Aarti Drugs Limited disclosed that the GST Department has filed a Special Leave Petition (SLP) in the Supreme Court of India, challenging a previous order by the Bombay High Court. The High Court had previously set aside an order by the CGST & C.Ex. Authority regarding alleged demands, including IGST refunds and proposed liabilities. The financial impact remains uncertain as the matter is currently sub-judice before the Supreme Court.
Update on Ongoing Tax Litigation
Aarti Drugs Limited provided an update regarding litigation involving the GST Department. This announcement follows an earlier intimation dated October 6, 2025, concerning an order passed by the Hon’ble High Court at Bombay. The High Court had allowed a Writ Petition, effectively setting aside a prior order issued by the CGST & C.Ex. Authority.
The company now confirms that the GST Department has formally challenged this favorable High Court order by filing a Special Leave Petition before the Hon’ble Supreme Court of India.
Background of the Dispute
The initial dispute stemmed from a Show Cause Notice related to the alleged contravention of Rule 96(10) of the CGST Rule. This notice proposed demanding IGST of Rs. 230.70 Crores, along with applicable interest and penalty, covering the Financial Years 2017-18 to FY 2021-22.
Key Elements of the Original Authority Order:
- Demand of erroneous sanctioned IGST refund amounting to Rs. 20.72 Crores under Section 74(9) of the CGST Act, 2017.
- Dropping of demand amounting to Rs. 209.98 Crores under Section 74 of the CGST Act, 2017, read with Section 20 of the IGST Act, 2017.
- Demand of interest at rates prescribed under Section 50(1) of the CGST Act, 2017.
- Imposition of penalty of Rs. 20.72 Crores under Section 74(9) read with Section 122(2)(b) of the CGST Act, 2017.
High Court Intervention and Supreme Court Appeal
The Company had previously filed a writ petition at the High Court challenging the aforementioned demand and penalty order issued by the CGST & C.Ex. Authority. The Hon’ble High Court subsequently passed an order setting aside the said order.
The GST department is now seeking redressal of this setting aside order through the Special Leave Petition filed before the Supreme Court.
Potential Financial Implications
A potential demand has been put forth, which remains subject to the final outcome of the matter before the Hon’ble Supreme Court. The management currently finds it difficult to assess the financial impact on the Company at this stage, as the matter is sub-judice. The Company has affirmed its intent to take appropriate legal steps to defend its position and will update the Stock Exchanges on any material development in the future.
Source: BSE
