Piramal Enterprises Ltd. has received a GST demand notice of Rs 1,502 crore, including tax, interest and penalties, from the Deputy Commissioner of State Tax, Maharashtra. According to an exchange filing on Friday, the penalty component amounts to Rs 83 crore.
The tax demand pertains to the company’s sale of its pharma business to Piramal Pharma Ltd. in fiscal 2021, a deal valued at Rs 4,487 crore, which also included the transfer of subsidiary companies. Authorities have contested the nature of this transaction, arguing that it was not a slump sale but rather an itemised sale. Based on this classification, the department has imposed an 18% GST on the entire sale consideration.
A slump sale involves the transfer of an entire business undertaking, including assets and liabilities, without assigning individual values. Such sales typically do not disrupt the entity’s operations. Whereas, an itemised sale involves assigning separate values to assets and liabilities, making it subject to different tax implications.
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Despite the tax order, Piramal Enterprises remains confident about its legal position. “The Company will take appropriate steps in its best interest and reasonably expects to have a favorable outcome of getting the Order set aside. The Company is advised that the order will have no impact on the statement of profit and loss for the year,” the filing stated.
Despite the ongoing tax dispute, Piramal Enterprises reported a net profit of Rs 38.6 crore for the quarter ended December 31, 2024, reversing a loss of Rs 2,378 crore in the same period last year. However, this turnaround was aided by an exceptional gain of Rs 376 crore.
Revenue for the October-December quarter stood at Rs 2,449 crore, reflecting a slight decline of 1.1% from Rs 2,476 crore a year ago. Meanwhile, earnings before interest, tax, depreciation, and amortisation (EBITDA) fell 10.8% to Rs 1,075 crore, compared to Rs 1,205 crore in the corresponding quarter of the previous financial year.
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