MRF Ltd has received a rectification order from Kerala tax authorities, reducing its CST tax demand for FY 2014-15 from Rs 91.53 crore to Rs 36.19 crore. This positive development eases the company's contingent liability, though management is still evaluating further legal options regarding the remaining amount.
MRF Tax Liability Reduced to Rs 36.19 Crore Following Rectification Order
Original tax demand of Rs 91.53 crore for FY 2014-15 slashed to Rs 36.19 crore.
Reduction provides significant relief to company’s contingent liability profile for the period.
Reader Takeaway: Tax demand reduction lowers financial uncertainty; company still weighing options to challenge the residual tax amount.
What just happened
MRF Ltd disclosed that it received a rectification order dated September 30, 2026, from the Deputy Commissioner of State Tax in Pala, Kerala. The order pertains to a long-standing litigation matter concerning export clearances and declaration forms under the Central Sales Tax (CST) Act for the 2014-15 financial year.
Why this matters
The reduction of over Rs 55 crore in tax demands is a major relief for the company. Such litigation often involves high contingent liabilities that cloud the financial outlook. By successfully getting the demand revised downward, MRF has effectively shrunk a significant portion of the financial risk associated with this specific assessment year.
The backstory
The litigation stems from assessments made by state tax authorities regarding the company's export-related tax filings from nearly a decade ago. For years, the original demand of Rs 91.53 crore remained a point of contention on the company's books. The current rectification order acknowledges corrections in the assessment, leading to the revised demand of Rs 36.19 crore.
What changes now
MRF Ltd is currently reviewing the order with its legal and tax teams. The company has not yet confirmed if it will pay the revised amount or initiate further legal challenges to contest the remaining Rs 36.19 crore. For now, the financial pressure from this specific dispute has substantially eased.
Risks to watch
Investors should monitor whether the company chooses to pay the revised demand or continues the legal battle. If the company contests the remaining balance, the litigation timeline will extend further, keeping some uncertainty alive regarding the final settlement amount.