ICRA Limited, a prominent credit rating agency in India, has recently been issued a significant demand and penalty order by the Superintendent of Central Taxes in the Range DND-1, North Division-I, Bangalore North Commissionerate, Bengaluru. This development was officially communicated to the stock exchanges on August 29, 2024, in compliance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, commonly known as the Listing Regulations.

The order, dated August 28, 2024, includes a demand of Rs. 11.56 lakh under Section 73 of the Central Goods and Services Tax (CGST) Act, 2017 and the Karnataka Goods and Services Tax (KGST) Act, 2017. Additionally, an interest amount of Rs. 11.27 lakh is demanded under Section 50(1) of the CGST/KGST/IGST Act, 2017. Furthermore, the order imposes a penalty of Rs. 1.58 lakh under Section 73(9) of the CGST/KGST Act, 2017, bringing the total financial impact to Rs. 24.41 lakh.

The order follows an assessment by the Bengaluru tax authorities, who have identified the said amounts as dues that ICRA must settle. The company has been diligent in responding to this order, ensuring that it complies with regulatory requirements and maintaining transparency with its stakeholders.

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Despite the financial demand, ICRA Limited has stated that this development is not expected to have any material impact on its financial, operational, or other activities. The company’s management is confident in its position and has indicated that it will file the necessary appeals against the order. This move is aligned with ICRA's commitment to protecting its interests and ensuring that all tax matters are resolved judiciously.

The company has been proactive in addressing this issue and has already started the process of preparing its appeal. The appeal will be filed with the appropriate authorities, as ICRA believes that there are valid grounds to contest the demand and penalty imposed by the Bengaluru tax authorities.

ICRA's legal and financial advisors are closely involved in this process, ensuring that the company presents a strong case in its appeal. The company's management has emphasized that it takes compliance with tax laws seriously and will continue to adhere to all regulatory requirements while defending its position through appropriate legal channels.

From a broader perspective, this situation underscores the increasing scrutiny faced by companies in India concerning their GST compliance. The tax authorities are becoming more vigilant in enforcing the provisions of the GST laws, which have been in place since 2017. Businesses across various sectors are now more frequently audited and assessed for compliance with the GST framework.

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For ICRA, this is a notable development, but it is not expected to disrupt the company's operations or financial performance significantly. The company remains focused on its core business activities and continues to provide high-quality credit ratings and research services to its clients.

The management has assured investors and stakeholders that they will be kept informed of any significant developments related to this matter. ICRA Limited has also published this disclosure on its official website, reflecting its commitment to transparency and regulatory compliance.

In conclusion, while the demand and penalty order from the Bengaluru tax authorities represents a challenge for ICRA, the company's swift response and planned appeal demonstrate its robust approach to managing such issues. The financial impact, though quantifiable at Rs. 24.41 lakh, is not expected to materially affect ICRA's overall business, allowing the company to maintain its focus on delivering value to its stakeholders.

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