Bombay High Court quashes Rs 2,237-crore GST demand against Larsen & Toubro
- In Reports
- 01:30 PM, Aug 21, 2024
- Myind Staff
Larsen & Toubro (L&T) announced on August 20 that the Bombay High Court has quashed a Goods and Services Tax (GST) demand of Rs 2,237 crore, which had been raised against the company. This decision comes after L&T filed a Writ Petition challenging the demand.
In an exchange filing, L&T disclosed that it had submitted the petition on August 14, 2023, against the show cause notice issued by the Principal Commissioner of GST and Service Tax in Mumbai. The notice pertained to a service tax demand on an erstwhile subsidiary for transactions conducted after a demerger, despite the company having already paid the required taxes. The High Court’s order, received on August 19, ruled in favour of L&T, setting aside the GST authorities' notice.
The dispute dates back to 2018 when the Director General of GST Investigation in Mumbai issued a show cause notice to L&T Finance Ltd on October 18. The notice alleged that additional interest, penal interest, and default interest charged to customers between 2013-14 and 2016-17 were liable to service tax and GST. The Principal Commissioner of CGST, Mumbai, confirmed this notice in February 2020, leading L&T Finance to appeal the order before the Customs Excise and Service Tax Appellate Tribunal.
L&T Finance was initially asked to pay additional GST totalling Rs 394.59 crore, covering various financial years: Rs 39.86 crore for 2013-14, Rs 70.01 crore for 2014-15, Rs 105.02 crore for 2015-16, Rs 143.68 crore for 2016-17, and Rs 36.02 crore for the first quarter of FY18. However, this demand has now been nullified by the High Court's ruling.
In related financial news, Larsen & Toubro reported a 12 percent increase in net profit for the first quarter of FY25. The company’s net profit rose to Rs 2,786 crore for the three months ending June 30, compared to Rs 2,493 crore in the same period last year. However, this result was slightly below market expectations, which had estimated a net profit of Rs 2,876 crore. L&T’s revenue from operations increased by 15 percent, reaching Rs 55,120 crore, surpassing the expected Rs 52,518 crore.
The court’s decision to quash the GST demand represents a significant relief for L&T, potentially reinforcing investor confidence following the company’s recent financial performance. The company continues to be a key player in India's infrastructure and engineering sectors, with its financial health closely watched by market analysts and investors alike.
Image source: Reuters
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