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.

Vedanta Iron & Steel subsidiary ESL Steel Limited has received a Show Cause Notice from the Registrar of Companies (ROC), Ranchi, alleging non-compliance with statutory disclosure requirements under the Companies Act, 2013. The notice, issued on August 06, 2026, relates to the financial year 2018-19 and proposes significant monetary penalties for both the company and its former chief financial officer.

The regulatory action stems from an alleged failure to disclose the ratio of each director’s remuneration to the median employee’s remuneration in the Corporate Governance Report or Board’s Report for FY2018-19. This disclosure is mandated under Section 197(15) of the Companies Act, 2013, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The ROC has called upon ESL to explain why penalties should not be imposed for this omission.

Penalty Details

The Show Cause Notice outlines specific proposed penalties for the entities involved in the alleged non-compliance:

The notice was issued under SCN No. SCN/ADJ/08-2026/RN/05453. The penalty against Mr. Malpani reflects his role as the CFO during the relevant period, highlighting individual accountability for compliance failures.

Company Response and Impact

Vedanta Iron & Steel Limited disclosed the receipt of the notice to the stock exchanges on August 07, 2026, under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company stated that ESL is currently examining the matter and intends to submit an appropriate response to the adjudicating authority within the prescribed timelines.

In its exchange filing, Vedanta Iron & Steel emphasized that the matter shall not have any significant financial or operational impact on the company. The disclosure also referenced SEBI circular HO/49/14/14(7)2025-CFD-POD2/I/3762/2026 dated January 30, 2026, ensuring transparency regarding the regulatory scrutiny.

What the Numbers Show

While the proposed penalties are relatively modest in absolute terms, the notice underscores strict regulatory scrutiny over corporate governance disclosures, particularly regarding executive compensation transparency. The fact that the notice targets FY2018-19 data suggests a retrospective review by the ROC, indicating that compliance gaps from earlier periods can still attract regulatory action years later. For investors, the key takeaway is the management’s assertion of no material operational impact, though the reputational risk associated with governance lapses remains a factor to monitor.