Vedanta Faces ₹141.36 Crore GST Penalty Over Ineligible ITC Claims, Plans Legal Challenge | File Photo
Global mining conglomerate Vedanta Ltd was hit with Goods and Services Tax (GST) penalties of Rs 141.36 crore for alleged ineligible Input Tax Credit (ITC) availment on Saturday.
The Mumbai listed Vedanta was slapped with two GST notices seeking penalties totalling Rs 141.36 crore along with tax demand and applicable interest.
In the first order a penalty of Rs 86.06 crore was imposed for availing and utilising Input Tax Credit (ITC) during the 2017-18 financial year. The second order seeking penalty of Rs 55.30 crore over availing ineligible ITC for the financial years between 2017-18 and 2019-20 was demanded.
Vedanta plans to challenge the orders and said “The company is hopeful of a favourable outcome thereof and does not expect the said Orders to have any material financial impact on the company.”
Earlier in January the Bombay High Court had Bombay High Court had stayed the effect and operation of the GST Circular relating to corporate guarantee on a petition filed by Vedanta. Similar stays were previously issued by the High Courts of Telangana and Punjab & Haryana.
A division bench of Justices Firdosh P Pooniwalla and B P Colabawalla said. Also, it allowed the revision of the petition to challenge the retrospective amendment in the GST circular a holding company providing a corporate guarantee to its subsidiary is not a ‘supply’ and/or ‘supply of service’ taxable under GST law.
In October 2023, the GST Council had recommended an 18 per cent tax on the parent company’s guarantee to the subsidiary. However, director’s personal guarantee was excluded. Later it was notified and a circular was issued.
While the first part of the circular is related to the personal guarantee given by the director, its second part deals with the parent company’s corporate guarantee to its subsidiary for a bank loan. The second part of the circular has been contentious and challenged in various High Courts and had been stayed.
