Sapphire Foods India has received a show cause notice from the Tamil Nadu GST department for Rs 21.47 crore. The notice relates to the April 2022-March 2023 period, focusing on Input Tax Credit utilization. Management maintains that the claim is not sustainable and expects no material impact on operations.
Sapphire Foods Receives Rs 21.47 Crore GST Show Cause Notice
Total claim amount: INR 214.65 million. Period under scrutiny: April 2022 to March 2023.
Reader Takeaway: Management disputes the validity of the Rs 21.47 crore tax demand and claims no material operational impact.
What just happened
Sapphire Foods India Limited has been issued a show cause notice by the Deputy Commissioner (CT), Chennai, Tamil Nadu, on September 21, 2026. The authority has raised concerns regarding the company’s alleged inadvertent availment and utilization of Input Tax Credit (ITC), alongside short payments of interest and tax under Section 73 of the Tamil Nadu SGST Act 2017.
Why this matters
The notice represents a tax liability claim of approximately Rs 21.47 crore for the financial year 2022-2023. For shareholders, this marks a regulatory development that requires close observation of how the company defends its tax position. While management has stated that the demand is not maintainable, formal tax disputes with state authorities can occasionally lead to prolonged legal or administrative processes.
What changes now
The company is currently reviewing the details of the notice. Sapphire Foods has committed to taking all necessary steps to respond to the authorities. No immediate changes to the company’s financial guidance or operational strategy have been announced at this stage.
Risks to watch
Investors should monitor the company's official responses and any subsequent orders from the Tamil Nadu tax authorities. Should the authority reject the company's defense, the company may need to consider potential payment or further legal appeals, which could tie up capital or incur additional litigation costs.