ISGEC Heavy Engineering has received a significant GST penalty order from tax authorities, highlighting regulatory compliance challenges faced by the engineering company. The penalty order was issued by the Assistant Commissioner (C.Tax), East Division 3, Bangalore East Commissionerate, and was received by the company on December 30, 2025.

Penalty Details and Authority

The tax authorities have imposed a penalty of ₹17.33 lakh on the company following their assessment of GST compliance issues. The order originates from the Assistant Commissioner of Central Tax office in Bengaluru, which has jurisdiction over the company's tax matters in the region.

Nature of Violation

The penalty has been levied due to issues with the company's GST return filing and reconciliation processes. Specifically, the Assistant Commissioner found that the reconciliation reported in Column 12F of GSTR-9C was not acceptable to the department. This led to the issuance of the penalty order, indicating discrepancies in the company's GST compliance documentation.

The GSTR-9C is an annual return reconciliation statement that companies are required to file, and Column 12F typically contains crucial reconciliation data that tax authorities scrutinize for compliance verification.

Financial Impact

The total financial impact on ISGEC Heavy Engineering extends beyond just the penalty amount. The company faces a comprehensive financial burden from this tax order:

This substantial financial impact represents a significant regulatory cost for the company and may affect its operational cash flows in the near term.

Company's Response Strategy

In response to the penalty order, ISGEC Heavy Engineering has announced its intention to challenge the decision through proper legal channels. The company plans to file an appeal against this order under the provisions of the Goods and Services Tax Act. This appeal process will allow the company to present its case and potentially seek relief from the imposed penalty and tax demand.

The appeal mechanism under the GST Act provides companies with an opportunity to contest orders they believe are incorrect or disproportionate, ensuring due process in tax dispute resolution.

Isgec Heavy Engineering Limited has informed stock exchanges about a significant penalty imposed by tax authorities, creating a substantial financial impact on the engineering company.

Penalty Details and Authority

The Joint Commissioner of Central Tax & Central Excise, Bengaluru East Commissionerate, has imposed a penalty of ₹13,67,16,445 on the company. The order was received on December 30, 2025 at 18:23:00 hours, as disclosed by the company in its regulatory filing.

Nature of Alleged Violations

The tax authorities have levied the penalty alleging specific GST compliance failures. The Joint Commissioner imposed a tax demand of ₹6,27,80,982, claiming the company failed to declare and discharge GST liability on advances received for supply of services in statutory returns.

The alleged violation pertains to Section 74(9) of the CGST Act, where the company is accused of not properly discharging GST liability on advances received for service supply.

Financial Impact Assessment

The total financial impact on Isgec Heavy Engineering amounts to ₹19,94,97,427, comprising two main components:

Company's Response Strategy

Isgec Heavy Engineering has announced its intention to challenge the order through proper legal channels. The company stated it will file an appeal under the Goods and Services Tax Act to contest the penalty and tax demand imposed by the authorities.

Regulatory Compliance

The disclosure was made pursuant to Regulation 30 read with Para A of Part A of Schedule III of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company has also published this information on its official website at www.isgec.com as part of its transparency obligations.

This development represents a significant regulatory challenge for the engineering company, with the substantial financial implications potentially affecting its operational and financial activities pending the outcome of the planned appeal process.