Mumbai, February 4, 2025 – Alkem Laboratories Limited has received a significant tax demand order from the Joint Commissioner, CGST & Central Excise, Mumbai Central under the Goods and Services Tax (GST) Act, 2017. The order, covering financial years 2017-18 to 2022-23, demands a total GST payment of ₹69.65 crore, along with an equivalent penalty of ₹69.65 crore, and an additional penalty of ₹1.23 crore, bringing the total financial impact to over ₹140 crore.
Nature of the Allegations
The GST authorities have raised concerns regarding:- Reversal of Input Tax Credit (ITC) on the return of expired goods from customers.
- Proportionate levy of GST on short realizations of export proceeds.
- Penalty imposition on GST already paid under the Reverse Charge Mechanism (RCM).
Company’s Response and Next Steps
Alkem Laboratories has stated that it disagrees with the claims made in the demand order and believes it has adequate legal and factual grounds to challenge the decision. The company has confirmed that it will pursue an appeal against the order under applicable laws.Despite the hefty tax demand, Alkem Laboratories has assured stakeholders that there is no material impact on its financial, operational, or other activities at present. The company’s official statement reiterated that the dispute is not tenable and that they are taking all necessary legal steps.
Investor & Market Implications
Alkem Laboratories has disclosed this development to BSE Limited and the National Stock Exchange of India (NSE) in compliance with Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The regulatory filing also mentioned that the details of the order are available on the company’s website.Investors and market watchers will closely monitor Alkem Laboratories' next steps as it challenges the demand, as well as any potential financial implications if the appeal does not succeed.