Tata Steel has recently been served a show-cause-cum-demand notice by the tax authorities, alleging irregularities in the company’s input tax credit (ITC) claims under the Goods and Services Tax (GST) framework. The notice, issued by the Office of the Commissioner (Audit), Central Tax, Ranchi, covers a five-year period from FY2018-19 to FY2022-23 and involves a sum of over Rs 1,000 crore.

Key Details of the GST Notice

The Office of the Commissioner (Audit), Central Tax, Ranchi, issued the notice on June 27, 2025, and Tata Steel received it on June 28.

Authorities allege that Tata Steel claimed ITC in contravention of Section 74(1) of the Central Goods and Services Tax Act, 2017, and corresponding provisions of the State GST and Integrated GST Acts.

The company has been asked to appear before the Additional/Joint Commissioner of Central GST & Central Excise, Jamshedpur, within 30 days to explain why the GST amount should not be recovered.

The total GST demand stands at Rs 1,007 crore, with the company required to justify why this amount should not be recovered.

Tata Steel’s Response

Tata Steel has stated in its regulatory filings that it has already paid Rs 514 crore in GST during regular business operations.

The notice proposes to appropriate this amount, reducing the alleged GST exposure to Rs 493 crore.

The company maintains that the show-cause notice “has no merits” and plans to make its case before the authorities within the given timeline.

Tata Steel emphasized that there is no impact on its financial, operational, or other activities as a result of the notice.

What Is Input Tax Credit (ITC) and Why Does It Matter?

Input Tax Credit (ITC) allows businesses to offset the tax paid on inputs against their output tax liabilities, ensuring that tax is only paid on value addition. However, strict compliance is required, and any irregular or ineligible claims can lead to scrutiny, penalties, and recovery actions.

Implications for Tata Steel and the Industry

The notice underscores the importance of GST compliance for large corporations, especially regarding high-value ITC claims.

While Tata Steel has reassured stakeholders of no immediate business impact, the development highlights the increasing vigilance of tax authorities under the GST regime.

The company’s proactive communication and transparency may help maintain investor confidence during the proceedings.

Conclusion

The GST show-cause notice to Tata Steel for alleged irregular input tax credit claims exceeding Rs 1,000 crore marks a significant regulatory development. Tata Steel’s management remains confident in its compliance and is preparing a robust response. The outcome will be closely watched by industry observers and stakeholders, as it may set important precedents for future GST compliance cases in India.