United Spirits Faces Rs 7 Crore Tax Demand; Contests VAT & CST Orders

14 Sep 2023 , 02:44 PM

United Spirits’ shares opened 0.5 % higher on the NSE on September 14 following the company’s announcement of VAT & CST assessment orders for FY21, resulting in a demand of approximately Rs 7 crore.

The tax authority rejected the input tax credit claimed by the company on extra neutral alcohol (ENA) purchases, deeming ENA subject to GST. This led to a VAT demand of Rs 98 lakh (including a Rs 12,000 penalty) and CST demand of Rs 5 crore (including a Rs 2,000 penalty).

United Spirits stated its intent to contest these demands through appropriate measures. Additionally, the company filed a writ petition with the Madhya Pradesh High Court challenging the denial of credit for previous financial years. The petition has been admitted, with proceedings temporarily halted.

In a post-earnings press release, Hina Nagarajan, MD & CEO of Diageo India, expressed optimism about the company’s Q1FY24 performance, citing a 13.27 % increase in net profit to Rs 238.20 crore in June 2023 compared to Rs 210.30 crore in June 2022.

United Spirits, a subsidiary of global alcoholic beverages brand Diageo, recently discussed the industry’s shift toward value expansion over volume expansion in an interview with CNBC TV18.

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