Eris Lifesciences , a prominent pharmaceutical company, has found itself in the spotlight of tax authorities over alleged non-payment of Integrated Goods and Services Tax (IGST). The company recently disclosed that it has received a show cause cum demand notice from the Directorate General of GST Intelligence, Mumbai, raising concerns about its tax compliance.

IGST Non-Payment Allegation

The notice alleges that Eris Lifesciences failed to pay IGST on reverse charge mechanism for the import of services. Specifically, the issue stems from the company's acquisition of trademark rights for "Zomelis" and its associated brands from Novartis AG Switzerland in November 2019.

Financial Implications

According to the notice, the financial implications for Eris Lifesciences could be substantial:

Company's Response

Eris Lifesciences has stated that it is currently evaluating the matter with its tax consultants. The company plans to submit its reply within the prescribed time period. In its disclosure, Eris Lifesciences maintained that it "keeps a scrupulous record of financial dealings" and contributes towards nation-building as a responsible business. The company asserts that its compliances are in line with the letter, spirit, and intent of the law, and aligned with prevailing industry practices.

Potential Impact

While the outcome of this tax dispute remains uncertain, it could have significant financial implications for Eris Lifesciences if the authorities uphold the demand. However, the company expressed confidence in its position, stating that it has "a good case on merits" and believes it has complied with the relevant provisions of the GST laws.

Regulatory Compliance

The company made this disclosure in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and other applicable laws. This transparency allows investors and stakeholders to stay informed about potential financial risks and regulatory challenges facing the company.

As the situation unfolds, stakeholders will be watching closely to see how Eris Lifesciences addresses these allegations and what impact, if any, this may have on the company's financial position and reputation in the pharmaceutical industry.

Eris Lifesciences announced a significant change in its audit structure as R R S & Associates, the statutory auditor of its wholly-owned material subsidiary Eris Therapeutics Limited (ETL), tendered their resignation effective August 12, 2025.

Resignation Details

R R S & Associates, a chartered accountancy firm with registration number 118336W, was initially appointed for a five-year term from April 1, 2022, to March 31, 2027. However, their tenure has been cut short, with the firm completing the statutory audit for the financial year ended March 31, 2025, and conducting a limited review for the quarter ended June 30, 2025.

Reasons for the Change

The primary reason cited for the auditor's resignation is to facilitate the appointment of a single auditor for both Eris Lifesciences and its material subsidiary, ETL. This move is aimed at:

• Bringing synergies to the audit process
• Aligning audit terms across the group
• Maintaining consistency in auditing practices

Assurances and Compliance

In their resignation letter, R R S & Associates confirmed that there were no material concerns or issues leading to their resignation beyond the stated reason of audit consolidation at the group level. This assurance is crucial for maintaining investor confidence in the company's financial reporting integrity.

Regulatory Compliance

Eris Lifesciences has duly informed the stock exchanges about this development, in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the SEBI Master Circular dated November 11, 2024.

Impact and Next Steps

While the change in auditors is significant from a corporate governance perspective, it is part of a broader strategy to streamline audit processes across the Eris Lifesciences group. The company is expected to appoint a new auditor for ETL, likely aligning with the auditor of the holding company, to ensure a seamless transition and maintain the integrity of financial reporting across the group.

Investors and stakeholders will be keenly watching for the announcement of the new auditor appointment, which is expected to bring about greater efficiency and uniformity in the audit process for Eris Lifesciences and its subsidiaries.

As the pharmaceutical sector continues to evolve, such corporate governance measures underscore the importance of transparent and consistent financial reporting practices in maintaining investor trust and regulatory compliance.