Sapphire Foods India Limited has disclosed receiving a significant GST demand order worth ₹203.25 crores from tax authorities, marking a major regulatory development for the quick service restaurant operator. The company made this disclosure under Regulation 30 of SEBI listing regulations on January 1, 2026.

GST Demand Order Details

The demand order was issued by the Office of Principal Commissioner, Central Goods & Services Tax Commissionerate, Rohtak, Haryana, dated December 31, 2025. This follows a show cause cum demand notice that the company had initially received on June 26, 2025, under Section 74 of the CGST Act 2017.

Nature of Alleged Violations

The tax authorities have alleged that Sapphire Foods availed excess Input Tax Credit (ITC) when compared to GSTR2A returns. Additionally, the authorities claimed that the company incorrectly utilized ITC against GST liability on outward supply during the specified period.

Despite the company's submissions and explanations provided during the proceedings, the authorities confirmed their original proposal from the show cause notice and proceeded to issue the formal demand order.

Company's Response and Impact Assessment

Sapphire Foods has maintained a firm stance against the demand order, stating that the claim made by the authority is not maintainable. The company has emphasized that there is no material impact on its financial, operational, or other activities due to the issuance of this order.

The company is currently in the process of evaluating the demand order and has indicated that it will take necessary steps to respond appropriately. This suggests that Sapphire Foods may challenge the order through available legal remedies.

Regulatory Compliance

The disclosure was made by Company Secretary and Compliance Officer Sachin Dudam, ensuring compliance with SEBI's Listing Obligations and Disclosure Requirements Regulations, 2015. This transparency reflects the company's commitment to keeping stakeholders informed about significant regulatory developments that could potentially impact the business.

Sapphire Foods India Limited has achieved a significant legal victory in its tax dispute, with the Income Tax Appellate Tribunal (ITAT) delivering a favourable ruling that substantially reduces the company's interest liability under the Income Tax Act. The tribunal's decision, announced on November 7, 2025, has resulted in considerable financial relief for the quick service restaurant operator.

Tribunal Ruling Details

The Income Tax Appellate Tribunal, Mumbai, ruled in favour of Sapphire Foods, determining that interest under section 201(1A) of the Income Tax Act, 1961, should be restricted only up to the date of actual payment of tax. This interpretation significantly limited the company's exposure to interest charges on Tax Deducted at Source (TDS) matters.

The Assessing Officer (TDS) subsequently passed the Order Giving Effect (OGE) on December 30, 2025, implementing the tribunal's decision across multiple assessment years.

Financial Impact

The tribunal's ruling has delivered substantial financial benefits to Sapphire Foods across seven assessment years:

The dramatic reduction from ₹17.04 crores to ₹25.13 lakhs represents a saving of approximately ₹16.79 crores for the company.

Legal Background

The current development follows the company's earlier intimation dated June 26, 2025, regarding the receipt of an order under section 250 from the Office of the Commissioner of Income Tax, Appeal Addl/JCIT(A), Ranchi. Sapphire Foods had subsequently filed an appeal at the Income Tax Appellate Tribunal in Mumbai challenging the original assessment.

Regulatory Compliance

Sapphire Foods has disclosed this development under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ensuring transparency with stakeholders regarding material legal proceedings. The company confirmed that the litigation does not involve key management personnel, promoters, or ultimate persons in control, and no settlement terms or compensation payments were required.

This favourable tribunal ruling provides significant financial relief to Sapphire Foods and resolves a long-standing tax dispute spanning multiple assessment years, potentially improving the company's cash flow position and reducing contingent liabilities.