GAIL India Gets ₹143 Crore GST Notice Over Corporate Guarantees - SAG Infotech Official Tax Blog
The Additional Commissioner of CGST, Delhi South Commissionerate, imposes an Order-in-Original on GAIL (India) Limited, the state-owned gas utility. It had asked for the Goods and Services Tax (GST) on corporate guarantees issued by the company to banks on behalf of its subsidiaries and joint ventures.
On December 10 at 5:00 PM, an order was obtained that alleges that GAIL has not paid GST on corporate guarantees given without consideration. The penalty was levied under the order of Rs 143.08 crore (₹143,08,40,592). GAIL has mentioned that the disclosure has been made in adherence with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Corporate Response and Compliance Framework
The order receipt has been acknowledged by the company, but it has not shown whether it has any plans to contest the demand. Often, parent companies issued corporate guarantees to ease borrowing by subsidiaries or joint ventures, and the GST treatment of such guarantees has been a matter of legal and regulatory debate. As per the experts, the outcome can have implications for other public and private sector companies that deliver similar guarantees.
Robust Quarterly Financial Performance
GAIL has reported impressive financial results for the last quarter, even after changes in regulations. The company’s net profit increased by 17.6% compared to the previous quarter, rising to ₹2,217 crore from ₹1,886 crore. This performance also surpassed analysts’ expectations, which had predicted a profit of ₹2,063 crore.
Read Also: GST Impact on Oil and Gas Sector in India
Revenue for the quarter arrived at ₹35,008 crore, which is higher than ₹34,769 crore in Q1 and above analyst expectations of ₹34,429 crore. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) came in at ₹3,191 crore, marginally lower than ₹3,334 crore in the previous quarter but ahead of the Street’s estimate of ₹3,071 crore. The company’s operating margin was 9.1% which is lower than 9.6% in Q1 but exceeding the expected 8.2%.
About GAIL India
GAIL (India) Limited is the country’s largest public sector undertaking in natural gas processing and distribution. It functions across the entire gas value chain, including exploration, production, transmission, marketing, and petrochemical activities.
In India’s energy infrastructure, the company plays an important role in providing cleaner energy solutions and supporting the government’s efforts to expand natural gas usage across the nation.