Jubilant FoodWorks Ltd. (JFL), the operator of Domino’s Pizza, Popeyes and Dunkin’ in India, has received a Goods and Services Tax (GST) show cause notice demanding ₹46.9 crore over the alleged incorrect reversal of Input Tax Credit (ITC) while filing its GST returns. The company disclosed the development through a regulatory filing and stated that it intends to challenge the notice before the appropriate authorities.
According to the company, the GST authorities have issued a show cause notice (SCN) alleging that JFL reversed Input Tax Credit in the incorrect table of its GST returns. Based on this alleged procedural error, the department has proposed a tax demand amounting to ₹46.9 crore.
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The notice pertains to the manner in which ITC reversal was reported in the GST returns rather than any allegation of tax evasion or suppression of turnover. The tax department has sought an explanation from the company as to why the proposed demand should not be confirmed.
Company to Contest the Demand
Jubilant FoodWorks has stated that it does not agree with the allegations contained in the show cause notice and believes that it has a strong case on merits. The company has indicated that it will file an appropriate response before the GST authorities and pursue all legal remedies available under the GST law.
The company also expressed confidence that the matter would not have any material adverse impact on its financial position or business operations, subject to the outcome of the adjudication proceedings.
Nature of the Dispute
The dispute appears to revolve around the reporting of Input Tax Credit reversal in GST returns. Under the GST framework, taxpayers are required to disclose ITC claims, reversals, and adjustments in specific tables of the prescribed return forms. Any mismatch or reporting in an incorrect table can trigger scrutiny by tax authorities, particularly if it affects the reconciliation of tax credits.
The department has alleged that the ITC reversal was reflected in an incorrect return table, resulting in the issuance of the show cause notice. At this stage, the allegations remain unadjudicated, and the company has been given an opportunity to present its defence.
What Is a Show Cause Notice?
A show cause notice is the first stage of adjudication under the GST law. It sets out the allegations made by the tax department and gives the taxpayer an opportunity to explain why the proposed demand should not be confirmed. No tax liability becomes final merely upon issuance of an SCN. The adjudicating authority must consider the taxpayer’s submissions before passing a final order.
