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Alkem Laboratories Faces ₹10.43 Crore GST Demand Order for FY 2017-2021
Team Finance Saathi
07/Jan/2025
What's covered under the Article:
- Details of the GST demand order and penalty issued by the GST Authority in Panchkula.
- Alkem’s response and intention to contest the allegations.
- The potential impact on the company’s financials and operations.
Alkem Laboratories has recently disclosed the receipt of an order passed by the statutory authority under the Goods and Services Tax (GST) Act, 2017, concerning its GST compliance for the period from FY 2017-2018 to 2020-2021. The order demands a payment of Rs. 5.21 crore in GST along with an equal amount as a penalty, and applicable interest under the Integrated Goods and Services Tax (IGST) Act, 2017, Central Goods and Services Tax (CGST) Act, 2017, and the State Goods and Services Tax (SGST) Act, 2017.
The demand order was issued by the Additional Commissioner, Central GST in Panchkula and was received by Alkem Laboratories on 6th January 2025. This action stems from the alleged excess availment of GST Input Tax Credit (ITC), a claim that the company firmly disagrees with. Alkem Laboratories has already indicated its intention to contest the demand and is in the process of taking appropriate actions, including filing an appeal against the order.
Despite the legal challenge, the company has emphasized that there is no material financial or operational impact on its activities. The company is confident that the ongoing legal actions will be handled appropriately and anticipates no significant disruption to its business operations.
This GST demand order is part of the company’s larger efforts to maintain transparency and adhere to regulatory requirements, as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR Regulations). In compliance with these regulations, the company has provided all required details in this disclosure, which can also be accessed on its official website, Alkem Laboratories.
The issue primarily revolves around the excess claim of GST Input Tax Credit (ITC), which is at the heart of the demand order. ITC allows businesses to reduce their tax liabilities by adjusting the taxes paid on purchases against the taxes they owe on sales. The company's stance is that it has adhered to all necessary GST provisions and is confident in its position, prompting them to challenge the demand through an appeal.
While the demand order specifies a penalty, Alkem Laboratories has expressed that it will take every necessary step to contest the decision, ensuring that its legal rights are protected. The company will proceed according to the necessary legal protocols, which may involve seeking redress through higher authorities.
As per the disclosure, the company asserts that this order, at this stage, does not have any material impact on its financial or operational performance. This statement aims to reassure investors and stakeholders that the day-to-day business functions will continue uninterrupted.
About Alkem Laboratories
Alkem Laboratories is a leading global pharmaceutical company, with a significant presence in over 30 countries. The company is renowned for its manufacturing capabilities and has a strong product portfolio spanning across various therapeutic areas. Alkem has remained committed to innovation, quality, and excellence in the pharmaceutical industry, continuously ensuring compliance with international regulations and maintaining a strong reputation for corporate governance.
The company remains confident in its legal position and will continue to engage in all appropriate actions to ensure that its interests are protected. Alkem’s proactive approach to addressing such matters, including seeking legal redress, aligns with its long-standing reputation as a reliable and transparent corporate entity in the pharmaceutical sector.