Diligent Media Corporation Limited has received a significant GST demand order from tax authorities in Mumbai, creating a potential financial liability of ₹33.90 crores. The company disclosed this development to stock exchanges on January 14, 2026, in compliance with regulatory requirements.

GST Demand Details

The demand order was issued by the Office of the Assistant Commissioner of State Tax, Mumbai, in Form GST DRC-07. The company became cognizant of the order on January 13, 2026.

Nature of Dispute

The GST demand centers on the assignment of leasehold rights for an industrial plot situated in Mumbai that was sold by the company. The Department of Goods and Services Tax has determined that this transfer constitutes a taxable supply of services under GST laws. The demand includes the principal tax amount along with interest, penalty, and issues related to input tax credit availment.

Company's Position and Response

Diligent Media Corporation has contested the tax authority's interpretation of the transaction. The company's key arguments include:

• The assignment of leasehold rights constitutes a "transfer of land"
• Such transfers do not qualify as "supply" under the GST regime
• The transaction should be exempt from GST provisions

The company had already submitted its contentions to the authority before the order was issued. Despite these submissions, the tax department proceeded with issuing the demand order.

Financial Impact and Compliance

Next Steps

The company has indicated it will take appropriate steps following discussions with legal counsels. This suggests potential legal challenges or appeals against the demand order. The disclosure was made under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ensuring transparency with stakeholders.

The matter relates to a transaction from FY 2018-19, indicating the extended timeline often involved in tax assessments and disputes. The company's response will likely depend on legal advice regarding the merits of challenging the order through available appellate mechanisms.

Diligent Media Corporation 's Board of Directors has approved a significant financial restructuring plan, involving the reduction and cancellation of 4.36 billion preference shares valued at ₹436.26 crore. This strategic move aims to streamline the company's capital structure and address its financial obligations.

Key Details of the Scheme

The approved Scheme of Reduction of Preference Share Capital includes the following main points:

• Cancellation of 4,36,26,56,265 6% Non-Cumulative, Non-Convertible Redeemable Preference Shares (NCRPS) with a face value of ₹1 each.
• ₹173.40 crore (₹0.40 per share) will be adjusted against outstanding Inter Corporate Deposit Agreements.
• The remaining ₹262.86 crore (₹0.60 per share) will be entirely reduced.

Impact on Share Capital

Post-implementation of the scheme, Diligent Media Corporation's share capital structure will undergo a significant reorganization:

It's important to note that there will be no change in the company's authorized share capital or the number of equity shares.

Rationale and Benefits

The company cites several benefits for this capital reduction:

1. Liquidity Preservation: The non-cash settlement preserves the company's liquidity by setting off NCRPS liability against existing obligations.
2. Reduced Future Liability: Substantially reduces future liability related to NCRPS redemption.
3. Financial Certainty: Brings commercial finality to NCRPS redemption liability and ICD Agreement obligations.
4. Cost Avoidance: Prevents potential future litigation costs between the company and NCRP shareholders.

Shareholder Impact

The scheme is designed to have minimal impact on equity shareholders:

• No change in the number of equity shares or their proportion.
• No alteration to the equity shareholding pattern.
• The scheme is not expected to adversely affect the company's ability to meet its financial commitments.

Regulatory Compliance

The decision was made in compliance with regulatory requirements:

• Approved by the Board of Directors.
• Based on recommendations from the Audit Committee and Committee of Independent Directors.
• Follows an Arbitration Award.

The company will now seek necessary statutory and regulatory approvals to implement the scheme. Diligent Media Corporation has assured that this restructuring will benefit the company, its shareholders, and creditors as a whole, while maintaining its ability to fulfill financial commitments in the ordinary course of business.

This strategic capital restructuring represents a significant step towards optimizing Diligent Media Corporation's financial position and ensuring long-term stability.