Tax department appeals against Tata Steel order dropping ₹368.72 crore penalty

The tax department has filed an appeal against an Adjudication Order that dropped a penalty of ₹368.72 crore on Tata Steel Limited . The appeal, filed on June 16, 2026, by the Assistant Commissioner, Division-I, CGST & Central Excise, Jamshedpur, challenges the Commissioner's decision dated December 18, 2025, which had reduced the penalty amount initially proposed in a show cause notice. The company stated it will contest the appeal before the Appellate Authority within statutory timelines, emphasizing that the matter is currently sub judice before the Hon'ble High Court of Jharkhand and there is no impact on its financial or operational activities.

Background of the dispute

The dispute originated from a show cause cum demand notice dated June 27, 2025, from the Office of the Commissioner (Audit), Central Tax, Ranchi. The notice proposed the disallowance of Input Tax Credit for the period FY2018-19 through FY2022-23, demanding a total GST amount of ₹1007,54,83,342 along with interest and penalty. Tata Steel had already paid ₹514,19,36,211 in the normal course of business, resulting in an alleged exposure of ₹493,35,47,131.

Adjudication Order details

The Adjudication Order passed on December 18, 2025, directed the payment of tax amounting to ₹493,35,47,131 and a penalty of ₹638,82,62,185. However, the Adjudicating Authority dropped the penalty amount of ₹368,72,21,158 that was originally proposed in the show cause notice. Following this, Tata Steel filed a Writ Petition before the Hon'ble High Court of Jharkhand on March 11, 2026, which granted a stay on all further proceedings.

Financial implications

Component	Amount (₹)
Total GST demanded	1007,54,83,342
GST already paid	514,19,36,211
Alleged GST exposure	493,35,47,131
Penalty imposed in order	638,82,62,185
Penalty dropped in order	368,72,21,158

The company maintains that it has a good case on merit and will contest the appeal. The disclosure was made in compliance with Regulations 30 and 51 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
+1.75%	+1.88%	-5.90%	+7.17%	+20.25%	+54.26%

Tata Steel Limited has infused $172 million into its wholly owned foreign subsidiary, T Steel Holdings Pte. Ltd, strengthening its overseas capital base. The acquisition of 199,07,40,741 equity shares was completed on June 24, 2026, at a face value of $0.0864 each, aggregating to ₹1,625.29 crore. Following this investment, T Steel Holdings Pte. Ltd continues to remain a wholly owned subsidiary of Tata Steel.

Investment Details

The Board of Directors of Tata Steel Limited approved the infusion of additional funds up to $2 billion during its meeting on March 17, 2026. This approval enhanced the aggregate investment limit to $26.21 billion, to be executed through subscription to equity shares in one or more tranches.

Transaction Breakdown

Particulars:	Details
Entity:	T Steel Holdings Pte. Ltd
Shares Acquired:	199,07,40,741
Face Value per Share:	$0.0864
Total Investment:	$172 million
INR Equivalent:	₹1,625.29 crore
Exchange Rate:	₹94.4938 (as on June 22, 2026)

The exchange rate of ₹94.4938 was used for conversion, as published by the Reserve Bank of India on June 22, 2026. This disclosure was submitted to the exchanges in compliance with Regulation 30 and 51 read with Para A of Part A of Schedule III of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.