Kirloskar Brothers Limited (KBL), a leading engineering and manufacturing company, has moved the Hon’ble High Court for the State of Andhra Pradesh at Amaravati challenging a demand notice issued under the Andhra Pradesh GST Act, 2017. The alleged tax arrears amount to ₹15,48,02,928 for the financial year 2017-18, connected to the activities of an unincorporated joint venture (JV).

Background of the Case

The matter traces back to a notice dated 21 January 2025 under the APGST Act, which was received by a majority of the directors on 14 February 2025. The notice alleged tax arrears of ₹15,48,06,528 for FY 2023-24, linked to the joint venture IVRCL-KBL-MEIL (JV) Hyderabad.

This JV was formed between:

• Kirloskar Brothers Limited (KBL)

• IVRCL Ltd.

• Megha Engineering & Infrastructure Ltd. (MEIL)

The JV was set up for executing a Water Resources Department project (formerly under the Irrigation and CAD Department) for the Government of Andhra Pradesh.

Fresh Demand Notice in August 2025

Subsequently, on 5 August 2025, the company received a fresh demand notice from the Assistant Commissioner (State Tax), Dwarakanagar Circle, Visakhapatnam – 1, claiming tax arrears of ₹15,48,02,928 for FY 2017-18. The notice required payment within 7 days from receipt.

According to the authorities, since the JV did not respond to prior demand notices, the liability was intimated to the majority of KBL’s directors, asking them to settle the dues.

Legal Action by Kirloskar Brothers

On 12 August 2025 at 12:52 PM (IST), KBL filed a Writ Petition (WP/31611/2025) before the Andhra Pradesh High Court under Special Original Jurisdiction. The petition seeks:

• Setting aside the impugned assessment order

• Quashing the demand notice

• An interim stay on the proceedings pending disposal of the writ petition

The respondents in the case include:

1. Deputy Assistant Commissioner of State Tax, Dwarakanagar Circle, Visakhapatnam-I Division

2. GST Officer, Dwarakanagar Circle, Visakhapatnam-I Division

3. State of Andhra Pradesh, represented by its Principal Secretary, Revenue Department, Commercial Taxes

Potential Financial Impact

At this stage, financial implications cannot be determined, given that the matter is now sub judice. KBL has assured that it will inform the stock exchanges about any significant developments in the case.

Market and Corporate Significance

The dispute highlights the tax complexities surrounding joint ventures in large-scale infrastructure projects. The outcome could influence future liabilities not only for KBL but also for other corporate entities involved in similar JV arrangements with state governments.

KBL’s proactive legal challenge underscores its intent to protect shareholder interests and mitigate potential financial risks. Investors will closely watch the court proceedings for clarity on the company’s tax obligations and possible impact on earnings.

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