Oriental Aromatics Ltd has been issued a Show Cause-cum-Demand Notice by the Central GST authorities in Vadodara concerning Input Tax Credit claims for the period of 2020-2025. The department alleges irregularities involving a vendor deemed non-existent. While the demand totals approximately Rs 0.96 crore plus interest and penalties, the company states no liability has crystallized and is currently preparing a formal defense.
Oriental Aromatics Faces GST Show Cause Notice
- Demand amount: Rs 0.96 crore (IGST ITC recovery) plus interest and penalties.
- Period involved: April 1, 2020, to March 31, 2025.
Reader Takeaway: The company faces a compliance query on vendor ITC; no liability is final as defense is underway.
What just happened
Oriental Aromatics Ltd received a Show Cause-cum-Demand Notice from the Office of the Principal Commissioner, Central GST and Central Excise, Vadodara-I. The notice, dated August 25, 2026, alleges issues with Input Tax Credit (ITC) availed by the company on transactions with a specific vendor. The tax department has categorized this vendor as 'non-existent' during the period of April 2020 to March 2025.
Financial Implications
The total recovery amount sought by the department is Rs 95,68,533 (approx. Rs 0.96 crore) under Section 74 of the CGST Act. Additionally, a minor penalty of Rs 15,962 is mentioned under Section 122(i). The company clarified that this is a show cause notice and no financial liability has crystallized. The management is currently evaluating the transactions to draft a response.
Risks to watch
Investors should monitor the company’s ability to substantiate these vendor transactions. If the company fails to provide sufficient documentary evidence, it may be required to reverse the availed ITC, potentially impacting cash flow. Any escalation in penalties or interest will also depend on the final adjudication by the tax authorities.
What to track next
Shareholders should track future exchange filings for the company's formal response to the GST department. The timeline for the hearing and the department's subsequent order will be critical indicators of potential financial impact.