Vedanta Ltd, a global mining conglomerate, has been served with a Goods and Services Tax (GST) demand of Rs. 141.36 crore by the Indian tax authorities for allegedly availing ineligible Input Tax Credit (ITC). The company plans to challenge these notices, stating that it expects a favorable outcome and does not anticipates any significant financial impact from the ruling.
The tax authorities have slapped two separate notices demanding penalties, worth Rs. 86.06 crore for the 2017-18 financial year and Rs. 55.30 crore for ineligible ITC claims between 2017-18 and 2019-20. Vedanta has already been engaged in a legal battle over GST regulations, including a recent dispute over a GST circular on corporate guarantees.
In October 2023, the GST Council recommended an 18% tax on parent company guarantees to its subsidiaries, sparking legal challenges from companies like Vedanta. The Bombay High Court has already stayed the GST circular, and Vedanta has been allowed to amend its petition, challenging the retrospective application of the rule.
Despite the tax demand, Vedanta remains optimistic about a favorable outcome and does not anticipate any material financial impact. Given its history of legal challenges against GST regulations, it will undoubtedly continue to engage with the authorities to ensure its interests are protected. Ultimately, the outcome will depend on the interpretation of the GST laws and the court’s decision, which may have significant implications for the company’s financial position and overall business operations.