Kirloskar Oil Engines Limited (KOEL), a prominent player in the manufacturing sector, has recently come under scrutiny from Maharashtra's tax authorities. The company has received a show cause notice from the Office of Deputy Commissioner of State Tax, Pune, Maharashtra, regarding an Input Tax Credit (ITC) mismatch for the financial year 2021-22 under GST regulations.

Details of the Tax Demand

The show cause notice proposes a substantial financial implication for KOEL:

This total demand of approximately Rs 18.7 crore stems from discrepancies identified in the company's Input Tax Credit claims for FY 2021-22.

Company's Response

In response to this development, Kirloskar Oil Engines Limited has stated that it does not foresee any material impact on its financial operations or other activities. This assertion suggests that the company is confident in its position and may be prepared to address the issues raised in the show cause notice.

Regulatory Compliance

As per the regulatory requirements, KOEL has duly informed the stock exchanges about this notice. The company filed an intimation under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This prompt disclosure aligns with the company's commitment to transparency and regulatory compliance.

Recent Corporate Actions

It's worth noting that amid these tax-related developments, Kirloskar Oil Engines Limited continues to progress with its employee stock option plan. The company's Stakeholders Relationship Committee allotted 25,651 fully paid-up equity shares of Rs. 2 each under the 'Kirloskar Oil Engines Limited – Employee Stock Option Plan 2019 [KOEL ESOP 2019]'. This allotment has resulted in a slight increase in the company's issued, subscribed, and paid-up capital.

As the situation unfolds, stakeholders will be keenly watching how Kirloskar Oil Engines Limited addresses the GST-related issues while maintaining its operational momentum. The company's response to the show cause notice and any subsequent developments will be crucial in determining the final outcome of this tax matter.

Kirloskar Oil Engines Limited (KOEL), a prominent player in the manufacturing sector, has received significant relief in its GST misclassification case. The company initially faced a Show Cause Notice for alleged misclassification in outward supply due to incorrect Harmonized System of Nomenclature (HSN) codes under GST regulations, but has now received a partially favorable adjudication order.

Initial GST Notice Details

The original notice dated September 19, 2025, from the Office of Deputy Commissioner of State Tax, Pune, Maharashtra, outlined substantial demands:

Favorable Adjudication Order

On December 12, 2025, Kirloskar Oil Engines received an Adjudication Order under Section 73(9) of the Maharashtra Goods & Services Tax Act, 2017, which was passed partially in favor of the company. The order resulted in a significant reduction of the tax demand, interest, and penalty:

Regulatory Compliance and Impact

The company has disclosed this development to BSE Limited and the National Stock Exchange of India Ltd. in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. KOEL maintains that it does not foresee any material impact on its financial, operational, or other activities following this favorable outcome.

Case Background

The original case pertained to miss-classification in outward supply due to HSN (Harmonized System of Nomenclature) code issues under the provisions of the Central Goods and Services Tax Act, 2017, Maharashtra Goods and Services Tax Act, 2017, and Integrated Goods and Services Tax Act, 2017.

Business Outlook

With the substantial reduction in GST liability from over ₹8 crore to approximately ₹4.35 lakh, representing a 99.46% decrease, Kirloskar Oil Engines has successfully navigated this regulatory challenge. The favorable adjudication order demonstrates the company's ability to effectively address compliance issues while maintaining its operational focus.