GST show cause notice to material subsidiary; proposed demand aggregating to ₹38,44,79,651

Material subsidiary Emmvee Energy received a Karnataka GST show cause notice alleging excess Input Tax Credit claim for FY 2022-23.

Thu 1 Oct 2026

Proposed GST demand

₹20,39,04,267

Proposed interest

₹16,01,84,958

Proposed penalty

₹2,03,90,427

Aggregate proposed demand

₹38,44,79,651

Eligible Input Tax Credit claimed (per company)

₹11,51,16,900

What has happened

Emmvee Energy Private Limited, described in the update as the material subsidiary, has received a Show Cause Notice dated September 30, 2026 from the Karnataka State GST Department. The notice alleges excess availment of Input Tax Credit for FY 2022-23.

A show cause notice is a formal communication from a tax authority asking why a proposed demand should not be enforced. The company is expected to reply, and the authority then takes a view.

The amounts involved

• GST proposed to be recovered: ₹20,39,04,267
• Interest proposed: ₹16,01,84,958
• Penalty proposed: ₹2,03,90,427
• Aggregate of the above in the notice: ₹38,44,79,651
• Quantum the company says it actually claimed as eligible Input Tax Credit: ₹11,51,16,900

What the company says

The company is of the view that the allegations are not sustainable, as it has availed only the eligible Input Tax Credit as per applicable GST provisions. It is also of the view that no interest or penalty is payable under the applicable GST provisions, and that based on its preliminary assessment no material financial impact is expected from the Show Cause Notice.

What happens next

• The company is in the process of update an appropriate response before the concerned authority within the prescribed timeline.
• The company states it will pursue appropriate legal remedies.

How a retail investor might read this

• The update concerns the material subsidiary, and the amounts proposed in the notice are stated in rupees.
• The company's stated position is that the demand is not sustainable and that it expects no material financial impact.
• The matter is at the notice stage, with the company's response yet to be shared.

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