Jubilant Pharmova Limited, a leading pharmaceutical company, has received a GST Show Cause Notice proposing a total demand of ₹87.31 crore in connection with certain alleged tax and input tax credit (ITC) discrepancies for the financial year 2022-23.
The notice has been issued by the Assistant Commissioner of Commercial Taxes (Enforcement)-4, Mysore, and proposes recovery of GST along with applicable interest and penalty. The company has stated that it intends to contest the proposed demand and will submit a detailed response before the concerned tax authority.
GST Demand of ₹87.31 Crore Proposed
According to the details disclosed by Jubilant Pharmova, the proposed demand consists of three major components:
- GST/Tax: ₹33.58 crore
- Interest: ₹20.15 crore
- Penalty: ₹33.58 crore
- Total proposed demand: ₹87.31 crore
The proceedings relate to various issues identified by the tax authorities concerning the company’s GST compliance for FY 2022-23.
Importantly, the amount mentioned in the notice represents a proposed demand at the show cause notice stage and does not constitute a final determination of tax liability.
Allegations Relating to Input Tax Credit
One of the principal issues raised in the GST proceedings concerns the alleged availment of ineligible or excess Input Tax Credit (ITC).
Under the GST framework, taxpayers are required to satisfy prescribed conditions before claiming ITC on inward supplies. Any credit alleged to have been availed contrary to the provisions of the CGST Act and applicable rules may result in tax proceedings, together with interest and penalty depending upon the nature and circumstances of the alleged violation.
The authorities have reportedly raised questions regarding the ITC claimed by Jubilant Pharmova during the relevant financial year.
The company, however, disputes the allegations and maintains that the proposed demand is not sustainable on facts or in law.
Differential Tax Liability Based on E-Way Bill Records
Another issue reportedly forming part of the notice relates to an alleged differential GST liability based on E-way bill data.
E-way bills contain information relating to the movement of goods and are increasingly used by GST authorities as a data source for identifying potential discrepancies between reported transactions and movement records.
However, a difference between E-way bill information and GST returns does not, by itself, necessarily establish an undisclosed taxable supply or determine the precise tax liability of a taxpayer. The underlying transactions, invoices, accounting records, returns and other relevant documents may need to be examined before arriving at a final conclusion.
Jubilant Pharmova to Contest the Proceedings
Jubilant Pharmova has stated that it is taking the necessary steps to file a comprehensive reply before the Assistant Commissioner of Commercial Taxes (Enforcement)-4, Mysore.
The company has reportedly described the allegations in the Show Cause Notice as factually and legally incorrect and unsustainable in law. It has also stated that the notice was issued without properly verifying the relevant facts and examining the issues involved.
The company further contends that it was not provided an adequate opportunity before the issuance of the notice.
Jubilant Pharmova intends to place its detailed submissions and documentary evidence before the adjudicating authority and contest the proposed demand on merits.
No Material Financial or Operational Impact Expected
Despite the sizeable amount involved, Jubilant Pharmova has indicated that it does not expect any financial or operational impact from the matter at this stage.
The company’s position is that it has a strong case and that the proposed demand will be appropriately contested during the adjudication proceedings.
The final outcome will depend upon the submissions made by the company, examination of documentary evidence and the findings of the competent GST authority.
Key Takeaway for GST Taxpayers
The case highlights the growing importance of reconciliation of GST returns, Input Tax Credit records, invoices, books of account and E-way bill data.
Businesses, particularly those having large-scale operations and significant inter-State movement of goods, should periodically undertake detailed reconciliations to identify and resolve potential differences before they result in GST notices or litigation.
It is also important for taxpayers to respond comprehensively to a GST Show Cause Notice, addressing each allegation with appropriate legal submissions and supporting documentary evidence.
At present, the ₹87.31 crore amount is only a proposed GST demand, and Jubilant Pharmova has made it clear that it will contest the proceedings before the concerned authority.