Modison Limited has disclosed a VAT demand of Rs. 395.70 Lakhs (inclusive of interest and penalty) received from the Assistant Commissioner of State Tax, Unit 73, Vapi, Gujarat. The order, dated 28th March 2025, stems from the alleged short levy of VAT due to the misclassification of goods during the period from 1st April 2016 to 30th June 2017. This development was officially communicated to the BSE and NSE on 29th March 2025, in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Tax Demand Details

The order mandates the payment of Rs. 395.70 Lakhs, which includes an interest component of Rs. 141.94 Lakhs and a penalty of Rs. 152.38 Lakhs. The tax authorities identified a misclassification of goods, which led to a short levy of VAT during the specified periods.

Company's Response and Appeal

In response to the demand, Modison Limited has expressed its intention to file an appeal against the order within the prescribed timelines. The company’s management has also stated that this issue will not have a material impact on the company’s financials, operations, or other activities, emphasizing that the matter is still in the appeal process.

Financial Implications

The company has disclosed that the VAT demand will be Rs. 395.70 Lakhs, which includes both the penalty and interest levied by the Gujarat tax authorities. However, the company asserts that there is no material impact on its overall financial position or day-to-day operations, as the matter is under review and action is being taken to challenge the demand.

Regulatory Compliance

The communication regarding the tax order is a part of Modison Limited's ongoing commitment to transparency and regulatory compliance, as required under SEBI’s disclosure regulations. The company’s timely filing of the appeal reflects its adherence to good corporate governance practices and ensures that shareholders and stakeholders are kept informed of any significant developments that may affect the business.

No Aberrations or Non-Compliance

As per the disclosure, there are no other aberrations or non-compliances identified by the tax authorities outside the misclassification of goods issue. The company has confirmed that the penalty and interest were imposed as a result of the short levy and that corrective measures are being considered.

Conclusion

Modison Limited has communicated the receipt of the tax demand order and its decision to file an appeal in response. Despite the significant amount involved, the company has assured stakeholders that there is no material effect on its operations. The resolution of this issue will be monitored closely, with Modison Limited maintaining its commitment to fulfilling regulatory obligations and ensuring transparency in all its dealings.

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