GST Trouble for Sheela Foam: Rs 20 Cr Demand Notice and Penalties Issued

Sheela Foam, the renowned manufacturer behind the Sleepwell mattress brand, has found itself in a challenging situation, as it grapples with a significant GST issue. On October 4, 2023, the company received a Show Cause Cum Demand Notice from the Commissioner of GST Intelligence in Gautam Budh Nagar, Greater Noida.

Source: https://www.rgfinservices.com/

Sheela Foam, the renowned manufacturer behind the Sleepwell mattress brand, has found itself in a challenging situation, as it grapples with a significant GST issue. On October 4, 2023, the company received a ShowCause Cum Demand Notice from the Commissioner of GST Intelligence in Gautam Budh Nagar, Greater Noida.

This notice, issued under section 16 of the Central Goods and Services Tax Act, 2017, alleges a substantial tax demand of Rs 20.26 crore, accompanied by an equivalent penalty of the same amount, along with applicable interest. The focus of this notice centers on the purported erroneous availment of transitional input credit and other incorrect input tax credit claims related to GST.

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In response to this development, Sheela Foam is diligently preparing a comprehensive formal response to the notice within the stipulated timelines. The company must demonstrate why the GST amounting to Rs 20.26 crore should not be demanded and recovered under Section 16 of the Central Goods and Services Tax Act, 2017. Additionally, it faces the imposition of a penalty amounting to Rs 20.26 crore, along with interest on the stated demand.

Sheela Foam has promptly sought the guidance of its tax advisors to navigate this complex issue. They are working closely with the company to ensure compliance with the prescribed timelines and regulations.

As a result of this news, the market reaction was evident as Sheela Foam Ltd's shares concluded at Rs 1,103.30, witnessing a decline of Rs 23.80 or 2.11 percent on the BSE. The company's future steps in addressing this taxation challenge will be closely monitored by stakeholders and the market.