Bajaj Consumer Care Limited, a leading FMCG company, has received an order from the Deputy Commissioner of CGST & Central Excise Division-I, Lucknow, regarding a tax demand due to Input Tax Credit (ITC) mismatch and excess claims under the Reverse Charge Mechanism (RCM). The order, dated 28th February 2025, was received in hard copy by the company on 11th March 2025 and has been disclosed under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

According to the official order, Bajaj Consumer Care Ltd has been directed to pay ₹63,37,375 in tax, along with an applicable interest and a penalty of ₹6,33,738, under Section 73 of the Central Goods and Services Tax (CGST) Act, 2017. The tax authority has cited discrepancies in the company's ITC claims, particularly a mismatch between ITC and excess claims under the Reverse Charge Mechanism (RCM).

Regulatory Compliance and Disclosure

Following SEBI's Listing Regulations, Bajaj Consumer Care Ltd has made this disclosure to BSE (Scrip Code: 533229) and NSE (Scrip Code: BAJAJCON), ensuring transparency with investors and stakeholders. Regulation 30 of SEBI's Listing Regulations requires publicly listed companies to report significant regulatory actions or financial obligations that may impact shareholders.

Despite the tax demand and penalty, the company has stated that there will be no financial, operational, or other material impact on its business activities. Bajaj Consumer Care Ltd has further clarified that it is in the process of filing an appeal at the higher appellate level, contesting the CGST order.

Understanding ITC Mismatch and Reverse Charge Mechanism (RCM)

Under India’s Goods and Services Tax (GST) framework, businesses can claim Input Tax Credit (ITC) to offset their tax liabilities against purchases. However, mismatches in ITC claims often arise due to errors in reporting or discrepancies between the data submitted by suppliers and buyers.

The Reverse Charge Mechanism (RCM) is another important GST provision where the recipient of goods or services is liable to pay GST instead of the supplier. Excessive claims under RCM can lead to non-compliance issues and financial penalties, as seen in this case with Bajaj Consumer Care Ltd.

Financial and Operational Impact

While the tax demand and penalty imposed on Bajaj Consumer Care Ltd amount to a significant ₹69.71 lakh, the company has assured stakeholders that its overall financial health remains unaffected. The company is confident in challenging the CGST order through legal proceedings and expects a favorable resolution in the appeal process.

Next Steps for Bajaj Consumer Care Ltd

1. Appeal Against CGST Order – The company is preparing to file an appeal at the higher appellate level, contesting the claims made in the CGST order.
2. Ensuring Compliance – To prevent future ITC mismatches or RCM-related disputes, the company will likely reassess its tax compliance procedures.
3. Transparency with Investors – By disclosing the order to BSE and NSE, the company has maintained its commitment to corporate governance and regulatory transparency.

Conclusion

The recent CGST order against Bajaj Consumer Care Ltd highlights the importance of accurate tax compliance under India's GST framework. While the tax authorities have raised concerns regarding ITC mismatches and RCM excess claims, the company remains confident in resolving the issue through an appeal.

For now, Bajaj Consumer Care Ltd has reassured its investors, shareholders, and stakeholders that this order will not impact its business operations or financial performance. The outcome of the appellate proceedings will determine whether the tax demand and penalties stand or get overturned in favor of the company.

The Upcoming IPOs in this week and coming weeks are Paradeep Parivahan, Divine Hira Jewellers.

The Current active IPO are Super Iron Foundry, PDP Shipping & Projects.

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.