GST demand-cum-show cause notice: tax Rs.78,86,667, proposed penalty Rs. 78,86,667

Dreamfolks received a Demand cum Show Cause Notice from the CGST (Audit) office, Gurugram, for FY 2021-22: tax of Rs.78,86,667, proposed penalty of Rs. 78,86,667, total Rs. 1,57,73,334.

Sat 10 Oct 2026

Tax Amount

Rs.78,86,667

Proposed Penalty

Rs. 78,86,667

Total Amount

Rs. 1,57,73,334

What the company disclosed

Dreamfolks Services Limited has informed the stock exchanges that it received a Demand cum Show Cause Notice from the Office of the Commissioner of CGST (Audit), Gurugram. The notice relates to financial year 2021-22 and was received on October 9, 2026.

What the notice is about

The notice has been issued under Section 74(1) of the Central Goods and Services Tax Act, 2017, read with Section 20 of the Integrated Goods and Services Tax Act, 2017 and Rule 142 of the Central Goods and Services Tax Rules, 2017. It pertains to input tax credit (ITC) availed on invoices issued by a supplier whose GST registration was cancelled with retrospective effect. The update adds that the supplier had deposited the applicable GST.

Amounts involved

• Tax: Rs.78,86,667
• Proposed penalty: Rs. 78,86,667
• Total: 1,57,73,334
• The head shown is IGST; applicable interest is mentioned along with these amounts.

What the company says

The company states that it does not presently envisage any immediate material impact on its financials, operations or other activities arising from this matter, and that it is in the process of submitting an appropriate reply to the notice within the prescribed timeline.

How a reader can look at this

• This is a show cause notice, which is a communication asking the company to respond, and the company has said it will reply within the prescribed timeline.
• The dispute turns on ITC claimed on purchases from a supplier whose GST registration was later cancelled with retrospective effect, while the supplier had deposited the applicable GST.
• The update places the tax and the proposed penalty at the same amount, Rs. 78,86,667 each, and the total at Rs. 1,57,73,334.
• Interest, where it applies, would be in addition to the tax and penalty amounts shown.

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