Disclosure of Significant GST Penalty Order on Chambal Fertilizers

Chambal Fertilisers and Chemicals Limited has disclosed that it received an order from the Joint Commissioner, CGST & Central Excise, Patna-I, on September 26, 2025. The order, passed under section 74(9) of the Central GST/Bihar GST Act, levies a substantial aggregate penalty of ₹5,26,84,73,848. (Rs. 562.84 Crores)

# Basis of the Penalty: The penalty has been imposed based on allegations concerning the period from FY 2018-19 to FY 2022-23. The primary issues are: - An alleged GST liability on the subsidy receivable from the Government of India for fertilizers. - The alleged incorrect availment of Input Tax Credit (ITC). # Company's Position and Rebuttal: The company strongly refutes the basis of the penalty. It asserts that as per Section 15(2)(e) of the Central GST Act, subsidies from the Government of India are specifically excluded from the value of taxable supply, and therefore, GST is not applicable. # Financial Impact and Future Action: According to the company, there is no impact on its financial, operational, or other activities, aside from the penalty amount levied. Believing it has a strong case to contest the order on its merits, Chambal Fertilizers has confirmed its intention to challenge the order at the appropriate appellate forum. This development presents a significant legal contingency, the outcome of which will be determined through the appellate process. If the department wins the case than it will be significant cash outflow from the company as the company is earning approximately Rs. 550 crores Profit after tax each quarter. so the amount of penalty is material and significant. Any adverse ruling will deteriorate company's financials.