Mumbai, January 31, 2025
Sapphire Foods India Limited (NSE: SAPPHIRE, BSE: 543397), a leading quick-service restaurant (QSR) operator, has disclosed that it has received a demand order from the Additional Commissioner (Office of the Commissioner of GST & Central Excise), Chennai South Commissionerate. The total tax and penalty amount under the order stand at
₹112.71 crore, excluding interest.
Key Details of the Demand Order
| Aspect | Details |
|---|
| Issuing Authority | Additional Commissioner (Office of the Commissioner of GST & Central Excise), Chennai South Commissionerate |
| Total Amount Demanded | ₹112.71 crore (including tax and penalty, excluding interest) |
| Applicable Laws | Central Goods and Services Tax Act, 2017; Integrated Goods and Services Tax Act, 2017; and relevant state GST Acts |
| Period Concerned | July 2017 – March 2022 |
| Date of Order Receipt | January 31, 2025 |
Allegations and Compliance Issues
The demand order cites multiple compliance issues, including:
- Taxability of Incentives and Promotional Expenses: Authorities claim that certain incentives and promotional expenses incurred by Sapphire Foods qualify as taxable supplies.
- Reversal of Input Tax Credit (ITC): The company is alleged to have wrongly availed ITC for periods before November 14, 2017.
- Transitional Credit Issues: Discrepancies in the transition from the pre-GST regime.
Financial and Operational Impact
Sapphire Foods has stated that
the demand order is not maintainable, and it does not anticipate any
material financial or operational impact due to the claim. The company is currently
evaluating the order and intends to challenge it through relevant appellate forums.
Next Steps
- The company is reviewing the order’s legal and financial implications.
- It will pursue necessary legal actions to contest the demand.
- Further updates will be disclosed as required by SEBI regulations.
This development is significant for investors, as it underscores the regulatory risks associated with taxation disputes in the QSR sector. However, Sapphire Foods’ assurance that there is
no material impact should offer some relief to stakeholders.
