Escorts Kubota Limited has secured a major relief in its ongoing tax matters as the State Tax Officer, Mandaveli Assessment Circle, Chennai, Tamil Nadu has officially dropped a Goods and Services Tax (GST) demand worth ₹43.26 crores for the financial year 2018-19. The company disclosed this development through a regulatory filing under Regulation 30 of SEBI Listing Regulations.

Official Order Details

The GST demand withdrawal follows the company's successful written objections filed against the Show Cause Notices (SCN) issued by the State Tax Officer of GST, Chennai, Tamil Nadu. The order dropping the tax demand was passed on December 29, 2024, at 06:17 P.M. (IST). The following table summarizes the key details:

Background of Tax Classification Dispute

The original GST demand stemmed from incorrect classification by the tax authorities, who had wrongly classified agricultural tractors as road tractors. The company had earlier informed through a filing dated May 08, 2024, that it anticipated no material financial impact since the GST department had also wrongly computed the alleged taxes on the total GST turnover instead of only turnover of tractors.

Regulatory Compliance and Impact

The company filed its written objections contesting the allegations made by the GST Department, which ultimately led to the favorable order. This development eliminates a significant contingent liability that had been pending since FY 2018-19. The successful resolution validates Escorts Kubota's position on tax classification matters and demonstrates the effectiveness of its compliance framework in challenging incorrect tax assessments.

The withdrawal of both the principal demand amount and associated interest and penalty provides substantial financial relief to the company and removes uncertainty regarding this long-standing tax matter.

Escorts Kubota Limited has successfully obtained relief from a GST penalty through the appeals process, with the Additional Commissioner dropping a penalty of ₹13.33 lakh that was previously imposed for procedural documentation issues.

GST Penalty Relief Details

The company received a favorable order from the Additional Commissioner, Grade-2 (Appeals), Agra, Uttar Pradesh, which has resulted in the complete dropping of the GST penalty. The penalty details and resolution are summarized below:

Background and Timeline

The penalty was originally imposed by the Assistant Commissioner of GST, Agra, Uttar Pradesh, on account of procedural issues in documentation. Escorts Kubota Limited had filed an appeal against this order in March 2025, challenging the penalty through the proper legal channels.

The company had previously informed the stock exchanges about the initial penalty order through a regulatory filing dated March 13, 2025, in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Regulatory Compliance

Escorts Kubota Limited has maintained transparency throughout the process by keeping stakeholders informed about both the initial penalty and its subsequent resolution. The company has fulfilled its disclosure obligations under SEBI Listing Regulations by providing timely updates on this matter to BSE Limited and National Stock Exchange of India Limited.

The successful appeal demonstrates the company's commitment to addressing regulatory matters through appropriate legal channels and validates its position regarding the procedural documentation issues that led to the original penalty.