Zee Entertainment Enterprises Ltd. (ZEEL) has been served a Goods and Services Tax (GST) notice by tax authorities in Tamil Nadu, citing issues with its input tax credit (ITC) claims. The company has been asked to pay Rs 0.40 million, including penalties, for allegedly ineligible ITC, along with Rs 16.56 million in interest for what officials say was excess credit availed between July 2017 and March 2018.
The order, issued under Section 74 of the GST framework, points to inconsistencies in the company’s tax filings during that period. Authorities claim ZEEL claimed more ITC than permitted, leading to a reassessment of its tax obligations.
In response, ZEEL has stated that it intends to challenge the notice, asserting that it has a strong case. The company plans to file an appeal within the legally allowed three-month period, seeking a review of the demand raised against it. ZEEL also assured stakeholders that the issue will not have any significant effect on its financial stability or daily operations.
Tax authorities have been increasing scrutiny of businesses’ ITC claims to ensure compliance with GST regulations. The matter involving ZEEL is part of broader efforts to monitor and regulate tax credits availed by corporations. The company has not disclosed specific details of its appeal but is expected to pursue legal recourse under existing provisions.
What is likely to happen in such a scenario?
In situations where a company like Zee Entertainment Enterprises Ltd. (ZEEL) receives a Goods and Services Tax (GST) notice alleging discrepancies in Input Tax Credit (ITC) claims, the company typically has the option to file an appeal under Section 107 of the Central Goods and Services Tax (CGST) Act, 2017. This appeal must be submitted within three months from the date of the order, with a possible one-month extension at the discretion of the appellate authority. Upon filing the appeal, the company is generally required to make a pre-deposit of 10% of the disputed tax amount, subject to a maximum of Rs 25 crores for both CGST and State Goods and Services Tax (SGST), as outlined in the GST regulations. The appellate authority has the power to confirm, modify, or annul the original order iff the appeal is unsuccessful, the company may escalate the matter to higher judicial forums, such as the High Court and, subsequently, the Supreme Court, provided certain conditions are met throughout this process, the company must ensure compliance with procedural requirements and timelines to effectively contest the GST demand.