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Tata Steel, one of India’s leading steel manufacturers, has come under scrutiny from GST authorities over alleged irregularities in claiming input tax credit (ITC). The company disclosed on June 29, 2025, that it received a show cause-cum-demand notice from the Office of the Commissioner (Audit), Central Tax, Ranchi, related to the financial years 2018-19 through 2022-23.
Details of the GST Notice
The notice, dated June 27, 2025, directs Tata Steel to explain within 30 days why Goods and Services Tax (GST) amounting to Rs 1,007.54 crore should not be recovered. The tax authorities allege that Tata Steel availed input tax credit in violation of Section 74(1) of the Central Goods and Services Tax (CGST)/State GST Act, 2017, read in conjunction with Section 20 of the Integrated GST (IGST) Act.
Input tax credit allows businesses to reduce their output tax liability by claiming credit for GST paid on business inputs. However, the improper or irregular availment of such credits is subject to rigorous scrutiny and can attract penalties and recovery actions.
Tata Steel’s Response and Financial Impact
In a regulatory filing to the stock exchanges, Tata Steel clarified that it has already paid Rs 514.19 crore in GST during the relevant period as part of its normal business operations. The company noted that the amount in question will be adjusted against this already paid GST, bringing the net alleged exposure down to Rs 493.35 crore.
Tata Steel firmly stated that it believes the show cause notice lacks merit and affirmed its intention to submit detailed responses and clarifications within the stipulated 30-day deadline.
Importantly, the company emphasized that the notice has no impact on its financial results, operational activities, or ongoing business.
Broader Context on GST and ITC Scrutiny
The Goods and Services Tax regime, implemented in India since July 2017, allows registered businesses to claim input tax credits on eligible purchases. This mechanism prevents the cascading effect of taxes and reduces the overall tax burden.
However, the misuse or erroneous claims of ITC have been a focus area for tax authorities. Over the years, the GST department has intensified audits and investigations to curb fraudulent or improper credit claims. Notices such as the one issued to Tata Steel are part of these enforcement efforts to ensure compliance and safeguard revenue.
What’s Next?
Tata Steel is expected to engage with the tax authorities by furnishing the necessary explanations and documentary evidence supporting its claim to the input tax credits. The final outcome will depend on the authorities’ review of the submissions and any further legal or administrative proceedings that may follow.
For stakeholders and investors, Tata Steel’s assurance that the notice does not affect its financial or operational performance may provide some reassurance amidst the ongoing tax probe.
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