, pertains to alleged discrepancies regarding Input Tax Credit (ITC) and the reversal of common ITC. The company stated that it intends to contest the allegations by filing detailed objections with the relevant authorities within the stipulated timeline.
The demand is broken down into three components: a tax demand of Rs 5,23,57,426, proposed interest of Rs 2,64,39,783, and a penalty of Rs 52,85,742. The notice, dated July 20, 2026, was issued by the Office of the Assistant Commissioner (ST), Ayyappanthangal Assessment Circle, Chennai. It raises issues concerning the reconciliation of exempt supplies, credit notes, and transactions with related or distinct persons.
Breakdown of Proposed Demand
| Component | Amount (Rs) |
|---|---|
| Tax Demand | 5,23,57,426 |
| Interest | 2,64,39,783 |
| Penalty | 52,85,742 |
| Total | 8,40,82,951 |
The allegations primarily arise from the department's interpretation of provisions and the reconciliation of information disclosed in various GST returns and statements filed by the company. Orkla India maintains that the issues raised are based on the department's view and is currently evaluating the contents of the notice.
In response to the communication, the company is preparing to submit detailed objections along with supporting documentation. Orkla India further stated that it would evaluate the legal options available under the applicable laws to address the demand. The disclosure was made to the stock exchanges in compliance with Regulation 30 of the SEBI Listing Regulations.
Historical Stock Returns for Orkla
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.48% | -5.76% | -8.09% | -5.78% | -21.99% | -21.99% |
How will the legal costs and potential provisions for this demand impact Orkla India's profitability margins in the upcoming quarters?
Could this scrutiny trigger similar audits or show cause notices for other FMCG companies regarding ITC and exempt supply reconciliations?
What is the likelihood of Orkla India securing a stay order against the demand to prevent immediate cash flow strain during the adjudication process?
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