Star Paper Mills Faces ₹1.15 Cr UPVAT Demand, Plans Review

Order Details and Company Response

Star Paper Mills Limited announced on May 1, 2026, that it received an ex-parte assessment order. The order, dated March 30, 2026, comes from the Deputy Commissioner, Sector-2, Saharanpur-UP. It demands an additional UPVAT tax of approximately ₹1.15 crore for the financial year 2015-16. An ex-parte order is issued without the full participation of the assessed party. Star Paper Mills has stated its strong disagreement with the order and plans to file a review application to challenge the assessment and seek a reconsideration of the case.

Implications of the Demand

While the tax demand presents a potential financial obligation, the company has emphasized it expects no material impact on its operations or financial health. This suggests management's confidence in challenging the order or its ability to absorb the amount if the review is unsuccessful. However, such tax disputes can introduce uncertainty for investors, and the company's proactive challenge via a review application is a key development for shareholders.

History of Tax Matters

Star Paper Mills, established in 1938, is a long-standing Indian paper manufacturer producing industrial, packaging, and cultural papers. The company has a history of engaging with tax authorities over various issues. Past disputes have included matters concerning excise duties, income tax on royalty deductions, and the taxability of specific products under state VAT laws. These past instances show the company has navigated periods of tax scrutiny.

Next Steps

Star Paper Mills will formally contest the ex-parte assessment order by submitting a review application. The company's goal is to have the case reopened for a comprehensive review of the demand. Shareholders will be monitoring progress on the review application.

Potential Risks

The ₹1.15 crore tax demand represents a direct financial risk if the review application is unsuccessful. The process of challenging the order may also incur legal and administrative expenses. Although the company claims no significant impact, prolonged tax disputes can affect investor sentiment. It's notable that the company reports contingent liabilities totaling Rs. 84.6 crore, indicating other potential financial obligations it manages.

Industry Context

Star Paper Mills competes in the Indian paper industry with companies like JK Paper Ltd., West Coast Paper Mills Ltd., Andhra Paper Ltd., and Tamil Nadu Newsprint and Papers Limited (TNPL). The sector is experiencing growth, largely fueled by demand in packaging and e-commerce.

Looking Ahead

Key developments to watch include the outcome of the review application filed by Star Paper Mills. Any further communications from tax authorities regarding the assessment will be significant. Updates on the company's financial performance and its management of contingent liabilities are also important. The company's future guidance concerning potential tax liabilities or settlements will be closely observed.