The Hon’ble Supreme Court of India has ruled in favor of Tata Steel Limited, quashing a demand of ₹890,52,10,202 in tax and an equal amount in penalty, totaling over ₹1,781 crore. The decision pertains to an Input Tax Credit (ITC) dispute for the financial years FY2018-19 through FY2020-21. This favorable ruling significantly reduces the company’s potential financial liabilities related to the tax dispute.
Supreme Court Upholds Tata Steel’s Appeal in Major Tax Case
In a significant development for Tata Steel Limited, the Hon’ble Supreme Court of India has delivered a final judgment in its favor, quashing a substantial tax demand and penalty. The dispute, which involved the alleged irregular availing of Input Tax Credit (ITC), had a potential financial impact exceeding ₹1,781 crore.
Background of the Dispute
The matter originated from a Demand cum Show Cause Notice issued on June 13, 2025, by the Office of the Commissioner of CGST and Central Excise, Jamshedpur. The notice alleged irregular ITC availing for the period FY2018-19 through FY2020-21, proposing a demand of ₹890,52,10,202, along with applicable interest and penalty. The company contested the demand, asserting that the ITC claimed was permissible under GST laws and that the notice was issued without jurisdiction and was barred by limitation.
Legal Proceedings and Supreme Court Ruling
Following the initial proceedings and an adverse order from the Adjudicating Authority on December 26, 2025, Tata Steel pursued legal recourse. A Writ Petition was filed before the Hon’ble High Court of Jharkhand on February 24, 2026, which was disposed of on April 23, 2026, granting liberty to approach the Appellate Authority. Aggrieved by this, the Company filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court. The Supreme Court heard the SLP and, on August 25, 2026, pronounced its final judgment. The apex court allowed the appeal, setting aside the Show Cause Notice dated June 13, 2025, and the Order-in-Original dated December 26, 2025. The court granted liberty to the Tax Department to initiate proceedings under Section 74 of the CGST Act, subject to foundational facts and an order being passed before February 28, 2027.
Final Outcome
Consequently, the tax demand of ₹890,52,10,202, the penalty of ₹890,52,10,202, and the applicable interest thereon stand quashed. This outcome provides significant relief to Tata Steel Limited, eliminating a substantial potential financial liability.
Source: BSE
