Alkem Laboratories Limited, a leading Indian pharmaceutical company, has received an order from the GST authorities confirming a tax demand of over Rs. 35 crore. The order, passed by the Commissioner (Appeals) – II, CGST and Central Excise, Mumbai, relates to the period from July 2017 to March 2022 and includes a penalty of Rs. 3.51 crore and applicable interest. The dispute centers on Input Tax Credit (ITC), which allows businesses to reduce their tax liability on sales by claiming credit for taxes already paid on inputs.
The GST department alleges that Alkem claimed ITC twice in its monthly return filings, while the same credits were not reflected in the government’s reconciliation statement. As a result, the department denied the ITC and raised the demand. Alkem Laboratories disagrees with the findings and plans to contest the order through appropriate legal action, including filing an appeal. The company believes it has strong factual and legal grounds to defend its case.
Despite the tax demand, Alkem Laboratories does not expect an immediate cash outflow, as it has a sufficient input tax credit balance available, apart from the disputed amount. This means the company can adjust the liability if required while continuing to fight the case through legal remedies. The outcome of this GST dispute will now depend on the company’s appeal and further legal proceedings.
Alkem Laboratories is known for its wide range of generic and branded medicines and is one of India’s leading pharmaceutical companies. The company has stated that there is no material impact on its financial or operational performance as a result of the order. The case highlights the importance of accurate and transparent reporting of ITC claims to avoid disputes with tax authorities.
The GST department’s order may have implications for other companies that claim ITC, and it is essential for businesses to ensure that their ITC claims are accurate and reflected in the government’s reconciliation statement. Alkem Laboratories’ decision to contest the order and appeal the decision may provide clarity on the interpretation of ITC rules and regulations. The outcome of this case will be closely watched by the pharmaceutical industry and tax experts.