Akzo Nobel India Limited, one of the leading players in the paints and coatings industry, has officially updated the stock exchanges regarding an important development in a pending litigation case with the Service Tax Department. The disclosure was made in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and communicated to both the BSE and NSE on 30th August 2025.

Background of the Case

The litigation originates from show cause-cum-demand notices issued by the Service Tax Department in Mumbai on 3rd January 2014 and 21st August 2014. These notices covered the period from December 2008 to June 2014, wherein the authorities alleged that the company had wrongfully availed Cenvat credit of service tax on Goods Transport Agency (GTA) services through Input Service Distributor (ISD) invoices. The notices quantified a demand of ₹60,05,712, which included a tax demand of ₹30,02,856, interest, and a penalty of an equal amount.

Akzo Nobel India had duly filed its reply along with supporting documentation to contest the claims. The case has since been under adjudication, with multiple procedural developments over the years.

Latest Development

As per the company’s filing, the matter underwent a de-novo adjudication, and the Joint Commissioner of CGST and CEX, Belapur, Navi Mumbai, issued a demand order dated 31st July 2025, which was formally received by the company on 29th August 2025.

According to this order, the revised demand stands at ₹48,56,366, broken down as follows:

• Tax amount: ₹24,28,183

• Penalty: ₹24,28,183

• Applicable interest: As per rules

This indicates that the authorities have slightly reduced the demand from the earlier notices but continue to press for payment of tax, penalty, and applicable interest.

Company’s Response

Akzo Nobel India has clarified in its regulatory filing that it is currently reviewing the demand order and will be submitting its response and further submissions to the relevant authorities within the legally prescribed timeframe.

The company reiterated that this update is being disclosed to maintain transparency with investors and stakeholders, as required under SEBI regulations and its July 2023 circular on litigation disclosures.

Impact and Next Steps

At present, the company has not provided an assessment of the financial impact of the demand order on its results, since the matter is still pending adjudication at the higher levels of the tax authorities. Investors and analysts will closely watch how the company strategizes its defense, as tax disputes of this nature can potentially lead to prolonged litigation.

Importantly, the disclosure confirms that there is no involvement of key management personnel, promoters, or persons in control in this litigation. The case is limited to tax matters linked to service tax and Cenvat credit utilization.

Investor Communication

By issuing this update, Akzo Nobel India has underlined its commitment to regulatory compliance and transparent communication with stock exchanges. The company has also assured stakeholders that further updates will be shared as and when there are changes in the status of the litigation or if a settlement or resolution is reached.

Broader Industry Context

Tax disputes related to Cenvat credit claims have been common among several corporates in India, especially in the pre-GST regime. Many companies faced litigation over interpretation of eligibility criteria for claiming credits on input services such as transportation. With the shift to GST in 2017, several legacy cases are still being adjudicated under the older tax framework.

For Akzo Nobel India, the outcome of this case will not only impact its short-term financial exposure but could also serve as a precedent for similar disputes in the paints and coatings industry.

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