SRF Limited has received a significant tax demand notice from GST authorities, with the order received on December 29. The chemical company faces a demand of ₹15.76 crores from the Joint Commissioner, CGST Commissionerate, Dehradun, along with applicable interest and penalties.

Nature of Tax Demand

The CGST authorities have raised the demand for Input Tax Credit (ITC) reversal on two specific grounds. The primary issue relates to a slump sale of a business unit that was reported as an exempted supply, with tax authorities taking the view that ITC reversal is required in proportion to such exempted supply. Additionally, the authorities have demanded ITC reversal due to alleged non-filing of returns by suppliers.

Key Violations Alleged

The tax authorities have identified specific contraventions in their demand notice. The company had undertaken a slump sale of a business unit, which was reported as an exempted supply under GST regulations. The authorities have taken the position that proportionate ITC reversal is mandatory for such exempted supplies. The second violation relates to supplier-related compliance issues, where authorities have sought ITC reversal from the company due to alleged non-filing of returns by suppliers.

Company's Response and Market Impact

SRF's management has expressed confidence in challenging the demand based on legal advice received. The company believes the demand lacks legal merit and has indicated its intention to contest the matter before appropriate legal forums. The management does not expect any material impact on its financial, operational or other activities at this stage.

Financial Implications

The total financial exposure includes the principal demand amount of ₹15.76 crores, along with applicable interest charges and penalties equivalent to the tax amount. However, the company's management remains optimistic about successfully defending against the demand through legal proceedings. This regulatory disclosure was made pursuant to SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

India has imposed anti-dumping duties on multiple Chinese products during the month, including cold-rolled non-oriented electrical steel and R134A refrigerant gas, to protect domestic manufacturers from unfairly priced imports. The move represents a significant trade protection measure affecting various industrial sectors.

Comprehensive Anti-Dumping Measures

The latest duties target three key product categories from China and Vietnam:

Additionally, India imposed anti-dumping duties on Calcium Carbonate Filler Masterbatch imports from Vietnam, a material widely used in the plastic industry. These measures follow investigations by the Directorate General of Trade Remedies (DGTR), which recommended the duties after determining that domestic industries were hurt by cheap imports.

Impact on R134A Market

The anti-dumping duty on R134A refrigerant represents a significant development for the domestic specialty chemicals sector. R134A is a non-flammable gas widely used as a refrigerant in various cooling applications. The substantial duty of up to $5,251 per tonne aims to counter Chinese suppliers' dumping practices by significantly increasing their landed costs.

Steel Sector Protection

The anti-dumping duties on cold-rolled non-oriented electrical steel from China vary by manufacturer, with rates ranging from $223.82 to $415.00 per tonne. This differential pricing structure reflects varying degrees of dumping practices among Chinese steel producers. The electrical steel category is crucial for transformer and motor manufacturing industries.

Trade Policy Framework

These anti-dumping measures operate under the World Trade Organisation's multilateral framework, ensuring compliance with international trade regulations. The duties aim to create a level playing field for domestic producers against foreign competitors engaging in unfair pricing practices. India has previously imposed similar duties on various products to tackle cheap imports, particularly as high US tariffs on several countries have led to goods being redirected to markets like India.