Big relief for Patanjali Foods as SC quashes Rs 186 crore tax demand
New Delhi, Feb 20, 2025
Earlier the NCLT had quashed the tax demands, leading the Income Tax Department to challenge it in the Bombay High Court, before escalating matter to the Supreme Court
The Supreme Court of India has dismissed the Rs 186 crore tax demand imposed on Patanjali Foods Ltd. The apex court quashed the demand following a Special Leave Petition (SLP) filed by the Principal Commissioner of Income Tax, Central 4, challenging a Bombay High Court ruling.
Patanjali Foods disclosed the development in a regulatory filing dated Feb 19, stating, “The demands of Rs 186 crore for the pre–Corporate Insolvency Resolution Process (CIRP) period raised by the Income Tax Department have been quashed by the Hon’ble Supreme Court of India.”
The Supreme Court dismissed the SLP on January 15, 2025, thereby upholding the Bombay High Court’s decision. However, Patanjali Foods claimed it only became aware of the ruling on February 18, 2025, after discovering it on the tax and finance website Taxmann.
Background of the case
The tax demand pertained to multiple assessment years predating Patanjali Foods’ Corporate Insolvency Resolution Process (CIRP). The National Company Law Tribunal (NCLT) had initially quashed the tax claims, prompting the Income Tax Department to contest the decision through a writ petition in the Bombay High Court. When the High Court ruled in favour of Patanjali Foods, the tax authorities escalated the case to the Supreme Court, which ultimately rejected the petition.
A copy of the Supreme Court order, shared in Patanjali Foods’ exchange filing, stated, “The Special Leave Petition is, accordingly, dismissed.”
Patanjali Foods shares rise
Following the announcement, Patanjali Foods’ shares have witnessed a slight uptick. Shares of the company were trading at 0.83 per cent, reaching Rs 1,842.05 at 11.00 am on Thursday.
Meanwhile, the company reported a strong third-quarter performance, with a 71 per cent rise in net profit. This growth was driven primarily by robust demand in its cooking oil segment, which continues to see strong consumption despite inflationary pressures. However, revenue from the food and fast-moving consumer goods (FMCG) division saw an 18 per cent decline due to weaker demand.
The company’s overall expenses rose by 13 per cent, influenced by the mid-September increase in import taxes on crude and refined edible oils, which escalated input costs.
With the Supreme Court’s decision providing regulatory clarity, Patanjali Foods is expected to focus on consolidating its market presence amid fluctuating consumer demand and rising operational costs.
[The Business Standard]
