Indian Overseas Bank (IOB) has disclosed the receipt of an order imposing a penalty of Rs. 8,23,79,584/- under Section 74(9) of the CGST Act, 2017. The penalty relates to transaction consideration received by the Bank while exercising its statutory powers as a Secured Creditor under the SARFAESI Act, 2002, during the transfer of an asset via e-auction in FY 2020-21. The Bank maintains that its actions were statutory enforcement, not a commercial supply, and plans to challenge the order immediately.
Regulatory Disclosure on GST Penalty
Indian Overseas Bank has officially informed the stock exchanges regarding an order received from the Commissioner, Central Tax (Delhi West), Central Goods and Services Tax, Delhi West Commissionerate, on 30.03.2026. This order imposes a significant financial liability on the Bank.
Details of the Imposed Penalty
The core of the communication is an order issued under Section 74(9) of the CGST Act, 2017, which levies a penalty amounting to Rs. 8,23,79,584/-.
Contested Grounds for the Levy
The penalty stems from the consideration received by the Bank for the transfer of a secured asset via e-auction during the financial year 2020-21. The Bank, acting in its capacity as a Secured Creditor under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), contends that this enforcement activity does not constitute a “supply” under GST Law.
- The Department argued that all ingredients of “supply” under Section 7(1)(a) of the CGST Act were met.
- The Department further cited Paragraph 2(a) of Schedule II of the CGST Act, which deems lease or license to occupy land as a supply of service.
- The Bank’s counter-argument is that the transaction is involuntary and statutory, arising from enforcement proceedings, and not a commercial supply undertaken by the Bank.
Bank’s Course of Action and Outlook
The Bank has confirmed its intention to dispute the order. It is currently in the process of filing an appeal before the appropriate forum within the stipulated timelines. The management holds a firm belief that it possesses adequate factual and legal grounds to substantiate its position. Consequently, the Bank expects that the entire penalty will subside, resulting in Nil financial or operational impact on the institution.
Compliance Declaration
In compliance with disclosure requirements, the document is affirmed by Raghuram Mallela, Deputy General Manager/Company Secretary & Compliance Officer, dated 30.03.2026, confirming the details provided are true, correct, and complete to the best of their knowledge.
Source: BSE
