GST Shocker: Tata Steel Hit with Rs. 890 Cr Demand Over Input Tax Credit:

GST Shocker: Tata Steel Hit with Rs. 890 Cr Demand Over Input Tax Credit

Tata Steel Limited has issued a regulatory filing to the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), under Regulations 30 and 51 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, informing them that it has received a legal notice dated June 24, 2025, from the Office of the Commissioner of CGST and Central Excise, Jamshedpur. The notice was initially issued on June 13, 2025, outlining the issue in the tax filings of the company for the financial years 2018-19 to 2020-21. Majorly, the case is related to the irregular or wrong use of Input Tax Credit (ITC) under the Central Goods and Services Tax Act (CGST), 2017, and the Integrated Goods and Services Tax Act (IGST), 2017. The Income Tax Credit (ITC) is a mechanism that permits businesses to reduce the amount of tax they have already paid on their purchases from the tax they need to pay when they sell their products. According to the tax department, the company is alleged to have wrongly claimed the Income Tax Credit (ITC) of a total of Rs. 890.52 crore consistently for three financial years and has violated Sections 16 and 41 of the CGST Act, which lay down the conditions for claiming such credits. Now, through an official notice, the tax department is asking the company for a "show cause" notice. This deals with why a particular action should not be taken against the company. Here, Tata Steel was required to issue the show cause notice addressing the adjudicating authority. The company is required to show cause within 30 days of receiving the notice (i.e., by around July 24, 2025) as to why:

• ITC of Rs. 890.52 crore under Section 74(1) of the CGST/SGST Acts was wrongly claimed by the company for the period FY2018-19 through FY2020-21.
• The company should not have to pay interest on this amount as per Section 50, which allows the government to charge interest on tax that was not paid or wrongly claimed.
• The company should not be fined a penalty under Section 74 for wrongly claiming this tax credit.
• Basically, Tata Steel has to prove why they shouldn’t have to pay back the money, the interest, or the penalty.

This is its response: The company stated that it believes the notice "has no merit," meaning the company believes that the department's claim is unjustified, and it is planning to submit its explanation with supporting documents within the specified due date. Tata Steel Limited has confirmed that the action will not impact their financial, operational, or other day-to-day business activities.