Vedanta Iron & Steel Limited disclosed that its subsidiary, ESL Steel Limited, has received a demand-cum-show cause notice from the GST Department in Ranchi. The notice alleges short payment of taxes during FY21 to FY23.

The Office of the Joint Commissioner, Central Goods and Service Tax & Central Excise, Ranchi, issued the notice under Section 74(1) of the Central Goods and Services Tax Act, 2017 on August 25, 2026.

Notice Details

The department proposes a total GST demand of ₹15,74,26,450. This amount comprises:

The notice also includes applicable interest and penalty. The allegation pertains to short payments under the Reverse Charge Mechanism (RCM) during the fiscal years 2020-21 to 2022-23.

Company Response

ESL Steel is examining the notice and intends to take appropriate legal steps within prescribed timelines. Vedanta Iron & Steel stated it does not envisage any significant financial or operational impact on the group due to this development.

This disclosure follows an earlier intimation dated August 10, 2026, regarding the same matter.

vedanta iron & steel subsidiary ESL Steel Limited has received a fresh intimation of ₹39.58 crore from the Office of the Principal Commissioner, Central Goods and Services Tax & Central Excise, Ranchi. The notice, issued under Section 74(5) of the Central Goods and Services Tax Act, 2017, covers alleged short reversal of Input Tax Credit (ITC) pertaining to the issuance of credit notes between FY21 and FY23. Despite the demand, Vedanta Iron & Steel Limited stated that the issue will not have any significant financial or operational impact on the group.

This is the second such notice received by the subsidiary in less than two weeks. On August 7, 2026, ESL Steel had received an earlier intimation of ₹51.23 crore regarding alleged excess availment and utilization of ITC on import transactions for the same period. The latest communication was received on August 13, 2026, at approximately 4:16 pm in Form GST DRC-01A.

Breakdown of the New Demand

The total proposed tax liability of ₹39,58,32,544 is composed of Integrated Goods and Services Tax (IGST), Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), and Compensation Cess. The specific components are detailed below:

The intimation specifically targets the alleged contravention of provisions under the Central Goods & Service Tax Act, 2017, read with the Jharkhand GST Act, 2017, the IGST Act, 2017, and the GST (Compensation to States) Act, 2017. The tax authority claims that ESL Steel failed to reverse sufficient ITC during the specified period.

Company Response

ESL Steel is currently examining the intimation and plans to take appropriate steps in accordance with applicable laws within the prescribed timelines. The subsidiary is evaluating legal remedies against the notice. Tina Lakhani, Company Secretary & Compliance Officer of Vedanta Iron & Steel Limited, confirmed that there is no material impact on the financial, operational, or other activities of the listed entity due to this intimation.

Previous Notice Details

For context, the earlier notice received on August 7, 2026, demanded ₹51,23,19,275, comprising ₹6,73,39,655 in IGST and ₹44,49,79,620 in Cess. That notice alleged excess availment and utilization of ITC on import transactions. Both disclosures were made pursuant to Regulation 30 read with Sub-para (20) of Para (A) of Part (A) of Schedule III of the SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015, referencing SEBI Master Circular No. SEBI circular HO/49/14/14(7)2025-CFD-POD2/I/3762/2026 dated January 30, 2026.

What the Numbers Show

The combined exposure from both notices totals approximately ₹90.81 crore. While the August 7 notice was heavily skewed toward Cess (87% of its total), the new August 13 notice is dominated by IGST, which accounts for roughly 74% of the ₹39.58 crore claim. This structural difference suggests distinct underlying transaction types: the first related to imports (attracting high compensation cess), while the second relates to credit note reversals involving domestic components (CGST/SGST). The company’s consistent assertion of no material impact across both substantial demands implies confidence in contesting these claims legally or possessing sufficient liquidity buffers to manage potential interim liabilities without disrupting operations.