Nestle India and Asian Paints Receive Tax Notices for Discrepancies in GST Payment for FY18

Nestle India and Asian Paints have joined the growing list of fast-moving consumer goods (FMCG) companies that have been sent tax notices for differences in the payment of Goods and Services Tax (GST) for the financial year 2017-18.

Nestle India announced on Tuesday through an exchange filing that a tax demand notice of Rs 15.01 lakh had been issued by the Commissioner of State Tax, Patliputra, central Bihar, for the financial year 2017-18.

The company also stated that the tax authority had imposed a penalty of Rs1.5 lakh along with the applicable interest.

Asian Paints, on Tuesday, announced that it had received three GST demand tax notices from the Andhra Pradesh tax authority, amounting to Rs 2.07 crore, including interest and penalties. This follows a notice received from Chennai authorities on Monday.

Meanwhile, Hindustan Unilever (HUL), the country’s largest FMCG company, revealed on Monday that it had received notices from five different states, totalling Rs 447 crore.

All the companies have stated that the notices have not had any material impact on their financial, operational, or other activities. Nestle and HUL have also expressed their intention to question the orders before the appellate authority.

Experts in indirect tax suggest that there may be a surge in tax notices in the coming months as the deadlines for filing orders related to mismatched tax payments, wrongful tax credit claims, and discrepancies in tax returns for the financial years 2019-20 and 2020-21 expire on April 30 and August 31, respectively.

The GST is a new concept in the country’s taxation system, and companies and tax authorities may have different interpretations of transactions in the initial years of its implementation. The recent tax notices issued are for the financial year 2017-18, and the deadline for filing orders, which are essentially show-cause-cum-tax-demand notices, was December 31, 2023, explained a tax expert.

The expert further added that it is expected that there will be more tax notices sent since tax authorities are investigating transactions and returns for the next two years.

Dabur India recently received a tax demand notice of Rs 61.89 lakh from the senior joint commissioner, state tax, LTU, West Bengal. This notice was the second one issued to the company within three months. In October, Dabur India received a tax demand notice of Rs320.6 crore from the Directorate General of Goods & Services Tax Intelligence, Gurugram unit.

Read Also: Demand Notices to Sectors by GST Authorities Raise Questions

In contrast, mattress maker Sheela Foam announced on Monday that it had obtained a favourable order regarding a tax demand of Rs 20.26 crore and an equivalent penalty from the Commissioner of GST Intelligence, Gautam Budh Nagar, Greater Noida. The majority of the tax demands were dropped by the Joint Commissioner, Central GST Commissionerate, Gautam Budh Nagar, Greater Noida, with only a tax demand of Rs 3.25 lakh plus interest and a penalty of Rs 32,510.