Kirloskar Brothers Limited (KBL), a leading pump manufacturing company, has received confirmation that the Goods and Services Tax (GST) demand notices issued to its directors have been withdrawn. This development marks a significant turn in the company's ongoing tax dispute with the Andhra Pradesh state tax authorities.

Key Details of the Withdrawal

The Deputy Assistant Commissioner of State Tax has withdrawn two demand notices:

Background of the Dispute

The tax dispute stemmed from transactions related to an unincorporated Joint Venture named IVRCL-KBL-MEIL (JV) Hyderabad. This joint venture was formed between IVRCL Ltd., Kirloskar Brothers Limited, and Megha Engineering & Infrastructure Ltd. (MEIL) for executing a project with the Water Resources Department of the Government of Andhra Pradesh.

Legal Proceedings and Resolution

1. Initial Notices: The majority of KBL's directors received notices on February 14, 2025, claiming tax arrears for the year 2023-24.

2. Additional Demand: On August 5, 2025, KBL received another demand notice for the tax year 2017-18.

3. Legal Challenge: In response, KBL and its directors filed writ petitions challenging these demand notices in the Andhra Pradesh High Court.

4. Interim Relief: On August 20, 2025, the High Court granted an interim stay against the recovery proceedings.

5. Final Outcome: An endorsement letter dated November 20, 2025, from the Deputy Assistant Commissioner of State Tax confirmed the withdrawal of the demand notices issued to KBL's directors.

This resolution brings closure to a significant tax dispute for Kirloskar Brothers Limited, potentially alleviating concerns about substantial tax liabilities and legal complications. The withdrawal of these notices, totaling nearly Rs. 31 crore, is likely to have a positive impact on the company's financial outlook and investor sentiment.

The company's proactive approach in challenging the tax demands through legal channels, coupled with the subsequent withdrawal of notices by tax authorities, demonstrates the importance of due process in resolving tax disputes in India's corporate landscape.

Kirloskar Brothers Limited (KBL) has taken legal action against a substantial GST demand, marking a significant development in the company's ongoing tax dispute with Andhra Pradesh authorities.

Writ Petition Filed

Directors of Kirloskar Brothers Limited have filed a writ petition with the Andhra Pradesh High Court, challenging GST demand notices totaling Rs. 15.48 crore. These notices are related to tax arrears from a joint venture project involving KBL, IVRCL Ltd., and Megha Engineering & Infrastructure Ltd. (MEIL).

Details of the Dispute

The dispute centers around a project executed for the Water Resources Department of the Government of Andhra Pradesh. The tax authorities initially issued notices to the majority of KBL's directors on January 21, claiming tax arrears of Rs. 15,48,06,528 for the year 2023-24. However, a subsequent demand notice dated August 5, revised the claim to Rs. 15,48,02,928 for the year 2017-18.

Legal Proceedings

KBL had previously filed a separate writ petition on August 12, challenging the demand notice. The Andhra Pradesh High Court granted an interim stay against recovery proceedings on August 20. The directors' recent writ petition, filed on November 19, seeks to set aside the impugned assessment order and demand notices, along with an interim stay pending the petition's resolution.

Financial Implications

The company has stated that the financial implications of this legal dispute cannot be ascertained at this juncture, given the ongoing legal proceedings. KBL has committed to informing the stock exchanges of any further developments in this matter.

Tabular Summary of Key Points

This legal challenge by Kirloskar Brothers Limited underscores the complexities that can arise in tax matters, especially those involving joint ventures and inter-state projects. The outcome of this case may have implications not only for KBL but also for other companies engaged in similar multi-party, cross-state projects.