Vedanta faces Rs 1.71 crore penalty in FY18 GST dispute over cenvat credit

Vedanta plans to challenge GST orders as it disputes penalties over transitional credit from FY18

Vedanta Ltd has received two orders from the Office of GST & Central Excise, imposing a penalty of Rs 1.71 crore along with a tax demand and applicable interest. These orders, issued by the Office of the Assistant/Deputy Commissioner, Jharsuguda Division, relate to the carryforward of cenvat credit on capital goods and the availment of transitional credit under Tran-1 during the financial year 2017-18 (FY18).

 

According to a disclosure made to the stock exchanges on Monday, the company received the orders on December 9, 2024, confirming the penalty amount. Vedanta intends to appeal the orders with the appellate authorities.

 

The company has stated that the penalty is not expected to have any material financial impact on its operations.

 

Details of the GST dispute

The dispute pertains to Vedanta’s treatment of transitional credit during the GST regime’s implementation in FY18. The orders, dated November 28, 2024, focus on the company’s handling of cenvat credit and its subsequent carryforward—key components of GST-related accounting practices.

 

Vedanta’s financial performance

In its second-quarter earnings report for FY25, Vedanta reported a 3.4 per cent decline in revenue, down to Rs 37,634 crore compared to Rs 38,945 crore in the same period last year. Earnings before interest, taxes, depreciation, and amortisation (Ebitda) also dropped 14 per cent, to Rs 9,828 crore from Rs 11,479 crore. The Ebitda margin narrowed to 26.1 per cent, down from 29.5 per cent.

 

Despite the revenue decline, Vedanta posted a net profit of Rs 5,603 crore.

 

The company’s total debt as of September 30 stood at Rs 78,654 crore, reflecting a 5.6 per cent increase compared to the previous year. This rise was attributed to higher borrowings from its subsidiaries, including Hindustan Zinc Ltd, Zinc International, and Bharat Aluminium Co.

 

Major investment plans

In October, Vedanta announced plans to invest Rs 1 trillion in Odisha. The investment aims to establish a 6-million-tonne per annum alumina refinery and a 3-million-tonne aluminium plant, producing green aluminium using renewable energy sources.