Rajapalayam Mills Limited has informed the stock exchanges about receiving a significant GST demand order from tax authorities, marking a notable regulatory development for the textile manufacturer.

GST Demand Order Details

The company received a demand order worth Rs 2 crores from Mr. Lakshmanan Kumaresan, Commercial Tax Officer serving as State Tax Officer (Inspection – 4) under the Intelligence Wing of the Goods and Services Tax Department. The order was issued under Section 74A of the TNGST/CGST Act, 2017, and was received on February 21, 2026.

Regulatory Compliance and Disclosure

The disclosure was made under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, in compliance with Para A of Part A of Schedule III. The company also referenced SEBI Master Circular no. HO/49/14/14(7)2025-CFD-POD2/I/3762/2026 dated January 30, 2026, and Industry Standards note on Regulation 30 of SEBI LODR Regulations.

The demand order specifically relates to observations in stock for the financial year 2024-25, indicating potential discrepancies identified during tax department inspections of the company's inventory records.

Company's Response and Outlook

Rajapalayam Mills Limited has expressed confidence in its position regarding the GST demand. Based on its preliminary assessment, the company believes it has a strong case on merits and anticipates a favorable outcome at the appellate stage. This suggests the company intends to challenge the demand order through the available legal remedies under the GST framework.

The company's management appears optimistic about resolving the matter in their favor, indicating they may have supporting documentation or legal grounds to contest the tax department's observations regarding their stock records.

Rajapalayam Mills Limited has received significant GST demand orders totaling Rs. 23.70 crores from the State Tax Officer under the Intelligence Wing of the Goods and Services Tax Department. The company disclosed this development through a regulatory filing under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

GST Demand Details

The demand orders were issued by Mr. Lakshmanan Kumaresan, Commercial Tax Officer – State Tax Officer (Inspection – 4), Intelligence Wing, under Section 74 of TNGST/CGST Act, 2017. Both orders were received on February 12, 2026, covering two consecutive financial years.

Nature of Violations

The GST demand orders cover multiple areas of alleged tax violations and contraventions:

FY 2020-21 Violations

• Tax due on ITC Reversal for Credit Note issued
• Interest due on belated payment of Creditors
• Tax due on Corporate Guarantee
• Tax due for Addition/Deletion to fixed assets
• Tax due on Rent paid
• Tax due on Other Selling Expenses

FY 2021-22 Violations

The violations for FY 2021-22 mirror those of the previous year, including:

• ITC reversal issues related to credit notes
• Belated payment interest on creditors
• Corporate guarantee tax implications
• Fixed asset addition/deletion tax matters
• Rent payment tax issues
• Other selling expenses tax dues

Company's Response and Financial Impact

The company has conducted a preliminary assessment of the demand orders and believes it has a strong case on merits. Management has expressed confidence in achieving a favorable outcome when the matter reaches the appellate stage. This suggests the company intends to challenge the GST demands through the appropriate legal channels.

Regulatory Compliance

The disclosure was made in compliance with SEBI (LODR) Regulations, 2015, read with SEBI Master Circular no. SEBI/HO/CFD/PoD2/CIR/P/0155 dated November 11, 2024, and Industry Standards note on Regulation 30 of SEBI LODR Regulations. The company has provided comprehensive details as required under the regulatory framework, ensuring transparency with stakeholders regarding this significant financial development.