Shemaroo Entertainment Limited has secured a significant legal victory with the Bombay High Court setting aside penalty proceedings worth Rs. 133.61 crores against its senior executives. The judgment, delivered on February 25, 2026, marks the conclusion of writ proceedings filed by the company challenging GST penalty actions.

Court Judgment Details

The Hon'ble High Court of Judicature at Bombay allowed the writ petition filed by Shemaroo Entertainment, ruling that the show cause notices and impugned Order-in-Original issued against the company's key executives were without jurisdiction and legally unsustainable. The court's decision specifically covers actions taken against the Joint Managing Director, Chief Executive Officer, and Chief Financial Officer of the company.

Background of GST Proceedings

The original GST proceedings involved multiple penalty components against Shemaroo Entertainment. The tax authorities had demanded recovery of allegedly inadmissible Input Tax Credit (ITC) amounting to Rs. 70.26 crores, along with applicable interest and penalty under Section 74(1) of CGST Act, 2017.

Additional penalties included:

• Rs. 63.35 crores under Section 122(1)(ii) & (x) and Section 122(2)(b) of CGST Act, 2017
• Rs. 133.61 crores each on the three senior executives under Section 122(1A) of the CGST Act, 2017 and MGST Act, 2017

Financial Impact Assessment

Shemaroo Entertainment has confirmed that the favorable court judgment will have no material financial impact on the company's operations. This outcome provides relief to the entertainment company, which has been dealing with these GST-related proceedings since the original disclosures made in August 2024.

Regulatory Compliance

The company has fulfilled its disclosure obligations under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This development follows previous disclosures made by the company on August 03, 2024, February 05, 2025, and December 8, 2025, keeping stakeholders informed throughout the legal proceedings.

The judgment represents a significant legal precedent regarding the jurisdiction of tax authorities in imposing personal penalties on company executives under GST regulations, particularly in cases involving corporate tax compliance matters.

Shemaroo Entertainment Limited has initiated a postal ballot process to seek shareholder approval for a preferential share allotment to its promoters and promoter group members. The company has engaged National Securities Depositories Ltd. as the authorized agency to provide e-voting facilities for this corporate action.

E-Voting Schedule and Process

The remote e-voting process has been structured with specific timelines for shareholder participation:

The postal ballot notice is being sent only through electronic mode to members whose email addresses are registered with the company or depositories, in compliance with Ministry of Corporate Affairs circulars.

Preferential Share Allotment Details

The company proposes to issue 14,10,000 equity shares of face value Rs. 10/- each at Rs. 110/- per share, including a premium of Rs. 100/- per share. The total aggregate consideration amounts to Rs. 15,51,00,000/-.

Purpose and Financial Impact

The preferential issue is being undertaken towards part repayment and appropriation of existing unsecured loans provided by the promoters and promoter group members. The company has outstanding unsecured debt totaling Rs. 33,85,30,000/- from these proposed allottees, of which Rs. 15,51,00,000/- will be appropriated through this equity conversion.

This debt-to-equity conversion will strengthen the company's financial position by reducing liabilities and increasing net worth without any actual fund inflow or outflow.

Shareholding Pattern Impact

Post-allotment, the promoter and promoter group shareholding will increase from 65.53% to 67.24% of the total share capital. The public shareholding will correspondingly decrease from 34.46% to 32.76%.

Regulatory Compliance

The preferential issue is being conducted in accordance with Section 62 read with Section 42 of the Companies Act, 2013, and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. The relevant date for pricing purposes is Wednesday, February 11, 2026, being 30 days prior to the proposed date of passing the special resolution.

The issue price of Rs. 110/- per share is above the floor price of Rs. 109.27 calculated as per SEBI ICDR Regulations based on the 90-day volume weighted average price. The allotted shares will be subject to lock-in provisions as prescribed under SEBI regulations and will rank pari-passu with existing equity shares upon listing on BSE and NSE.