GST: Sapphire Foods India Faces Penalty of Rs. 30.74 Million, Reviewing Order

Sapphire Foods India Limited has issued a regulatory filing to the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), informing them that it has received a dismissal order u/s 107(11) of CGST Act 2017 from the GST appeals department, Joint Commissioner of Commercial Tax, (Appeals)-8 LGSTO 040 / DGSTO-4, Bengaluru, Karnataka. The company issued the disclosure under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

According to the issued dismissal order dated June 30, 2025, the department has confirmed a demand of INR 30.74 million (includes tax: INR 17.38 million, interest: INR 11.62 million, and penalty: INR 1.74 million) on the company.

The matter is related to the financial year 2019-20. In accordance with the tax authority, the company is alleged to have wrongly used eligible Input Tax Credit (ITC) after November 14, 2017, which is not permitted as per the rules. Therefore, the department disallowed the tax credit claim made by the company, leading to the demand for recovery of tax, interest, and penalty. In conclusion, the company filed an appeal challenging the disallowance; however, presently the appeal is dismissed.

Even after suffering from a huge amount of tax penalty, the company has stated that there is no material impact on its financial, operational, and other activities. Moreover, the company has stated that it is not satisfied with the order and is currently reviewing the dismissal order issued by the GST department and is considering further challenging the order before appropriate legal forums, such as a higher appellate authority or a court.

Finally, the company has mentioned that it is currently reviewing the dismissal order and is likely to challenge it further at appropriate legal forums, such as a higher appellate authority or a court. This means the company has not accepted the order as final and is planning to continue its legal fight to overturn or reduce the tax demand.