The Joint Commissioner of CGST & CX, Palghar, Maharashtra, has issued a hefty tax demand order of ₹121.25 crore against Glenmark Pharmaceuticals Ltd for the period between 2017-18 and 2021-22. The order, dated February 4, 2025, was uploaded on the GST portal and involves claims of excess IGST refunds, unpaid tax liabilities, and potential penalties.
Excess IGST Refund at the Core of Dispute
A significant chunk of the demand—₹57.70 crore—stems from what the tax authorities claim was an excessive IGST refund. According to the department, Glenmark wrongly claimed refunds based on the Cost, Insurance, and Freight (CIF) value instead of the legally permitted Free on Board (FOB) value for its exports. The miscalculation, as per the tax officials, led to an inflated refund that now needs to be reversed.
Separately, the order also accounts for ₹5.86 crore that Glenmark had already repaid after voluntarily surrendering IGST refunds related to export proceeds that were not realized. This means that while the total claim stands at ₹121.25 crore, a portion had already been settled by the company before the order was issued.
Additional Tax Demand and Possible Financial Consequences
Beyond the refund-related issues, the department has slapped an additional ₹63.56 crore in tax liabilities on Glenmark. This sum includes unpaid taxes as well as possible penalties and interest charges. However, the exact composition of this demand—how much pertains to actual unpaid tax versus penalties—is not yet fully detailed in the public domain.
Glenmark Pharmaceuticals, however, appears unshaken by the order. The company has stated that it plans to appeal before the appropriate appellate authority, arguing that the demand will have “absolutely no material effect” on its financial standing or operational performance.
Glenmark’s Market Reaction and Stock Performance
Despite the tax notice, Glenmark’s shares closed at ₹1,540 on Friday, marking a 2.68% gain from the previous close. The stock has been on an upward trajectory over the past year, soaring by 82% in the last twelve months. However, since the start of 2025, it has seen a 3.35% dip, indicating some volatility.
While regulatory actions like tax disputes can sometimes trigger a negative reaction from investors, Glenmark’s strong long-term performance suggests that the market isn’t overly concerned—at least for now.
What’s Next for Glenmark?
- Appeal Process: Glenmark is expected to challenge the tax demand in higher forums. The appellate process could take months or even years, depending on legal proceedings.
- Potential Financial Impact: While the company insists that the demand has no significant financial effect, investors will closely watch how it affects cash flow and provisions in the upcoming quarters.
- Regulatory Scrutiny: The case brings attention to how IGST refunds are claimed in the pharmaceutical export sector, possibly leading to stricter compliance checks by tax authorities.
For now, Glenmark remains in the spotlight, not just for its stock gains but also for how it plans to handle this hefty tax order.
