Escorts Kubota Limited has informed the Exchange about Show Cause Notices issued by the State Tax Officer of GST, Chennai, Tamil Nadu.
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Escorts Kubota has received Show Cause Notices (SCNs) from the GST department in Chennai, Tamil Nadu, proposing a tax demand along with interest and penalty. The dispute relates to the alleged wrong classification of agricultural tractors as road tractors, and computation of taxes on total GST turnover instead of only tractor turnover. The cumulative tax demand across six financial years (FY2019 to FY2024) totals approximately Rs. 389.28 crore, with yearly demands ranging from Rs. 43.26 crore (FY2018-19) to Rs. 84.72 crore (FY2022-23). The company has stated it will contest the allegations and believes there will be no material financial impact on its operations.
Although the aggregate demand is sizable (nearly Rs. 390 crore), this is only a preliminary show cause notice and not an order. Since the company plans to contest and believes the merits are in its favour, near-term impact on shareholders should be limited — though investors should watch for any escalation or adverse ruling in subsequent hearings.