Patanjali Foods Issued Show Cause Notice Over GST Dues

Patanjali Foods, a prominent entity in the edible oil sector led by Yoga guru Ramdev's Patanjali Ayurved Group, is currently under scrutiny by the GST intelligence department. The Directorate General of GST Intelligence, Chandigarh Zonal Unit, has issued a show cause notice to the firm. Dated April 26, the notice demands an explanation from Patanjali Foods regarding the input tax credit of Rs 27.46 crore that is under question for recovery along with interest, and the possibility of imposing a penalty.

Representative image

The inquiry hinges on several legal provisions, including Section 74 of the Central Goods and Services Act, 2017, and corresponding sections of the Uttarakhand State Goods and Services Act, 2017, alongside Section 20 of the Integrated Goods and Services Tax (IGST) Act, 2017. Patanjali Foods has responded to the notice stating its intention to take all necessary actions to defend its position before the authority. However, the company has also noted that the potential financial implications of this issue cannot be ascertained until the conclusion of the proceedings.

In a separate development, Patanjali Foods revealed plans to potentially expand its portfolio by acquiring the non-food business segment of its promoter group company, Patanjali Ayurved. This consideration was disclosed in a regulatory filing where it was mentioned that Patanjali Foods' board is evaluating an initial proposal from Patanjali Ayurved Ltd. The proposal involves the sale of Patanjali Ayurved's non-food business undertaking to Patanjali Foods.

Founded in 1986 and formerly known as Ruchi Soya Industries Ltd, Patanjali Foods Ltd stands as a leading Fast-Moving Consumer Goods (FMCG) company. It boasts a diverse product range across edible oils, food and FMCG sectors, and wind power generation. The company markets a variety of brands including Patanjali, Ruchi Gold, and Nutrela. It's noteworthy that Patanjali Ayurved had previously acquired Ruchi Soya through an insolvency process before renaming it to Patanjali Foods Ltd.

This recent development underscores the regulatory challenges faced by major FMCG players in India's rapidly evolving market landscape. As Patanjali Foods navigates through this legal scrutiny, industry observers are closely watching how this situation unfolds and its potential impact on the company's future operations and growth trajectory.