Patanjali faces double blow: Rs 27.5 crore penalty for GST infraction and product license suspension
Patanjali faces double blow: Rs 27.5 crore penalty for GST infraction and product license suspension
In a significant setback for Patanjali, the Directorate General of GST Intelligence (DGGI) in Chandigarh has levied a hefty penalty of Rs 27.5 crore on Patanjali Foods for irregularities in Input Tax Credit (ITC).
This penalty follows closely on the heels of the Uttarakhand government’s decision to suspend licenses for 14 products sold by the Ramdev-led Patanjali Ayurved and Divya Pharmacy, including popular offerings like Swasari Gold, Mukta Vati Extra Power, and BP Grit.
The penalty imposed by DGGI Chandigarh is a consequence of detecting a Rs 20 crore irregularity in ITC, as revealed by GST officials. In cases of fraudulent ITC claims, penalties can be imposed up to the amount of the ITC claim along with interest. In this instance, the erroneous ITC claim amounted to Rs 20 crore, resulting in a penalty of Rs 27.5 crore, inclusive of interest, bringing the total to Rs 47.5 crore.
Patanjali Ayurved Group, spearheaded by Yoga guru Ramdev and primarily engaged in the edible oil business, received the notice from the Directorate General of GST Intelligence, Chandigarh Zonal Unit, as disclosed in a regulatory filing by the company on April 26.
The company stated, “A show cause notice is received by the company… requiring the company, its officers, and authorized signatories to show cause as to why input tax credit amounting to Rs 27,46,14,343 should not be recovered (along with interest), and why a penalty should not be imposed…,”
The department has cited Section 74 and other relevant provisions of the Central Goods and Services Act, 2017, the Uttarakhand State Goods and Services Act, 2017, and Section 20 of the Integrated Goods and Services Tax (IGST) Act, 2017.
Patanjali Foods affirmed its intent to mount a robust defence, stating, “As of now the authority has only issued a show cause notice and the company will be taking all necessary action to defend its case before the authority.”
Simultaneously, the legal battle escalated as Uttarakhand suspended licenses for 14 Patanjali products, including those aforementioned. The state government also demanded the formulation details for these drugs from Patanjali.
