Sapphire Foods Receives ₹516.84 Crore GST Notice

Sapphire Foods India Ltd. has received a GST show-cause notice proposing a demand of ₹516.84 crore from the Deputy Commissioner (CT), Chennai, Tamil Nadu. The notice was issued on September 21, 2026, under Section 73 of the Tamil Nadu GST Act and relates to the period from April 2022 to March 2023. According to the notice, the proposed amount includes tax, interest and penalty components. The authorities have raised issues relating to the alleged inadvertent availment and utilisation of Input Tax Credit (ITC), along with alleged short payment of tax and interest. Sapphire Foods has stated that the amount mentioned in the notice contains computational errors in the calculation of tax, interest and penalty and has maintained that the claim is not legally maintainable. The company is evaluating the notice and will take appropriate steps to respond to the proceedings. The company has also stated that the notice does not have any material impact on its financial, operational or other activities at this stage. Importantly, this is a show-cause notice and not a final adjudicated tax demand. The development comes as Sapphire Foods continues its proposed merger process with Devyani International, under which the two companies are seeking to combine their restaurant businesses. My View: The size of the proposed demand makes this an important regulatory development to monitor. However, the eventual financial impact will depend on the outcome of the proceedings and the company's response to the tax authorities.