Tata Steel has been served a show cause-cum-demand notice by tax authorities regarding alleged irregular input tax credit claims worth over ₹1,007 crore spanning fiscal years 2018-19 to 2022-23. The steelmaker disclosed this development to stock exchanges on Sunday, clarifying that the actual financial exposure stands significantly lower at ₹493.35 crore after accounting for already-paid GST amounts.
The notice dated June 27 from the Office of the Commissioner (Audit), Central Tax, Ranchi, alleges contraventions under Section 74(1) of the CGST/SGST Acts, 2017 and Section 20 of the IGST Act, 2017. Tata Steel has been summoned to appear before the Additional/Joint Commissioner of Central GST & Central Excise in Jamshedpur within 30 days.
The company must respond to allegations of irregular input tax credit availment across five consecutive financial years, with authorities questioning the legitimacy of ITC claims totaling ₹1,007 crore.
Tata Steel has categorically rejected the allegations, stating the notice 'has no merits' and confirming it will submit a comprehensive response within the stipulated deadline. The company emphasized that ₹514.19 crore in GST has already been paid during normal business operations, which authorities propose to appropriate against the demand.
This adjustment reduces the alleged exposure to ₹493.35 crore. Tata Steel assured stakeholders that the notice would have no impact on financial, operational, or other business activities, maintaining confidence in its tax compliance procedures.
Input tax credit (ITC) under the GST framework allows businesses to offset taxes paid on raw materials, services, and other inputs against their output tax liabilities. This mechanism prevents cascading taxation and ensures businesses pay tax only on value addition.
However, ITC claims must comply with specific provisions and documentation requirements. Tax authorities regularly audit ITC availments to prevent irregular claims that could result in revenue loss. Companies must maintain proper invoices, receipts, and compliance records to support their ITC claims during such audits.
While Tata Steel faces significant tax scrutiny over alleged ITC irregularities, the company remains confident about challenging the notice through proper legal channels. The actual financial exposure of ₹493.35 crore, though substantial, appears manageable for the steel giant. This case highlights the importance of meticulous GST compliance and documentation for large corporations operating under India's complex tax framework.