Mumbai, December 23, 2025 – Tata Steel Ltd. (TATASTEEL.NS) announced a significant regulatory relief on Tuesday, with a Joint Commissioner of CGST & Central Excise in Jamshedpur dropping a ₹161.52 crore input tax credit (ITC) compensation cess demand and imposing no penalty. The order, dated December 17, 2025, and received on December 19, resolves a long-pending Show Cause Notice (SCN) issued in June 2025 against erstwhile Tata Steel Long Products Ltd. (TSLP), which merged into Tata Steel effective November 15, 2023.
The SCN from the Directorate General of GST Intelligence, Jamshedpur, had flagged irregular availment of ITC compensation cess worth ₹161,51,51,635 by TSLP during April 2019 to February 2024, seeking recovery under Sections 74(1) of CGST/Jharkhand GST Acts, 2017, read with IGST Act and Compensation to States Act provisions. It also proposed an equivalent penalty and questioned reversal/deposit of ₹160,28,29,018 via GSTR-3B returns for December 2022 and August 2023.
Order Highlights:
- Payment Acknowledged: The authority recognized the ₹160.28 Cr already remitted to the government exchequer, deeming it appropriated.
- Balance Demand Dropped: Remaining tax liability of ₹1.23 Cr (₹123,22,617) fully waived.
- Aggregate Relief: Total demand of ₹161.52 Cr set aside; no penalty levied, citing submissions on merits.
- No Further Action: The dropped amount aligns with prior disclosures, closing the matter without appeal.
Tata Steel's management is reviewing the order for compliance implications. The resolution eases a overhang from the TSLP merger, potentially freeing up cash flows for capex in downstream steel ops and green steel initiatives. FY25 EBITDA stood at ₹15,200 Cr (up 8% YoY), with the steel giant targeting 3-4% volume growth in Q3 amid softening raw material costs.
Shares reacted positively, climbing 1.8% to ₹162.45 in early trade (open ₹160.20, range ₹159.80-₹163.10, vol 2.45 Cr shares), lifting m-cap to ₹2.02 lakh Cr. Analysts at Motilal Oswal term it a "clean win," upgrading FY26 EPS by 0.5% to ₹12.80, with a ₹175 PT (Buy). Sector peers like JSW Steel (+0.9%) also edged higher on sentiment spillover.
