Dabur Receives ₹320.6 Crore GST Demand Notice: Exploring the Company's Response

Introduction:

On October 17, 2023, Dabur, a leading Indian consumer goods company, received a Goods and Service Tax (GST) demand notice for a hefty ₹320.6 crore under Section 74(5) of the CGST Act, 2017. This unexpected development has raised eyebrows in the corporate and financial sectors, and has led to many questions and concerns. In this blog post, we will provide a comprehensive analysis of the GST demand notice, including the reasons behind it, the relevant section of the GST Act, and Dabur's response and next steps.

Why Dabur Received the Demand Notice:

Section 74(5) of the CGST Act, 2017 empowers the proper officer to issue an intimation of tax ascertained as being payable to any person chargeable with tax, where it appears that any tax has not been paid or short-paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax.

In Dabur's case, the specific reason for the demand notice is not yet known. However, it is likely that the GST authorities have identified discrepancies in the company's GST filings or financial transactions during an audit. These discrepancies could involve underpayment of GST, incorrect claims for input tax credit, or other violations of GST regulations.

Under Which Section was the Demand Notice Issued?

As mentioned earlier, the GST demand notice was issued under Section 74(5) of the CGST Act, 2017. This section deals with the issuance of intimation of tax ascertained as being payable.

Dabur's Response and Next Steps:

Dabur has stated that the company is currently reviewing the demand notice and evaluating the next steps.

Conclusion:

Dabur's receipt of a ₹320.6 crore GST demand notice is a significant development, and it will be interesting to see how the company resolves this matter. The outcome of this case could set important precedents in the realm of GST compliance and taxation in India.

Additional Insights:

It is important to note that Dabur is not the only company that has received a GST demand notice under Section 74(5) of the CGST Act, 2017. In recent years, the GST authorities have issued similar notices to a number of other large companies, including Hindustan Unilever, Nestlé India, and ITC.

GST demand notices are often issued based on the results of audits and investigations conducted by the GST authorities. These audits and investigations can take several months or even years to complete.

Once a GST demand notice is issued, the company has a limited amount of time to respond. If the company fails to respond or does not pay the demanded tax amount, the GST authorities can take further action, such as seizing the company's assets or issuing a show-cause notice.

Companies have the right to challenge GST demand notices, and the authorities are required to consider the company's objections before issuing a final order.

Overall, the GST demand notice issued to Dabur is a reminder to all businesses of the importance of GST compliance. Businesses should ensure that they are maintaining accurate GST records and filing their GST returns correctly. If a business does receive a GST demand notice, it is important to seek professional advice and take appropriate action to address the matter.

Disclaimer: The content and information provided in this article are for general informational purposes and should not be considered as legal advice. While reasonable efforts have been made to ensure the accuracy of the information, Pre-Taxes Solutions shall not be liable for any incorrect or outdated information.

If you have any query regarding this circular or any other income tax matter, you can email us: pretaxessolutions@gmail.com. Thank you for reading and stay tuned for more updates!