Shri Gang Industries Faces ₹28 Crore Tax Demand, Plans Appeals

Shri Gang Industries & Allied Products Ltd announced on March 31, 2026, that it has received tax demand notices totaling ₹28.16 crore. This includes a Central Sales Tax (CST) demand of ₹65.46 lakh and a Uttar Pradesh (UP) Value Added Tax (VAT) demand of ₹27.51 crore. These assessments are for the Financial Year 2022-23.

The company is disputing the tax assessments. Shri Gang Industries stated that authorities applied what it believes are higher VAT and CST rates on its products. The company plans to file appeals against these orders.

While management currently anticipates no adverse impact on its financials or operations from this tax demand, an unfavorable outcome in the appeals process could result in a significant financial liability. The disputed amount is substantial when compared to the company's market capitalization.

Shri Gang Industries & Allied Products, initially focused on edible oils, has diversified into the alcoholic beverage sector, manufacturing Indian Made Foreign Liquor (IMFL) and Extra Neutral Alcohol (ENA). It operates under agreements with major industry players such as Diageo and United Spirits, primarily within Uttar Pradesh. Recently, the company secured a new bottling agreement with Tilaknagar Industries, effective April 1, 2026. In March 2026, a ₹2.50 crore capital infusion was also completed through promoter CCPS conversion, bolstering its financial position.

Following the notices, the company will initiate legal proceedings to file appeals against both the CST and UP VAT demand orders. Management expects no immediate disruption to its business operations or overall financial health during this process. Shareholders will likely monitor the progress of the company's appeals.

The primary risk for Shri Gang Industries is an unfavorable decision in the appeals process, which could lead to payment of the disputed ₹28 crore tax. The tax and legal landscape can be complex, and outcomes are not guaranteed.

Shri Gang Industries operates in both the liquor and edible oil sectors. Its key peers in the liquor segment include United Spirits Ltd. (a major client), Radico Khaitan Ltd., and GM Breweries Ltd. In the edible oils and broader FMCG space, competitors include Patanjali Foods Ltd. and KRBL Ltd. Publicly available information did not indicate similar large tax disputes for these peers recently.

The tax demand specifically relates to the assessment for the Financial Year 2022-23.

Investors and stakeholders will be tracking the company's progress in filing its appeals. Any further communication from tax authorities or significant developments in the appellate process will be key. The ultimate resolution of the tax dispute and the company's sustained operational and financial stability during this period are also important factors to watch.