Sarla Performance Fibers , a prominent player in the textile industry, has taken legal action against a substantial GST demand by filing a Special Civil Application in the High Court of Gujarat. The company is contesting an order issued by the Additional Commissioner, Central GST & Central Excise, Surat Commissionerate, which alleges improper availing of tax refunds and credits.

Details of the GST Demand

The GST order in question, numbered SURAT/GST/ABS/30/2025-26 and dated July 31, 2025, raises several allegations against Sarla Performance Fibers:

1. Undue IGST refund of ₹9.45 crore on exports while importing inputs duty-free.
2. Improper claim of refund on unutilized Input Tax Credit (ITC) of ₹11.34 crore on exports without payment of tax.

The total demand raised by the tax authorities includes:

Note: Interest amount not specified in the order

Company's Stance

Sarla Performance Fibers maintains a strong position regarding the allegations. The company has stated that it possesses adequate factual and legal grounds to substantiate its stance. In its disclosure to the stock exchanges, the firm expressed confidence that the entire demand would be set aside, anticipating no impact on its financial position or operations.

Legal Proceedings

The Special Civil Application has been filed against multiple respondents, including:

1. The Union of India, through the Secretary, Ministry of Finance
2. Central Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance
3. Commissioner, Central GST & Central Excise, Surat Commissionerate
4. Additional Commissioner, Central GST & Central Excise, Surat Commissionerate

Implications and Outlook

While the GST demand is significant, amounting to ₹41.57 crore plus applicable interest, Sarla Performance Fibers appears confident in its legal position. The company's management, led by Managing Director Krishna Jhunjhunwala, has assured stakeholders of their commitment to maintaining high standards of compliance and corporate governance.

As the legal proceedings unfold, investors and industry observers will be keenly watching the outcome of this case, which could have implications for other companies in the textile sector dealing with similar GST-related issues.

Sarla Performance Fibers continues to operate normally as it awaits the court's decision on this matter. The company has pledged to provide updates on any significant developments in the case as required by SEBI regulations.

Sarla Performance Fibers Limited , a leading player in the yarn and wind power segments, has reported a robust financial performance for the first quarter, despite facing challenges in revenue growth.

Financial Highlights

The company's standalone revenue from operations stood at ₹10,165.20 crore, marking an 8% decrease from ₹11,053.68 crore in the same quarter last year. However, Sarla Performance Fibers demonstrated strong profitability, with profit after tax surging by 34.7% to ₹2,266.32 crore, compared to ₹1,683.06 crore in the corresponding quarter of the previous year.

Segment Performance

Sarla Performance Fibers operates in two business segments:

1. Yarn: This segment contributed ₹9,977.28 crore to the quarterly revenue.
2. Wind Power: The wind power segment generated ₹220.00 crore in revenue.

Key Financial Metrics

• Earnings Per Share (EPS): The company's EPS improved to ₹2.71, up from ₹2.02 in the same quarter last year, reflecting a 34.2% increase.
• Exchange Loss: Sarla Performance Fibers recognized an exchange loss of ₹1,127.82 crore during the quarter, primarily related to foreign currency exposures including working capital loans, debtors, and creditors.

Management Commentary

The Board of Directors reviewed and approved the unaudited financial results for the quarter ended June 30.

Segment-wise Analysis

The yarn segment continues to be the primary revenue driver for the company, while the wind power segment shows promising growth potential.

Sarla Performance Fibers Limited's ability to significantly boost its profitability amidst a challenging revenue environment demonstrates its operational efficiency and strategic management. The company's diversified business model, with a strong focus on the yarn segment complemented by its wind power operations, positions it well to navigate market fluctuations and capitalize on emerging opportunities in the textile and renewable energy sectors.