LT Foods Faces ₹32.41 Crore GST Demand as Appellate Order Reverses Prior Relief

LT Foods has received a significant blow from the Commissioner of CGST (Appeals-II), Delhi, with an appellate order dated January 30, 2026, confirming a Goods and Services Tax (GST) demand of ₹32.41 crore. This order overturns a prior ruling from January 2025 that had dropped the demand against the basmati rice producer.

Reader Takeaway: GST demand confirmed; company plans appeal, citing no material impact.

What just happened (today’s filing)

LT Foods announced on February 4, 2026, that it received an appellate order from the Commissioner of CGST (Appeals-II), Delhi, dated January 30, 2026.

This order confirms a GST demand of ₹32.41 crore, alongside applicable interest and penalties.

The demand is related to alleged wrongful availment of GST exemption for rice supplies that were packaged without plain packaging.

The appellate authority's decision reverses an earlier Order-in-Original from January 27, 2025, which had dropped this specific GST demand.

LT Foods stated its intention to file an appeal against this confirmed demand before the appropriate GST Appellate Tribunal.

The company currently foresees no material financial or operational impact from this development.

Why this matters

The confirmation of a substantial GST demand, even if disputed, adds a layer of financial contingency for LT Foods.

It signals increased regulatory scrutiny on tax exemptions and packaging compliance within the food sector.

The outcome of the planned appeal will be crucial in determining the final financial liability and sets a precedent for similar cases.

The backstory (grounded)

LT Foods is a prominent Indian FMCG company, established in 1990, known for its flagship basmati rice brands like 'Daawat' and 'Royal', serving over 80 countries. [2], [5], [8]

The company has a history of navigating tax and legal matters. In January 2024, an Income Tax Appellate Tribunal (ITAT) ruling favoured LT Foods regarding the disallowance of expenses u/s 14A. [41]

Basmati rice exports are a key revenue driver, with India facing stiff competition from Pakistan, often leading to price pressures. [15], [25]

What changes now

LT Foods must now prepare a robust case for its appeal at the GST Appellate Tribunal.

The company may need to account for potential liabilities, though it currently views the impact as non-material.

This event underscores the need for meticulous adherence to GST regulations, particularly concerning exemptions and product packaging.

Risks to watch

The primary risk lies in the outcome of the appeal before the GST Appellate Tribunal.

Failure to overturn the appellate order could lead to the payment of the ₹32.41 crore demand, plus accrued interest and penalties.

There's a potential for increased compliance costs and tighter scrutiny on tax exemption claims related to product packaging.

Peer comparison

Competitors in the rice industry also face regulatory challenges. For instance, KRBL Ltd., India's largest rice miller, was fined ₹3 crore by Customs in May 2025 for non-compliance with Basmati rice standards. [24]

This highlights that regulatory adherence is a critical operational aspect for major players in the agri-food sector.

Context metrics (time-bound)

• The confirmed GST demand stands at ₹32.41 crore.
• The appellate order was dated January 30, 2026, with the original order dropping the demand issued on January 27, 2025.

What to track next

LT Foods' formal filing of the appeal before the GST Appellate Tribunal.

The proceedings and eventual judgment at the GST Appellate Tribunal.

Any further updates on the company's assessment of financial or operational impact as the appeal progresses.