Company Plans to Contest the Order; No Immediate Financial Impact Expected
New Delhi, February 1, 2025 – KEI Industries Limited (NSE: KEI, BSE: 517569) has disclosed receiving a Goods and Services Tax (GST) demand order from the Office of the Additional Commissioner, Central Goods & Services Tax (CGST), Delhi East. The demand order, issued under Section 74(1) of the CGST Act, 2017, includes a tax liability of
₹590.38 crore, along with an equal
penalty of ₹590.38 crore and applicable interest under Section 50(1) of the CGST Act.
Key Details of the GST Demand Order
| Parameter | Details |
|---|
| Issuing Authority | Additional Commissioner, Central Goods & Services Tax, Delhi East |
| Nature of Order | Tax demand under Section 74(1) of CGST Act, 2017 |
| Tax Demand | ₹590.38 crore |
| Penalty | ₹590.38 crore (under Section 122(2)(b)) |
| Interest | Levied under Section 50(1) of CGST Act, 2017 |
| Time of Communication | January 31, 2025, at 20:44 PM |
| Period of Alleged Non-Compliance | FY 2017-18 to FY 2020-21 |
| Reason for Demand | Non-cross charging of certain expenditure incurred at the Corporate Office/Head Office for services rendered to branches/units |
| Company’s Response | KEI believes the demand is not maintainable and is evaluating all options, including filing an appeal. |
Company’s Stand on the Matter
KEI Industries has clarified that the demand order relates to
expenditures incurred at the corporate office/head office that were not cross-charged to branch offices and units. The company maintains that the demand is
not justified and is currently assessing legal options to challenge the order.
Impact on Financials
Despite the significant amount cited in the order, KEI Industries has stated that
it does not expect any immediate financial, operational, or other business disruptions. The company is confident in its legal stance and intends to pursue an appeal.
Next Steps
KEI Industries is likely to appeal the demand order before the appropriate authorities. Given the large quantum involved, the matter may take a prolonged legal route before resolution.
Market Implications
While tax disputes can weigh on investor sentiment, KEI’s assertion that it does not expect any material impact on its business might help alleviate concerns. Investors will closely watch regulatory proceedings and any further announcements from the company.