Tata Steel has received a show cause-cum-demand notice from the Office of the Commissioner (Audit), Central Tax, Ranchi, over alleged irregularities in availing input tax credit (ITC) of ₹1,007.54 crore across FY2018–19 to FY2022–23. The notice, dated June 27 and received by the company on June 28, calls on the steel major to explain why this credit should not be recovered under Section 74(1) of the CGST Act and corresponding provisions of the SGST and IGST Acts.
According to its regulatory disclosure dated June 29, 2025, Tata Steel clarified that ₹514.19 crore of the claimed ITC has already been paid in the regular course of business. Thus, the remaining potential GST exposure stands at ₹493.35 crore.
The show cause notice alleges contravention of CGST Section 74(1), which pertains to fraudulently availed tax credits, and IGST Section 20, which allows enforcement of CGST provisions within IGST matters.
Tata Steel responded by stating that the notice “has no merits” and confirmed its intent to make submissions within the required timeframe. The company added that the issue has no material impact on its business operations, financial health, or day-to-day activities.
Under India’s GST system, input tax credit allows businesses to offset the GST paid on purchases against output tax liabilities. However, ITC claims are scrutinized rigorously by tax authorities, especially in large manufacturing sectors where transaction complexity is high.
Here’s a breakdown of the financial implications as disclosed:
| Parameter | Amount (in ₹ crore) |
|---|---|
| Total Alleged ITC Claimed | 1,007.54 |
| Already Paid/Adjusted by Company | 514.19 |
| Balance Tax Exposure | 493.35 |
This is the second such development in recent weeks. Tata Steel previously received a similar show cause notice for an ITC dispute amounting to ₹890.52 crore, issued by the Commissioner of CGST & Central Excise, Jamshedpur, covering FY2018–19 to FY2020–21. Additionally, Tata Steel Long Products, a subsidiary of Tata Steel, is also facing a ₹161.51 crore notice from the Directorate General of GST Intelligence (DGGI), related to wrongful ITC on compensation cess for coal.
Despite mounting regulatory queries, Tata Steel’s stock has shown remarkable resilience. On the final trading day of last week, the stock closed up by ₹0.75 or 0.47%. Over the past six months, it has gained 17.83%, indicating continued investor confidence in the company’s fundamentals.
The fresh notice comes amid intensified government efforts to tighten GST compliance by large corporates. The Finance Ministry has publicly committed to improving tax administration and curbing evasion, with a special focus on high-risk industries including manufacturing, mining, and infrastructure.
Industry analysts have mixed views. While some believe the enforcement drive is essential to maintaining the integrity of the GST system, others caution that frequent notices and disputes could disrupt corporate planning and cash flows, especially when significant sums are involved.
From a legal standpoint, Tata Steel will have the opportunity to present documentation and arguments before the adjudicating authority. If not satisfied, the authority may initiate recovery procedures, though appeals can be filed before higher forums such as the GST Appellate Tribunal or High Courts.
The outcome of this case is expected to set an important precedent for future tax credit disputes in capital-intensive industries. If the tax department sustains its demand, other major companies could come under similar scrutiny.
