Tata Steel on Sunday disclosed that it has received a show cause-cum-demand notice from the tax department over an alleged irregular availment of input tax credit (ITC) amounting to over Rs 1,000 crore for the financial years 2018-19 to 2022-23.
In a filing to the stock exchanges, the steel giant said the notice—dated June 27—was issued by the Office of the Commissioner (Audit), Central Tax, Ranchi. It directs the company to explain within 30 days why Goods and Services Tax (GST) worth Rs 1,007.54 crore should not be recovered.
The tax authorities allege that Tata Steel availed ITC in violation of Section 74(1) of the CGST/SGST Act, 2017, read with Section 20 of the IGST Act.
Tata Steel clarified that it has already paid Rs 514.19 crore in GST during the relevant period in the normal course of business. “The above GST amount is proposed to be appropriated in the notice, and therefore, the alleged GST exposure is Rs 493.35 crore only,” the company said.
Tata Steel added that it believes the show cause notice (SCN) has “no merits” and that it will make appropriate submissions within the stipulated timeframe.
The company also confirmed that the notice has no impact on its financial, operational, or other business activities.
Under GST law, businesses can claim credit for input taxes paid on purchases used in the course of business to offset their output tax liability. Alleged misuse or incorrect claims of such credits are subject to scrutiny by authorities.