Akzo Nobel India Limited, a key player in the Indian paints and coatings sector, has disclosed a significant development in a pending litigation case under GST laws, as required under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company announced that it has received an Order-in-Appeal dated 17 July 2025, which was officially received on 31 July 2025, from the Commissioner of Appeals, Telangana GST Department.

This development pertains to a long-standing tax demand case initiated by the Telangana GST authorities, initially arising from a Show Cause Notice (SCN) dated 31 August 2023. The SCN alleged a tax liability of ₹35.61 crores, invoking Sections 73 and 74 of the CGST Act, 2017 and TSGST Act, 2017, in addition to Section 122 of the CGST Act. The company was subsequently issued an order dated 30 December 2023, which imposed a reduced demand of ₹21.85 lakhs, comprising ₹19.87 lakhs as tax and ₹1.98 lakhs as penalty.

However, this relief granted to Akzo Nobel did not mark the end of the proceedings. The GST Assessing Officer filed an appeal under Rule 109(1) of the CGST Rules, contesting the relief and seeking reinstatement of a higher tax demand amounting to ₹2.9 crores, including interest and penalties.

In response, Akzo Nobel submitted cross-objections, urging the appellate authority to dismiss the appeal filed by the GST department. The company stood its ground, stating that the initial relief was justified and lawful, and that the department's reassessment was unwarranted.

However, in a setback for the company, the Commissioner of Appeals upheld the appeal filed by the tax department. The Order-in-Appeal dated 17 July 2025 endorses the tax department’s position, thus reviving the ₹2.9 crore liability, which includes interest and penalty components.

The company officially received this appellate order on 31 July 2025 at 12:30 PM, and it has confirmed that it is currently in the process of preparing a formal response. Akzo Nobel has assured investors and stakeholders that it will respond within the stipulated time frame outlined in the appellate order. The company has not yet disclosed the specific steps it plans to take next, such as appealing to a higher tribunal or initiating a settlement process.

As per the SEBI circular SEBI/HO/CFD/CFDPoD1/P/CIR/2023/123 dated 13 July 2023, Akzo Nobel is obligated to regularly update the stock exchanges on the status of this litigation until its final resolution.

Importantly, the company has clarified that this litigation does not involve any of its Key Managerial Personnel (KMP), promoters, or persons in control, making this strictly a corporate-level tax issue.

At this point, there is no settlement in the case. Therefore, details such as settlement terms, compensation, or any financial impact due to resolution do not apply. However, the revival of the ₹2.9 crore tax demand does have potential financial implications, which may reflect in future quarterly or annual financial statements, should the liability be enforced without further relief.

Akzo Nobel has also stated that further details, including next legal steps, submission status, and any new developments, will be disclosed transparently as required under SEBI LODR regulations.

This episode underscores the increasing scrutiny that listed entities face under the evolving GST compliance landscape in India. As a responsible corporate, Akzo Nobel has reiterated its commitment to compliance and disclosure obligations, assuring shareholders of its proactive legal management strategy.

Summary of Key Details from Annexure-1:

• Original Tax Demand (per SCN): ₹35.61 crores

• Order dated 30.12.2023: Relief granted; reduced demand to ₹21.85 lakhs

• Appeal by GST Department: Challenging reduced liability, seeking ₹2.9 crores

• Commissioner’s Order-in-Appeal (dated 17.07.2025): Appeal upheld

• Company’s Status: Preparing response within stipulated time

With the latest appellate decision not in its favor, Akzo Nobel India Limited finds itself back in the litigation loop, having to navigate a complex regulatory environment while safeguarding its financial integrity and shareholder interests. Further updates are expected in the coming months depending on the outcome of its forthcoming submissions.

The Upcoming IPOs in this week and coming weeks are BLT Logistics, Bhadora Industries, Highway Infrastructure, Parth Electricals & Engineering, Jyoti Global Plast, Essex Marine, Aaradhya Disposal Industries.

The Current active IPO are Flysbs Aviation, Cash Ur Drive Marketing, Renol Polychem, B.D. Industries (Pune), NSDL, Takyon Networks, Mehul Colours, M&B Engineering, Sri Lotus Developers & Realty.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.