• Notification Date: 05-01-2024
• Notification No: N/A

FMCG Firms receive GST Tax Notices in bulk

Nestle India and Asian Paints joined an increasing list of fast-moving consumer goods (FMCG) companies to receive tax notices for discrepancies in payment of Goods & Services Tax (GST) for FY17-18. 

On Tuesday, Nestle said in an exchange filing that it had received a tax demand notice for Rs15.01 lakh from the Commissioner of State Tax, Pataliputra, central Bihar, for FY17-18. 

The tax authority had also levied a penalty of Rs 1.5 lakh on the company, in addition to applicable interest for the period, Nestle India said. 

Asian Paints, meanwhile, said on Tuesday it had received three orders for GST demand, totalling `2.07 crore from the Andhra Pradesh tax authority. The total amount includes interest and penalties. This follows a notice on Monday from Chennai authorities. 

Monday also saw Hindustan Unilever (HUL), the country’s largest FMCG company, disclose that it had received five notices amounting to Rs 447 crore from five different states. 

All the companies said that there was no material impact on financial, operations or other activities due to the notices. Nestle and HUL also said they would challenge the orders before the appellate authority. 

Indirect tax experts say that there could be a flurry of tax notices in the months ahead, as the deadline for filing orders for mismatch in tax payment, wrongful ailment of tax credits and discrepancies in tax returns filed for FY19 and FY20 lapses on April 30 and August 31respectively. 

“GST is a new tax regime and there will be different positions that companies and tax authorities will take with respect to transactions in the initial years of its implementation. The tax notices that have been issued of late are for the 2017-18 financial year, whose deadline for filing orders, which are basically show-cause-cum-tax-demand notices, lapsed on December 31, 2023,” said Sohrab Bararia, partner, tax at Grant Thornton Bharat, said. 

“There will be more tax notices as tax authorities scrutinise transactions and returns for the next two years,” he says. 

Last week, Dabur India received a tax demand notice of `61.89 lakh by the senior joint commissioner, state tax, LTU, West Bengal, which was the second notice for the company in three months. 

In October, the company had received a `320.6 crore tax demand notice from the Directorate General of Goods & Services Tax Intelligence, Gurugram unit. 

Mattress maker Sheela Foam, on the other hand, informed the stock exchanges on Monday that it had received a favourable order for the tax demand of `20.26 crore and an equivalent penalty by the Commissioner of GST Intelligence, Gautam Budh Nagar, Greater Noida after challenging the matter with higher tax authorities. 

The Joint Commissioner, Central GST Commissionerate, Gautam Budh Nagar, Greater Noida dropped most of the tax demands, Sheela Foam said, confirming a tax demand of `3.25 lakh plus interest and a penalty of `32,510 only.