Petronet LNG has received a Goods and Services Tax (GST) demand order worth ₹6.69 crores from tax authorities in New Delhi, the company disclosed in a regulatory filing on December 11, 2025. The demand relates to alleged tax violations during the financial year 2021-22.

GST Demand Details

The Department of Trade and Taxes, Office of the Assistant Commissioner/GSTO, New Delhi issued the order under Section 73 of the Goods and Services Tax Act, 2017. The demand breakdown includes multiple components beyond the base tax amount.

Alleged Violations

The tax authorities have cited two primary violations in their demand order:

• Excess Claim of Input Tax Credit (ITC): The company allegedly claimed ITC beyond permissible limits
• Under-declaration of Ineligible ITC: Authorities claim the company failed to properly declare certain ineligible ITC amounts

These allegations pertain to the company's GST compliance during FY2021-22, suggesting potential discrepancies in tax filings from that period.

Company's Response and Legal Strategy

Petronet LNG has strongly disputed the GST demand order, maintaining that the allegations are unfounded. The company stated that based on its assessment of facts and prevailing law, the GST demand amount, interest, and penalties levied are unjustified.

The energy infrastructure company plans to challenge the order through appropriate legal channels in consultation with its advisors. This approach indicates the company's confidence in its tax compliance procedures and its willingness to defend its position through the legal system.

Financial Impact Assessment

Despite the significant demand amount, Petronet LNG has assessed that there will be no likely material impact on the company's financial or operational activities due to this order. This assessment suggests the company believes it has strong grounds to successfully contest the demand.

The company's confidence in avoiding material impact likely stems from its evaluation of the legal merits of the case and its financial capacity to handle such regulatory challenges while maintaining normal business operations.

Petronet LNG has executed a comprehensive loan agreement worth ₹12,000 crores with a banking consortium led by State Bank of India (SBI) and Bank of Baroda. The secured Rupee Term Loan facility will specifically finance the company's ambitious petrochemicals project at Dahej, Gujarat, along with other capital expenditure requirements.

Loan Agreement Structure

The loan agreement involves equal participation from both consortium members, with each bank providing ₹6,000 crores under SBI's leadership. This structured approach ensures balanced risk distribution while providing Petronet LNG with substantial financial resources for its strategic expansion into petrochemicals manufacturing.

Petrochemicals Project Specifications

The loan will finance a comprehensive petrochemicals project featuring a 750 KTPA Propane Dehydrogenation (PDH) unit and a 500 KTPA Polypropylene (PP) facility. The project, located at Dahej, Gujarat, will also include propane and ethane handling facilities, representing a significant expansion of Petronet LNG's operational capabilities beyond traditional gas distribution.

Security and Collateral Framework

The loan agreement includes comprehensive security arrangements with multiple layers of protection for lenders. The security structure features first pari-passu charges on both movable and immovable properties related to the PDH-PP project, along with second charges on existing movable fixed assets that will be released upon project commissioning.

Strategic Business Expansion

This petrochemicals project represents Petronet LNG's strategic diversification from its core gas distribution business into value-added petrochemical manufacturing. The PDH-PP project will enable the company to produce polypropylene, a key plastic polymer with extensive industrial applications, while leveraging its existing infrastructure and expertise in gas handling operations at the Dahej facility.