For allegedly availing ineligible Input Tax Credit (ITC), Vedanta Ltd. has been slapped with Goods and Services Tax (GST) penalties totalling ₹141.36 crores. The Mumbai-listed company has received two GST notices demanding the tax amount, applicable interest, and penalties.
GST Penalties
- For ineligible ITC claims spanning 2017-18 to 2019-20 Rs 55.30 crore penalty has been imposed.
- For claiming and using the ineligible GST ITC in the 2017-18 fiscal year, an Rs 86.06 penalty is been levied.
To contest these orders Vedanta has announced the plans citing that it stayed hopeful towards a favorable result and does not anticipate any material financial impact from the ruling.
Vedanta is in a statutory battle over GST statutory. GST council in October suggested an 18% tax on a parent company’s corporate guarantee to its subsidiary and does not have the personal guarantees of the director.
Subsequently the same was reported and a circular was furnished, discovering statutory challenges from corporations like Vedanta.
The Bombay High Court in January 2024 stayed the GST circular on corporate guarantees answering to a petition furnished via Vedanta. Telangana and Punjab & Haryana High Courts have furnished similar stays.
Vedanta has been permitted by the HC to revise its petition contesting the retrospective application of the rule which set the valuation of such guarantees at 1% per annum of the loan guaranteed, w.e.f October 2023.
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The revision of the petition has been authorized by a division bench of justices Firdosh P. Pooniwalla and B.P. Colabawalla and reaffirmed that a holding company’s corporate guarantee to its subsidiary is not a ‘supply’ under GST law.
