Rs 117 Crore GST Refund Alert! Morepen Labs Denies Wrongdoing Amid Tax Notice – What Investors Must Know!

Morepen Laboratories is currently facing scrutiny from tax authorities following the issuance of a show-cause notice by the Central GST & Central Excise Commissioner, Shimla.

Allegation of Erroneous Refund

• The notice from the tax department alleges that Morepen Laboratories has violated Goods and Services Tax (GST) rules.
• The core of the allegation concerns an alleged erroneous claim of a GST refund amounting to Rs 1,17,94,03,452.
• This significant sum has raised concerns among investors regarding the company's compliance and financial practices.

Company's Defense and Stance

• In a formal exchange filing, Morepen Laboratories strongly refuted the allegations.
• The company stated that the refund in question was claimed strictly in accordance with the provisions laid out in the GST Act.
• Morepen Laboratories firmly believes that the show-cause notice holds no merit.
• Importantly, the tax authorities have not yet imposed any penalty on the company.

Planned Actions and Legal Review

• Morepen Laboratories has committed to providing all necessary information, documents, and a detailed explanation to the GST authorities.
• This submission will be made within the prescribed time limit to support its refund claim.
• The company is also actively reviewing the matter and pursuing relevant legal advice to safeguard its interests and find a resolution.

Recent Stock Performance

• The company's stock, Morepen Laboratories, closed at Rs 43.59 on Thursday, showing a 2.08 per cent increase in intra-day trading.
• However, the overall trend for the stock has been negative recently.
• Over the past month, the share price has declined by 9.56 per cent.
• In the last six months and one-year periods, the stock has fallen by 31.69 per cent and 49.52 per cent, respectively.

Q2 FY26 Financial Highlights

• In the second quarter of the fiscal year 2026, Morepen Laboratories reported a net profit of Rs 41 crore.
• This represents an improvement from the Rs 34 crore net profit recorded in Q2 FY25.
• Despite the profit growth, the company's revenue saw a slight decrease.
• Revenue for Q2 FY26 was Rs 411 crore, down from Rs 437 crore in the corresponding quarter of the previous fiscal year.

Impact

• This show-cause notice introduces uncertainty and potential risk for Morepen Laboratories, affecting investor confidence.
• The company's ability to successfully contest the notice and defend its refund claim will be critical for its financial health and stock performance.
• An adverse outcome could lead to penalties, financial strain, and a negative market reaction.
• Impact rating: 7/10

Difficult Terms Explained

• Show-cause notice: A formal document issued by a government agency requiring a party to explain why a certain action (like a penalty) should not be taken against them.
• Central GST & Central Excise: A department of the Indian government responsible for administering Goods and Services Tax (GST) and excise duties.
• GST: Goods and Services Tax, an indirect tax levied on the supply of goods and services across India.
• Erroneously: By mistake or error.
• GST refund: A repayment by the government to a taxpayer for GST amounts that were overpaid or are eligible for return under specific regulations.
• Exchange filing: Official notifications made by listed companies to stock exchanges to inform the public about significant events.
• Net profit: The profit of a company after all expenses, taxes, and interest have been paid.
• Revenue: The total income generated by a company from its primary business operations before deducting expenses.