Kalpataru Projects International Limited has officially disclosed to stock exchanges that it has paid a penalty of ₹17.13 lakh on 18th July 2025 at approximately 4:21 PM IST, following a directive from the GST Authority. The penalty pertains to the reversal of ineligible Input Tax Credit (ITC) availed by one of its service providers, which had been utilized to discharge output tax liabilities.

This disclosure was made under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and filed with BSE (Scrip Code: 522287) and NSE (Scrip Code: KPIL). The company took the action proactively to mitigate potential future financial exposure, including interest and further penalties under the Central Goods and Services Tax Act, 2017, and corresponding State GST Act provisions.

What Happened?

The issue arose when Kalpataru Projects identified that one of its service providers had availed ineligible ITC, which was subsequently used for discharging output tax liabilities related to the company’s operations. Upon direction from the GST Authority, Kalpataru voluntarily reversed the ITC and paid the applicable interest and penalty under Section 16(2)(C) of the CGST Act, 2017.

Financial Exposure and Strategic Response

The total penalty paid by Kalpataru Projects was ₹17.13 lakh, and the company clarified that this will not have any material impact on its financial performance or operations.

The management stated in its official filing:

“In order to avoid potential risk of additional financial exposure on account of interest, etc., the Company has reversed the ITC availed and paid the same along with applicable interest and penalty under section 16(2)(C) of the Act.”

This transparent and timely move demonstrates Kalpataru’s commitment to regulatory compliance, and its proactive approach to managing taxation and legal risks.

Disclosure Details Provided to the Stock Exchanges

Here are the key highlights from the disclosure filed by the company:

• Authority Involved: GST Authority

• Nature of Action Taken: Reversal of ineligible ITC and payment of penalty as directed

• Amount of Penalty: ₹17.13 lakh

• Date of Action: 18th July 2025, 04:21 PM IST

• Legal Basis: Section 73 and Section 16(2)(C) of CGST Act, 2017, and relevant SGST rules

• Impact on Operations: No material financial or operational impact as confirmed by the company

Broader Regulatory Context

The Central Goods and Services Tax Act, 2017, lays down specific conditions for availing ITC. Section 16(2)(C) in particular requires that the tax charged in respect of the supply has been actually paid to the government. If a vendor fails to comply, the recipient may be held liable for reversal, as happened in this case.

Such actions are part of the government's broader efforts to curb tax evasion, tighten indirect tax compliance, and ensure that GST credits are only availed where the underlying transactions are completely compliant.

This case is a reminder for corporations to conduct robust due diligence on all service providers, ensuring they follow accurate invoicing and GST payment practices to avoid future liabilities.

Kalpataru’s Compliance Record

Kalpataru Projects International Limited (KPIL) has a long-standing reputation as one of India’s premier infrastructure companies. The company operates in multiple verticals such as:

• Power Transmission and Distribution

• Railways Infrastructure

• Oil & Gas Pipelines

• Urban Infrastructure

The company’s compliance mechanisms are generally robust, and this payment appears to be a preventive step rather than a consequence of any wrongdoing by Kalpataru itself.

Industry View on ITC Scrutiny

The government’s increasing scrutiny on GST Input Tax Credit is being felt across sectors, particularly in industries with large service ecosystems. Even when the ineligible credit is availed by a third party, the burden often falls on the client company to ensure reversal and settle dues.

This case highlights the importance of:

• Vendor compliance checks

• Timely reconciliations of ITC

• Transparent disclosures to regulators and exchanges

Contact and Company Details

Kalpataru Projects International Limited

• Corporate Office: Kalpataru Synergy, 7th Floor, Opp. Grand Hyatt, Santacruz (E), Mumbai - 400055
  Tel: +91 22 3064 2100 / +91 22 6885 1500

• Registered Office: Plot No. 101, Part-III, GIDC Estate, Sector - 28, Gandhinagar - 382 028, Gujarat
  Tel: +91 79 2321 4000

• Email: info@kalpataruprojects.com

• Website: www.kalpataruprojects.com

• CIN: L40100GJ1981PLC004281

Final Thoughts

This proactive measure by Kalpataru Projects International Ltd reflects a strong commitment to regulatory transparency and corporate governance. While the amount involved is not significant from a balance sheet perspective, the move enhances investor confidence and assures stakeholders that the company is vigilant in managing legal and tax risks.

Stakeholders, investors, and market watchers can be assured that Kalpataru continues to prioritize compliance, even in instances where third-party actions may pose indirect risks. Future operational and financial updates will likely reinforce this image of corporate responsibility and timely disclosure.

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