Bharat Heavy Electricals Limited (BHEL), a leading public sector enterprise in India, has received an order from Telangana GST authorities citing a demand amounting to ₹19.58 crore due to a mismatch of GST credit for the financial year 2020-21. The company disclosed this information to BSE Limited and the National Stock Exchange of India Limited (NSE) on March 29, 2025, under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Nature of the Communication

The order was received under Section 73 of the Central Goods and Services Tax (CGST) Act, 2017, which deals with the determination of tax liability in cases where tax has not been paid or has been short-paid, or where an input tax credit has been wrongly availed or utilized.

Key Details of the GST Order

As per Annexure I provided by BHEL, the details of the communication are as follows:

• Type of Communication: Order under Section 73 of the CGST Act, 2017, for FY 2020-21.

• Date of Receipt: March 29, 2025.

• Issuing Authority: Joint Commissioner, Office of the Commissioner of Central Tax, Central Excise & Service Tax, Medchal Commissionerate, Hyderabad.

• Reason for the Communication: The order highlights a mismatch of GST credit availed by BHEL with the comparison statement generated from the GST portal, leading to the determination of outstanding liabilities.

Summary of Financial Implications

The communication specifies the following financial implications for BHEL:

• Demand Amount: ₹10,76,13,004/-

• Interest Levied: ₹7,74,81,363/-

• Penalty Levied: ₹1,07,61,300/-

• Total Payable Amount: ₹19,58,55,667/-

The total liability includes the principal demand, interest, and penalty levied due to the discrepancies in GST credit availed and reported.

Nature of Aberration and Non-Compliance

The order identifies that the mismatch of GST credit availed by BHEL, when compared with the statement available on the GST portal, led to this assessment and subsequent demand. Such mismatches often arise due to delays in vendor filings, errors in reporting, or discrepancies in reconciliation of input tax credits (ITC).

Penalty and Restrictions

The authority has levied a penalty of ₹1,07,61,300/- under the applicable provisions of the CGST Act, 2017. However, no additional restrictions or sanctions have been imposed on the company’s operations.

Actions Taken by BHEL

BHEL, in its disclosure, mentioned that the company intends to file an appeal before the Commissioner (Appeals) challenging the order. Filing an appeal is a statutory right provided under the CGST Act, 2017, allowing taxpayers to contest any demand or order issued by the tax authorities.

Impact on Financials and Operations

BHEL clarified that the demand of ₹19.58 crore and related penalties will not have any material impact on the company’s financials, operations, or other business activities. The company is confident that the matter will be resolved through the appellate process.

Regulatory Compliance and Disclosure

As per Regulation 30 of the SEBI (LODR) Regulations, 2015, listed entities are required to disclose material events or developments that may have a bearing on the company’s operations or financials. BHEL’s disclosure ensures transparency and compliance with regulatory norms, keeping shareholders and stakeholders informed about significant developments.

GST Compliance and Challenges Faced

Input Tax Credit (ITC) mismatches and disputes arising from GST reconciliation continue to pose challenges for large organizations like BHEL. GST compliance involves meticulous reconciliation of invoices, vendor filings, and credit availed to ensure that tax liability is accurately determined. Mismatches often lead to demand notices, which companies have to contest through appropriate legal channels.

Filing of Appeal and Next Steps

BHEL will now proceed to file an appeal before the Commissioner (Appeals) to contest the demand and penalties imposed by the Telangana GST authorities. The appeal process is expected to take a few months, depending on the complexity of the case and the workload of the appellate authority.

Conclusion

BHEL’s receipt of the GST order from Telangana authorities for FY 2020-21 is part of the ongoing compliance and assessment process under the GST regime. The company has disclosed this development in compliance with SEBI norms and assured that there is no material impact on its financials or operations. BHEL’s decision to file an appeal demonstrates its commitment to addressing regulatory matters through the appropriate channels and maintaining transparency with its stakeholders.

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