Diligent media corporation has taken legal action against a significant GST demand by filing a writ petition in the Bombay High Court. The company disclosed this development to stock exchanges on February 25, 2026, under Regulation 30 of the Listing Regulations.

GST Demand Details

The controversy stems from a GST demand order issued by the Office of the Assistant Commissioner of State Tax, Department of Goods and Services Tax, Mumbai. The authority had previously issued this demand order in Form GST DRC-07 on January 14, 2026.

Legal Challenge

The company filed the writ petition on February 24, 2026, challenging the impugned demand order. This legal action was taken based on advice from the company's counsels and supported by judicial precedents from the Hon'ble High Court in similar matters.

The dispute centers around the authority's allegation of non-payment of GST on the assignment of leasehold rights for a leasehold industrial plot situated in Mumbai that was sold by the company.

Regulatory Compliance

The disclosure was made by Company Secretary and Compliance Officer Jyoti Upadhyay, who digitally signed the communication on February 25, 2026. The company has maintained transparency by keeping stock exchanges informed of developments related to this significant tax matter, following proper regulatory disclosure requirements under the Listing Regulations.

Diligent media corporation Limited announced its unaudited financial results for the third quarter and nine months ended December 31, 2025, revealing a challenging operational period marked by declining revenues and profitability pressures. The Board of Directors approved these results at their meeting held on February 11, 2026, following review by the Audit Committee and limited review by statutory auditors M/s MGB & Co. LLP.

Financial Performance Overview

The company's financial performance showed significant deterioration compared to the previous year. For Q3FY26, the company reported a net loss of Rs 29.78 lakhs, a stark contrast to the net profit of Rs 254.25 lakhs recorded in Q3FY25. This represents a complete reversal from profitability to losses year-on-year.

Nine-Month Performance Analysis

The nine-month period ended December 31, 2025, reflected similar challenges with the company recording a net loss of Rs 285.17 lakhs compared to a substantial profit of Rs 963.75 lakhs in the corresponding period of the previous year. Revenue from operations declined significantly by 35.13% to Rs 488.39 lakhs from Rs 753.01 lakhs.

Operational Expenses and Cost Structure

The company's expense structure remained relatively stable despite revenue declines. Employee benefit expenses for Q3FY26 were Rs 85.91 lakhs compared to Rs 103.82 lakhs in Q3FY25. Other expenses decreased to Rs 91.01 lakhs from Rs 284.16 lakhs year-on-year, indicating cost management efforts. Finance costs increased significantly to Rs 3.84 lakhs from Rs 0.32 lakhs in the previous year quarter.

Going Concern and Financial Position

The company's accumulated losses as of December 31, 2025, have exceeded its paid-up capital and reserves, raising going concern considerations. However, management noted that current assets remain higher than current liabilities. The company maintains a paid-up equity share capital of Rs 1,177.08 lakhs with a face value of Re. 1 each.

Management emphasized continuous efforts to expand digital media operations and stated that the business plan approved by the Board of Directors reflects adequate fund inflows. Based on projected cash flows and present liquidity position, the financial results have been prepared on a going concern basis.

Regulatory and Legal Matters

The company disclosed receiving a GST demand of Rs 3,390.68 lakhs from the Assistant Commissioner of State Tax, Mumbai, related to the assignment of leasehold rights. Based on legal counsel opinion, the company believes no liability is expected to arise and is taking requisite legal steps.

Additionally, the company addressed the impact of India's new Labour Codes effective from November 21, 2025, which merged 29 labour laws into four unified codes. The assessment indicated the impact is not material and has been appropriately reflected in the financial results.