Shriram Finance has received an order from the Deputy Commissioner of State Tax, Lucknow, Uttar Pradesh, imposing penalties of Rs. 27,70,732. This action is in response to show-cause cum demand notices against Shriram City Union Finance Limited, which merged with Shriram Finance effective April 1, 2022. The penalties are associated with the Central Goods and Service Tax Act, 2017, and the Integrated Goods and Services Tax Act, 2017.
Tax Penalty Details
Shriram Finance has been notified of penalties totaling Rs. 27,70,732 levied by the Deputy Commissioner of State Tax in Lucknow. The order, received on December 16, 2025, pertains to show cause cum demand notices that were initially issued to Shriram City Union Finance Limited before its amalgamation with Shriram Finance.
Reason for Penalties
The penalties are based on Section 73 of the Central Goods and Service Tax Act, 2017, in conjunction with the Integrated Goods and Services Tax Act, 2017. The issues leading to the demand are:
* Short payment of GST due to a difference in applicable tax rate on Scrap Sales.* Non-payment of GST under reverse charge on incentives paid to recovery employees.* Claiming of Ineligible Input Tax Credit (‘ITC’) under the provisions of Section 17 of the GST laws.* ITC booked in FY 2020-21 but claimed in FY 2021-22.* Non-submission of supporting sample invoices corresponding to inward supplies as disclosed in Table 8A of GSTR-9.* GST demand has been raised on payments made to individual Direct Selling Agent (DSAs) on which tax was not discharged under the Reverse Charge Mechanism.
Financial Impact
The total tax demand amounts to Rs 2,77,07,316, and along with interest of Rs.1,88,56,157 and a penalty of Rs. 27,70,732, has been levied.
Shriram Finance states that there is no immediate material impact on the company’s financials or operations. The company is seeking an opinion from its tax consultant regarding the Uttar Pradesh state demand order reference no. ZD0912252909802, dated December 16, 2025.
Source: BSE