Sapphire Foods India Limited has received a show cause notice worth ₹516.84 crore from the Deputy Commissioner (CT), Chennai, regarding Goods and Services Tax (GST) matters for the period April 2022 to March 2023.

The notice was issued under Section 73 of the Tamil Nadu SGST Act 2017 on September 21, 2026. The tax authorities cited inadvertent availment and utilization of Input Tax Credit (ITC), along with short payment of interest and tax, as the basis for the demand.

Nature of the regulatory action

The disclosure was made to the National Stock Exchange of India Limited and BSE Limited in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company clarified that the aggregate amount stated in the notice contains computational errors regarding tax, interest, and penalty.

Company response and impact

Sapphire Foods stated that the claim made by the authority is not maintainable. The company asserted that there is no material impact on its financial, operational, or other activities due to the issuance of this notice. Management is currently evaluating the notice and will take necessary steps to respond appropriately.

The Board of Sapphire Foods India Limited approved a revised scheme of arrangement for its amalgamation with Devyani International Limited on August 26, 2026. The revision follows the termination of a secondary share sale transaction involving promoter Sapphire Foods Mauritius Limited (SFML).

The Board removed the consummation of the secondary sale as a condition precedent to the effectiveness of the merger scheme. Consequently, SFML will receive shares of Devyani International in accordance with the original exchange ratio, similar to other shareholders.

Revised Scheme Terms

The merger framework agreement was amended and restated to reflect the termination of the share purchase agreement between SFML and Arctic International Private Limited. The parties terminated the agreement by mutual consent following commercial discussions.

SFML and Arctic may continue exploring a secondary transaction at a later date, subject to compliance with applicable laws. This potential future transaction does not impact the current merger terms.

What the Numbers Show

The share exchange ratio remains fixed at 177:100, indicating that the termination of the promoter’s exit plan did not alter the valuation basis agreed upon in January 2026. The removal of the condition precedent simplifies the regulatory approval path, as the merger no longer depends on a separate third-party transaction closing first.

The merger process continues in the ordinary course, subject to requisite approvals from regulators and shareholders. The change has no impact on the shareholders of either entity other than the procedural adjustment to the scheme conditions.