Mumbai, January 29, 2025 – Hindustan Unilever Limited (HUL) (BSE: 500696 | NSE: HINDUNILVR) has been served with two demand orders under Section 74 of the CGST Act, 2017, resulting in a total GST credit disallowance and penalty of ₹25.92 crore. The orders, issued by the Additional Commissioner of CGST & CX, Kolkata, on January 22 and January 28, 2025, allege wrongful claims of input tax credit (ITC).
Breakdown of GST Demand Orders
1st Order (Received on January 22, 2025)
- GST Credit Disallowed: ₹6,85,23,322 (₹6.85 crore).
- Penalty Imposed: ₹6,85,23,322 (₹6.85 crore).
- Total Disputed Amount: ₹13.70 crore.
2nd Order (Received on January 28, 2025)
- GST Credit Disallowed: ₹6,10,90,820 (₹6.10 crore).
- Penalty Imposed: ₹6,10,90,820 (₹6.10 crore).
- Total Disputed Amount: ₹12.22 crore.
Total GST Credit Disallowed & Penalty Imposed:
HUL's Response & Legal Strategy
- No material financial or operational impact: HUL has stated that the demand orders will not affect its business operations or cash flow.
- Company to challenge the orders: The company is currently evaluating its legal options and intends to exercise its right to appeal.
- Delay in disclosure of the first order (January 22) was due to internal review and assessment before making an official statement.
Potential Market & Industry Impact
- Investor Watch: While HUL maintains that the penalties are not significant, investors will closely monitor the progress of the appeals and potential financial provisioning.
- Regulatory Scrutiny: The orders highlight increasing compliance checks in the FMCG sector, with tax authorities tightening oversight on input tax credit claims.
- FMCG Sector Implications: Other major FMCG companies could also face heightened GST audits and compliance challenges.