Tata Steel Limited has received a Rs. 161.51 crore penalty from the GST Intelligence Directorate for allegedly availing irregular input tax credit on compensation cess through its merged entity, Tata Steel Long Products. The company disputes the charge, plans to respond legally within the deadline, and states the notice will not impact its financial or operational activities.
The Jamshedpur unit of the GST Intelligence Department has fined Tata Steel Limited over Rs. 161.51 crore for allegedly wrongly claiming Input Tax Credit (ITC) on compensation cess.
The penalty pertains to Tata Steel Long Products Limited (TSLP), which officially merged with Tata Steel on 15th November, 2023. According to the Directorate General of GST Intelligence (DGGI), TSLP irregularly claimed ITC on compensation cess during the period between April 2019 and February 2021, which is in alleged violation of multiple provisions under the Goods and Services Tax (GST) laws.
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Legal Provisions Cited
The notice issued by the authorities mentions contraventions of:
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Section 17(2) of the Central Goods and Services Tax (CGST) Act, 2017
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Rule 42 of the CGST Rules, 2017
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Section 11 of the Goods and Services Tax (Compensation to States) Act, 2017
The core allegation is that TSLP availed ineligible ITC on compensation cess for taxable supplies, which was disallowed under the prevailing GST regulations.
Tata Steel Responds
In an official statement, Tata Steel has contested the claims, asserting that the Show Cause Notice (SCN) issued by the DGGI lacks merit. The company has confirmed that it will present its response within the stipulated timeframe before the appropriate judicial authority or tribunal.
“We believe the SCN is not sustainable and will not have any adverse impact on our financial, operational, or other business activities,” Tata Steel stated.
Additionally, Tata Steel has informed both the Securities and Exchange Board of India (SEBI) and the Bombay Stock Exchange (BSE) of the development, in line with regulatory disclosure norms.
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No Operational Impact Expected
Despite the hefty penalty demand, Tata Steel has made it clear that the notice will not impact its day-to-day operations or financial stability. The company, one of India’s largest integrated steel producers, continues to maintain that it has complied with applicable tax laws and will take all necessary legal recourse to resolve the matter.
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