FMCG major Hindustan Unilever Limited (HUL) has been issued tax demands and penalties totaling Rs 447.5 crore by Goods and Services Tax (GST) authorities across five states.
The company on Monday informed stock exchanges that it received five separate notices last Friday and Saturday on various grounds like disallowance of GST credit, tax on salaries and allowances paid to expatriate employees, etc.
The biggest demand of Rs 373 crore tax plus Rs 39.9 crore penalty comes from the Mumbai GST office related to payments made to expats. GST officials in Bengaluru, Haryana, and Kerala also raised demands ranging from Rs 10-13 crore along with penalties.
HUL has said it will appeal against the orders which it believes will not have any material impact on the company’s financials or operations. The demands amount to less than 1% of its revenue of Rs 59,000 crore recorded last fiscal.
This is not the first instance of HUL facing action from tax authorities. The company along with many other FMCG firms have often red-flagged the increasing burden of GST rules and compliance.
Experts say the authorities seem to be cracking down on issues like the availment of input tax credits as revenues have taken a hit post-pandemic. The demands may be intended to shore tax collections.
However, retrospective demands and penalties disadvantage corporates in planning their operations. HUL is expected to contest the latest orders to avoid creating a precedence of volatility concerning GST provisions.
