Quess Corp Limited has issued an update regarding a recent order from the CGST (Central Goods and Services Tax) department, as per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The order pertains to penalties for the financial years 2017-18 to 2022-23, with a penalty amount totaling Rs. 23.26 crores. The company clarified that the penalties were imposed due to the issue of invoices without a corresponding supply of goods or services, related to the input tax credit (ITC) passed on to SBI General Insurance and HDFC Life Insurance. This communication follows a prior disclosure made on February 1, 2025 regarding the order's initiation.

Violation and Penalty Breakdown
The CGST department's order, dated January 29, 2025, highlighted significant violations under the CGST Act of 2017. Specifically, the company allegedly issued invoices without any underlying supply for manpower services, violating Section 16(2) of the CGST Act. This led to penalties amounting to Rs. 23.26 crores for the period from FY 2017-18 to FY 2022-23. The order also includes accusations regarding input tax credit being extended improperly to insurance companies without corresponding services rendered.

The company also faces additional penalties, with a Rs. 128.90 crore fine imposed for similar violations in the FY 2017-18 to FY 2021-22 period.

No Immediate Financial Impact
Despite the imposition of penalties, Quess Corp assures that there is no immediate financial or operational impact on its business operations. The company has contested the validity of the penalties, asserting that they are not maintainable. The company has outlined plans to contest the orders in the relevant legal forums, with a commitment to reviewing the penalties and ensuring the company is treated fairly in the process.

Company's Legal and Financial Position
Quess Corp maintains a strong stance regarding these matters, emphasizing that the submissions and representations made during the investigation were not considered in the CGST department's order. The company has outlined its intent to seek relief from the imposed penalties through legal action and has committed to keeping the exchanges informed of any further updates related to the case.

As part of their continued transparency and compliance with SEBI regulations, Quess Corp will provide periodic updates on the matter. The management believes that the penalty should be reviewed in light of the facts, especially given the ongoing legal processes.

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