GAIL India Limited has entered into a strategic partnership with the Government of Chhattisgarh to develop a major gas-based fertilizer project in the state. The collaboration was formalized through a non-binding Memorandum of Understanding (MoU), marking a significant step toward strengthening India's domestic fertilizer production capacity.

Project Partnership Details

The MoU outlines plans for a greenfield gas-based fertilizer project with a substantial urea manufacturing capacity of 12.70 lakh metric tons. The project is strategically planned to be located along GAIL's Mumbai-Nagpur-Jharsuguda Natural Gas Pipeline (MNJPL) corridor.

GAIL's Project Responsibilities

Under the terms of the MoU, GAIL will undertake comprehensive techno-economic studies for establishing the urea manufacturing facility. Following the completion of techno-economic evaluation, GAIL will make the final investment decision for setting up the fertilizer project.

Government Support Framework

The Chhattisgarh Government has committed to providing extensive facilitation support throughout all stages of the project development. The state government's assistance will encompass multiple critical areas:

• Support for comprehensive feasibility studies
• Identification and allocation of suitable land parcels
• Coordination with State and Central authorities
• Facilitation for statutory approvals and clearances
• Development of enabling infrastructure necessary for project implementation

Strategic Significance

This partnership represents GAIL's strategic expansion into the fertilizer sector, leveraging its expertise as India's leading natural gas transmission and distribution company. As a Maharatna Public Sector Undertaking under the Ministry of Petroleum and Natural Gas, GAIL aims to strengthen domestic fertilizer production capabilities.

The Chhattisgarh Government's participation aligns with its active promotion of industrial growth through investor-friendly policies, infrastructure development, and ease of doing business initiatives, creating a conducive environment for large-scale industrial projects.

GAIL (India) has received a substantial GST demand notice from tax authorities, creating a significant financial obligation for the gas distribution company. The development was disclosed through an official regulatory filing under SEBI LODR Regulations, highlighting ongoing regulatory scrutiny of corporate guarantee structures and their tax treatment under the GST framework.

Official GST Demand Notice

The company received an Order-in-Original from the Additional Commissioner, CGST, Delhi South Commissionerate on December 10, 2025, at 05:00 PM. The demand specifically relates to corporate guarantees that GAIL (India) has provided to banks on behalf of its subsidiaries and joint ventures without consideration.

Regulatory Violation Details

The GST authorities have identified the violation as "Non-payment of GST on Corporate Guarantee issued to bank on behalf of subsidiaries, JVs etc. without consideration." This indicates that the tax department considers such guarantee arrangements as taxable services under the GST regime, even when provided without explicit consideration between related entities.

Financial Impact and Compliance

The penalty of ₹143.08 crore represents a significant financial impact on GAIL (India)'s operations. The company has made this disclosure in compliance with Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ensuring transparency with stakeholders regarding statutory actions taken against the company.

Corporate Guarantee Implications

This development reflects the complex tax implications surrounding corporate guarantees provided by parent companies to their subsidiaries and joint ventures. The case highlights how tax authorities are interpreting GST applicability on financial services, particularly guarantee provisions between related entities, even in the absence of explicit consideration or fees.