According to a regulatory filing made by the company on April 26, the Yoga Guru Ramdev-led Patanjali Ayurved Group company, which is primarily in the edible oil business, has got the notice from the Directorate General of GST Intelligence, Chandigarh Zonal Unit.
Show Cause Notice Issued
Patanjali Foods, a subsidiary under the umbrella of the Ramdev-led Patanjali Ayurved Group, finds itself under the radar of the GST intelligence department.
The company has been served a show cause notice, demanding explanations regarding input tax credit worth Rs 27.46 crore.
This notice, issued by the Directorate General of GST Intelligence, Chandigarh Zonal Unit, was disclosed by Patanjali Foods in a regulatory filing made on April 26.
Legal Basis and Company Response
The notice invokes Section 74 and other relevant provisions of the Central Goods and Services Act, 2017, and the Uttarakhand State Goods and Services Act, 2017.
Additionally, it references Section 20 of the Integrated Goods and Services Tax (IGST) Act, 2017. In response, Patanjali Foods has affirmed its receipt of the notice and stated its intention to take necessary actions to defend its case before the authority.
However, the company also acknowledges that the full financial implications of the inquiry cannot be ascertained until the proceedings are concluded.
Uncertain Financial Impact
While the show cause notice raises concerns, the precise financial impact remains uncertain until the regulatory proceedings reach a resolution.
Patanjali Foods emphasized this uncertainty in its regulatory filing, indicating that the expected consequences cannot be determined until the investigation concludes.
Amidst Inquiry, Consideration of Acquisition Proposal
Despite facing regulatory scrutiny, Patanjali Foods is actively exploring strategic opportunities for business expansion.
The company disclosed its evaluation of a proposal to acquire the non-food business of its promoter group, Patanjali Ayurved Ltd. The board of Patanjali Foods discussed an initial proposal received from Patanjali Ayurved Ltd regarding the sale of its non-food business undertaking.
Navigating Regulatory Challenges while Pursuing Growth
As the inquiry unfolds, the company must navigate the regulatory challenges posed by the GST investigation while simultaneously exploring avenues for growth and expansion through strategic acquisitions.
The company’s response to both the regulatory inquiry and the potential acquisition opportunity will significantly shape its trajectory in the coming months.
