Morepen Laboratories has secured a significant legal victory by obtaining a stay on a show-cause notice from the Himachal Pradesh High Court, providing relief in a GST refund dispute worth ₹117.94 crore. The pharmaceutical company successfully challenged the notice through legal proceedings, ensuring continuity of its business operations without immediate financial impact.

Legal Proceedings and Court Order

The Central GST & Central Excise Commissionerate in Shimla had issued a show-cause notice dated December 2, 2025, alleging violations of GST regulations. The notice claimed that Morepen Laboratories had erroneously claimed excess GST refunds, violating Section 54 of the CGST Act, 2017, and Rule 89 of the CGST Rules, 2017.

In response to the allegations, Morepen Labs filed a writ petition before the High Court of Himachal Pradesh in Shimla. The court reviewed the matter and passed an order on January 6, 2026, granting a stay on the operation of the show-cause notice.

Business Impact Assessment

According to the company's official statement, the high court's stay order ensures no immediate adverse effects on its operations. The management has confirmed that the legal relief provides protection across multiple business dimensions:

• Financial Operations: No immediate impact on cash flows or financial position
• Business Activities: Continued normal operations without disruption
• Operational Continuity: All business functions remain unaffected

Recent Financial Performance

Morepen Laboratories had reported mixed financial results for Q2FY2025-26, showing revenue challenges but improved profitability metrics.

Despite revenue declines, the company demonstrated strong profit recovery with net profit surging significantly on both quarterly and annual comparisons.

Market Response

The company's stock price reflected market sentiment on the trading day, closing at ₹40.32, representing a decline of ₹1.20 or 2.89% from the previous session. The legal stay provides a foundation for operational stability while the GST matter remains under judicial review.

Morepen Laboratories has secured significant judicial relief with a court granting a stay on a tax demand worth ₹118.00 crores. This development provides the pharmaceutical company with temporary protection from the enforcement of the substantial tax liability.

Court Decision Details

The court's decision to grant the stay order demonstrates that Morepen Laboratories has presented sufficient legal grounds to challenge the tax demand. This judicial intervention temporarily halts any enforcement actions related to the ₹118.00 crore tax liability, providing the company with breathing room while the matter undergoes legal scrutiny.

Impact on Company Operations

The stay order offers immediate financial relief to Morepen Laboratories by preventing the immediate collection of the disputed tax amount. This judicial protection allows the company to continue its operations without the immediate burden of settling the substantial tax demand while pursuing legal remedies.

Legal Proceedings Status

With the court granting the stay, Morepen Laboratories can now focus on building its case to challenge the tax demand through proper legal channels. The stay provides the necessary time and legal framework for the company to present its arguments and evidence in the ongoing proceedings.

This development represents a positive outcome for the pharmaceutical company in its efforts to address the regulatory challenge through the judicial system.