Aurobindo Pharma has disclosed that the Goods & Service Tax Department has issued orders demanding the recovery of refunds previously granted to the Company. The total disputed amount stands at Rs. 169,83,61,326/-, covering tax and penalty components related to ITC refunds claimed by its EOU Unit 3 for the period spanning September 2022 to December 2022. The Company maintains the claim was valid and intends to file an appeal against the demand confirmed on February 18, 2026.
Disclosure of GST Refund Recovery Orders
Aurobindo Pharma Limited has formally notified the stock exchanges regarding the receipt of orders from the Additional Commissioner of Central Tax, Ranga Reddy GST Commissionerate, Hyderabad. These orders relate to the alleged erroneous refund of accumulated Input Tax Credit (ITC) sanctioned to the Company’s EOU Unit 3 under Rule 89 of the CGST Rules for the months of September 2022 to December 2022. The disclosure was made following communication received by the Company on February 18, 2026.
Total Disputed Financial Quantum
The aggregate disputed amount detailed in the four orders issued by the Authority amounts to Rs. 169,83,61,326/-. This figure is broken down into the GST component of Rs. 84,91,80,663/- and an equal penalty component of Rs. 84,91,80,663/-.
Background of the Dispute
The refund was originally claimed by the EOU Unit 3 concerning Zero-Rated Supply of goods made without payment of Tax under a Letter of Undertaking (LUT). The Department sanctioned the refunds following verification and acceptance of the Company’s declaration that no domestic supply of exported goods occurred from that Unit. However, the Department subsequently challenged the initial sanction orders before the Deputy Commissioner (Appeals, Hyd.) between December 2021 and March 2023, arguing that similar domestic products manufactured by others should have impacted the eligible refund value.
The Learned Deputy Commissioner (Appeals) ruled in favor of the GST Department in 2023. The Company responded by filing Writ Petitions before the Hon’ble Telangana High Court, challenging the Appellate Order-in-Appeal (OIA) and the validity of Rule 89(4)(C) of the CGST Rules, which remain pending.
Company’s Defense and Next Steps
Aurobindo contends that its exports from EOU Unit 3 involve only scrap sales domestically, not comparable finished goods. Furthermore, the Company referenced a favorable ruling from the Hon’ble High Court of Karnataka in M/s. Tonbo Imaging India Pvt Ltd (February 16, 2023), which quashed the condition comparing domestic value with exported goods as ultra vires the GST Act. Despite submitting this defense, the Department confirmed the demand, interest, and imposed an equal penalty.
To safeguard its interests, the Department issued protective demand Show Cause Notices (SCNs) for the months of September to December 2022. The Company plans to file an appeal before the Commissioner of Central Tax (Appeals), Hyderabad, against the confirmed demand.
Material Impact Assessment
The Company has explicitly stated that there is no material impact on its financials or operations resulting from these specific orders, as the matter is subject to ongoing legal proceedings at the appellate stage.
Source: BSE
