Escorts Kubota Limited has received a significant tax demand order from Maharashtra's tax authorities, with the company disclosing the development to stock exchanges on December 30, 2025. The order pertains to input tax credit eligibility issues and carries substantial financial implications for the agricultural and construction equipment manufacturer.

Tax Demand Details

The Assistant Commissioner of State Tax, Pune South, Maharashtra passed the order on December 29, 2025, at 05:21 P.M. (IST). The comprehensive financial impact of this tax order includes multiple components that significantly affect the company's obligations.

Nature of Tax Issue

The tax demand centers around the eligibility of Input Tax Credit (ITC), a crucial component of the Goods and Services Tax (GST) framework. Input tax credit allows businesses to reduce their tax liability by claiming credit for taxes paid on inputs used in their business operations. The tax authority has questioned the company's claim for such credits, leading to the confirmation of the demand along with applicable interest and penalties.

Company's Response Strategy

Escorts Kubota Limited has indicated its intention to challenge the tax order through proper legal channels. The company plans to file an appeal before the appellate authority, which is the standard procedure for contesting tax demands under the GST framework. This approach allows the company to present its case and seek relief from the imposed tax liability.

Regulatory Compliance

The disclosure was made in strict compliance with SEBI Listing Regulations, specifically Regulation 30 read with Para A (20) of Schedule III. The company provided detailed information as required under SEBI Master Circular No. SEBI/HO/CFD/PoD2/CIR/P/0155 dated November 11, 2024, ensuring transparency for investors and stakeholders.

The company secretary Arvind Kumar signed the disclosure, confirming the accuracy of the information provided to both BSE Limited and National Stock Exchange of India Limited. This development represents a significant regulatory matter that the company will need to address through the appropriate legal and tax advisory channels while maintaining compliance with all applicable regulations.

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.