Bharat Heavy Electricals Limited (BHEL), a leading engineering and manufacturing company, has secured a significant legal victory against a substantial tax demand. The company recently received a favorable order from the Commissioner CGST(Appeal) in Dehradun, effectively quashing a ₹31.2 crore CGST demand.

Key Highlights of the Appellate Order

• The Commissioner CGST(Appeal) in Dehradun ruled in favor of BHEL, eliminating the tax liability of ₹31.2 crore.
• The order quashed the Departmental Appeal filed against the decision of the Joint Commissioner.
• The original Show Cause Notice (SCN) dated 26.12.2023, issued under Section 73 of the CGST Act 2017, has been dropped.
• The tax demand pertained to the financial years 2018-19 and 2020-21.

Implications for BHEL

BHEL's management has stated that this favorable ruling will have no impact on the company's financials or operations. The order effectively removes a significant potential liability from the company's books, providing clarity and stability to its financial position.

Legal and Compliance Aspects

• The appellate authority found no aberrations or non-compliances in BHEL's conduct.
• No penalties, restrictions, or sanctions were imposed on the company.
• BHEL has accepted the favorable order, and no further action is required from the company's side.

This victory for BHEL underscores the importance of robust legal and compliance frameworks in navigating complex tax matters. It also highlights the company's commitment to addressing regulatory challenges effectively.

Additional Corporate Update

In a separate development, BHEL has announced the dissolution of its joint venture company, M/s Powerplant Performance Improvement Pvt. Ltd. (PPIL). The National Company Law Tribunal (NCLT), New Delhi Bench, has ordered the dissolution of PPIL, which was a joint venture between BHEL and Siemens AG Germany. The dissolution is effective from August 29, 2025, as per the NCLT order received by BHEL on September 1, 2025.

As BHEL continues to navigate its business landscape, these recent developments demonstrate the company's active management of both tax liabilities and corporate structures, potentially streamlining operations and reducing financial uncertainties.

Bharat Heavy Electricals Limited (BHEL), a prominent state-owned engineering and manufacturing company, has been fined by both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) for failing to maintain the required composition of independent directors on its board.

Penalty Details

Both BSE and NSE have imposed a fine of Rs 5.37 lakh each on BHEL, totaling Rs 10.74 lakh. The penalty was levied for non-compliance with Regulation 17(1) of the Securities and Exchange Board of India (SEBI) Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015.

Reason for Non-Compliance

According to the exchanges, BHEL's board composition did not meet the regulatory requirements. Specifically, the number of independent directors on BHEL's board was less than 50% of the actual board strength, which is mandated by SEBI regulations for certain categories of listed entities.

BHEL's Response

In response to the fines, BHEL has stated that as a government-owned company, all directors, including independent directors, are appointed by the central government. The company has emphasized that it regularly consults with the government regarding such appointments to ensure compliance with regulatory requirements.

Planned Action

BHEL has announced its intention to seek a waiver of the fines imposed by both stock exchanges. The company disclosed this information in a regulatory filing, stating:

"BHEL is proposing to seek waiver of fines levied by Stock Exchanges. It is pertinent to mention that BHEL is a Government Company and the Directors including Independent Directors are appointed by Government of India. BHEL is regularly taking up with the Government of India for appointment of requisite number of Independent Directors so as to ensure compliance with the aforesaid Regulations."

Implications

This incident highlights the challenges faced by state-owned enterprises in maintaining compliance with corporate governance norms, particularly when board appointments are controlled by the government. It also underscores the importance of timely appointments to ensure adherence to regulatory requirements and avoid financial penalties.

As BHEL works towards resolving this issue, investors and market watchers will be keen to see how the company addresses its board composition to meet SEBI's regulations in the coming months.