Orient Cement Limited, a prominent player in the cement industry, has received a GST demand order from the Assistant Commissioner, Central Tax, Gulbarga, Karnataka, alleging wrongful availment of Input Tax Credit (ITC) on gold coins provided as dealer incentives. The order demands payment of Rs. 29,09,762, along with interest and an equivalent penalty, raising questions about the applicability of GST on such incentives.

The disputed tax credit arises from gold coins provided to dealers upon achieving specific monthly or quarterly sales targets. The tax authorities have classified these gold coins as "gifts," asserting that they are not in the furtherance of Orient Cement’s business operations. However, the company disagrees with this interpretation and firmly believes that the incentives align with legitimate business practices to enhance sales and distribution within the cement sector.

The order, dated November 28, 2024, was received by Orient Cement on December 23, 2024, and is being closely reviewed by the company. In accordance with Regulation 30 of SEBI’s Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015, the company disclosed this development to its stakeholders, emphasizing its intent to challenge the order.

While the financial implications of the order are limited to Rs. 29.09 lakh plus interest and penalty, Orient Cement has assured its stakeholders that the matter will not significantly affect its financial or operational stability. The company is confident in its strong legal grounds to contest the claim and plans to approach the appropriate appellate authorities to seek relief.

This development highlights the complex tax landscape faced by businesses in India, particularly in sectors like cement manufacturing, where promotional schemes and incentives are integral to the marketing strategy. The outcome of Orient Cement’s challenge could potentially set a precedent for how similar cases are addressed in the future.

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Stay tuned for updates as Orient Cement navigates this legal challenge, reaffirming its commitment to compliance and stakeholder transparency.