IRCTC faces tax demand cum show cause notice for Rs 3.93 crore

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According to the notice, the total demand amounts to Rs 3.93 crore. The demand is attributed to several discrepancies identified by the authorities.

On April 8th, 2024, the Indian Railway Catering and Tourism Corporation (IRCTC) found itself in the spotlight as it received a demand cum show cause notice from the Additional Commissioner of CGST Delhi South Commissionerate. This notice, pertaining to the fiscal year 2018-2019, highlights various discrepancies and alleged violations that have raised concerns.

The Allegations:

The notice outlines a total demand of Rs 3.93 crore against IRCTC. This demand is attributed to several discrepancies identified by the authorities:

  1. Mismatch in Tax Liability: A significant portion of the demand, amounting to Rs 68.70 lacs, stems from discrepancies in tax liability between GST returns.
  2. Input Tax Credit (ITC) Reversal: Another aspect of the demand, totaling Rs 4.15 lacs, pertains to the liability on account of ITC requiring reversal due to non-filing of GST returns or cancellation of GSTN of respective suppliers.
  3. Interest on Late Filing: A nominal amount of Rs 0.005 lacs is attributed to interest on late filing of GSTR-3B.
  4. Non-reversal of ITC: A significant liability of Rs 2.85 crore is imposed on account of non-reversal of ITC under section 17 read with Rule 42 of the CGST Act.
  5. Penalty: Additionally, a penalty of Rs 35.73 lacs has been levied for the aforementioned discrepancies.

Financial Exposure and Legal Options:

As a result of these determined liabilities, IRCTC faces a substantial financial exposure of Rs 3.93 crore. However, it is essential to understand that the demand specified in the Summary Order issued in Form GST DRC-07 is subject to litigation. IRCTC has the option to appeal against this order within three months from the date of its communication.

Market Response:

Following the news, on April 10th, the shares of IRCTC closed at Rs 1022.80 apiece, reflecting over 1.2 per cent gains. This indicates the market’s response to the situation and suggests that investors remain cautiously optimistic.

In conclusion, while the notice from CGST Delhi South Commissionerate poses financial challenges for IRCTC, the corporation has legal avenues to contest the allegations. The market response also indicates a measured reaction, highlighting the need for further clarity and resolution in the matter.


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Pooja Gupta

CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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