Suzlon Energy has announced a favorable resolution in a service tax dispute. The Commissioner of Central Excise and Service Tax had levied a penalty of ₹21,92,23,767. However, the Honourable CESTAT, Mumbai, has now reduced this penalty to Nil. The dispute pertained to the classification of designs and drawings imported under Product Development & Purchase Agreements. This decision significantly reduces the company’s contingent liabilities.
Favorable Tax Dispute Resolution
Suzlon Energy has achieved a positive outcome regarding a long-standing service tax dispute. The issue revolved around the classification of designs and drawings imported under Product Development & Purchase Agreements, with an initial demand of ₹101.92 Crores (including tax, penalty, and interest).
Penalty Reduction Details
Initially, the Commissioner of Central Excise and Service Tax, Pune-III Commissionerate, had imposed service tax on certain transactions conducted between 2007 and 2011, along with a penalty of ₹21,92,23,767. Suzlon Energy contested this levy by filing appeals with the Honourable CESTAT, Mumbai.
CESTAT Order
The Honourable CESTAT, Mumbai, after referral from the Honourable Supreme Court, has now disposed of the matter, ruling in favor of Suzlon Energy. The order, dated December 10, 2025, allows the appeals, reducing the penalty from ₹21,92,23,767 to Nil. The appeals were granted on both merits and time limitation grounds.
Impact on Contingent Liability
This favorable outcome will reduce the company’s contingent liability by ₹101.92 Crores. This announcement provides valuable information for the company’s members and the public.
Source: BSE
