Aurobindo Pharma Limited has received orders from the GST Department demanding recovery of refunds totaling ₹169.84 crore, related to alleged erroneous Input Tax Credit (ITC) refunds claimed by the company's Export Oriented Unit (EOU) Unit 3 during September 2022 to December 2022.

GST Department Orders and Disputed Amount

The Additional Commissioner of Central Tax, Ranga Reddy GST Commissionerate, Hyderabad, passed four orders under the Central Goods and Services Tax Act, 2017, alleging erroneous refund of accumulated ITC under Rule 89 of CGST Rules. The company received these orders on February 18, 2026.

Nature of Dispute

The dispute centers around Aurobindo Pharma's EOU Unit 3, which claimed refund of accumulated ITC for zero-rated supply of goods made without payment of tax under Letter of Undertaking (LUT). The GST Department initially sanctioned these refunds after verifications, considering the company's declaration that there were no domestic supplies of exported goods from the unit.

However, the Department later challenged the refund sanction orders before the Additional Deputy Commissioner (Appeals, Hyderabad), stating that similar products exist in the domestic market manufactured by other manufacturers. The Department argued that the refund sanctioning authority failed to consider the value of these similar products while determining the eligible refund amount.

Legal Proceedings and Company's Position

The Additional Deputy Commissioner (Appeals) passed an Order-in-Appeal (OIA) in favor of the GST Department in 2023. In response, Aurobindo Pharma has filed Writ Petitions against the OIA and challenged the validity of Rule 89(4)(C) of the CGST Rules in the Telangana High Court. These petitions remain pending for disposal.

The company contends that it does not have domestic supplies of goods exported from its EOU Unit 3, with only scrap sales occurring domestically. Aurobindo Pharma argues that even if the value of goods available in the domestic market is considered, the eligible ITC refund would not significantly impact the refund already sanctioned.

Regulatory Context and Precedent

A significant legal precedent supports the company's position. The Karnataka High Court in the case of M/s. Tonbo Imaging India Pvt Ltd (Writ Petition No. 13185 of 2020, decided on February 16, 2023) quashed the condition of comparing domestic value of like goods with exported goods, holding it as ultra vires the provisions of the Central Goods and Services Tax Act, 2017.

Financial Impact and Next Steps

Aurobindo Pharma has stated that there is no material impact on the company's financials or operations due to these orders. The Department issued protective demand Show Cause Notices (SCNs) for the months September 2022 to December 2022 to safeguard revenue.

The company plans to file an appeal before the Commissioner of Central Tax (Appeals), Hyderabad, as the Department confirmed the demand along with interest and imposed an equal penalty without adequately considering the company's reply.

Aurobindo Pharma Limited has issued a formal clarification to stock exchanges regarding recent news reports about a US FDA inspection, reaffirming its commitment to regulatory compliance and transparent disclosure practices.

Stock Exchange Communication

The pharmaceutical company responded to specific queries from both the National Stock Exchange of India Limited and BSE Limited on February 18, 2026. The exchanges had sought clarifications regarding news items appearing on NDTV Profit's website concerning the US FDA inspection.

FDA Inspection Status Update

The company clarified that it had previously informed stock exchanges on February 10, 2026, regarding the completion of the US FDA inspection at Unit-VII of Aurobindo Pharma Ltd. The company confirmed its commitment to responding to the US FDA within the stipulated timelines as part of standard regulatory procedures.

Aurobindo Pharma emphasized that it has been making timely and adequate disclosures of all material events and information to stock exchanges in strict compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Regulatory Compliance Framework

The company highlighted that routine regulatory inspections across its manufacturing facilities by global regulatory authorities, including the USFDA, are part of normal business operations. Any observations issued during such inspections are addressed in accordance with established regulatory processes.

Key compliance aspects mentioned:

• Timely disclosure of material events under SEBI LODR Regulations
• Routine regulatory inspections as standard business practice
• Appropriate responses to regulatory observations
• Transparent communication with stock exchanges

Current Disclosure Status

Aurobindo Pharma stated that at present, there is no material event or information that requires further disclosure under Regulation 30 of the SEBI LODR Regulations, other than what has already been disclosed to the exchanges. The company requested that the exchanges take this clarification on record.

The clarification was signed by B. Adi Reddy, Company Secretary, and submitted digitally on February 18, 2026, demonstrating the company's prompt response to regulatory queries and commitment to maintaining transparency with stakeholders.