Patanjali Foods, a renowned FMCG company in India, has been handed a show-cause notice by the Directorate General of GST Intelligence (DGGI) in Chandigarh for an alleged disproportionate claim of ₹27.5 Crore in input tax credit (ITC). This warning, given under the CGST Act, identifies a potential inconsistency in the company's tax filings that may result in fines.
Patanjali Foods' spokesperson commented that the company has been served a Show Cause Notice by the Directorate General of GST Intelligence, specifically from the Chandigarh Zonal Unit.
The Company, its officers, and authorised signatories were asked to explain why an input tax credit of ₹27,46,14,343 should not be recovered (with interest), and why penalties should not be imposed under Section 74 and other applicable provisions of the CGST Act 2017/Uttarakhand SGST Act, 2017, in conjunction with Section 20 of the IGST Act 2017.
The corporation has stated its determination to vigorously defend its stance before the authorities. However, it has underlined that the financial repercussions of the notice will not be established until the procedures are completed.
This development comes amid increased scrutiny of tax compliance in the FMCG sector. Notably, Patanjali has already faced similar scrutiny. In a separate event, the DGGI issued show-cause orders to two other Patanjali Group entities for alleged erroneous ITC claims. Furthermore, a case involving alleged SGST nonpayment and erroneous ITC claim has been forwarded to Uttarakhand for further investigation.
Patanjali Foods has reiterated its commitment to the highest corporate governance standards and has stated that it will handle this matter in accordance with the law.
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