Sundrop Brands receives ₹26.38 crore GST show cause notice for FY23
- Sundrop Brands received a show cause notice for ₹26.38 crore regarding FY23 GST returns
- The demand includes a penalty of ₹2.40 crore issued by UP GST authorities
- Company disputes the demand citing already discharged liabilities on LUT and reverse charge
- No immediate financial or operational impact is envisaged by the company
*this image is generated using AI for illustrative purposes only.
Sundrop Brands Limited has received a show cause notice from the Uttar Pradesh GST authority raising a total demand of ₹26.38 crore for the financial year 2022-23. The notice, issued on September 29, 2026, includes a penalty component of ₹2.40 crore.
The communication was issued by the Deputy Commissioner (SGST), Sector-7, Ghaziabad I, under Section 73 of the UPGST/CGST Act, 2017. The demand stems from a scrutiny of GST returns filed for FY23. The company stated that it does not currently envisage any financial or operational implications arising from this notice.
Nature of the Demand
The authority identified discrepancies during the scrutiny process. The breakdown of the total demand is as follows:
| Component | Amount (₹) |
|---|---|
| Total Demand | 26,37,65,281.41 |
| Penalty | 2,39,78,661.93 |
| Principal Tax Demand | 23,97,86,619.48 |
The company contends that the authority failed to consider GST liabilities already discharged on deemed supplies, exports under Letter of Undertaking (LUT), and Reverse Charge Mechanism transactions for the period in question.
Company Response Strategy
Sundrop Brands is preparing to reply to the show cause notice within the prescribed timeline. The company intends to file explicit submissions supported by documentary evidence to rebut the allegations and contest the stated demand. The company maintains that the demands and allegations are not in line with its actual tax compliance status for FY23.
What the Numbers Show
The penalty amount of ₹2.40 crore represents approximately 9.1% of the total demand raised. This proportion suggests that the primary component of the notice relates to the principal tax liability rather than punitive measures alone, indicating that the core dispute centers on the calculation of tax payable versus tax paid, specifically regarding complex mechanisms like LUT exports and reverse charge applications.
Historical Stock Returns for Sundrop Brands
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -3.25% | -12.37% | -1.22% | +2.19% | -16.04% | 0.0% |
How might the resolution of this GST dispute influence Sundrop Brands' future tax provisioning and balance sheet liabilities?
Could this scrutiny trigger similar retrospective GST audits for Sundrop Brands in other states where it operates?
What impact could a prolonged legal battle over the ₹26.38 crore demand have on investor sentiment and stock volatility?
18
Create Custom Screeners 
Access 200+ Pre-built Filters 
Use 50+ Readymade Screener 
