Mahindra Holidays' Club Services Under GST Lens: Rs. 363 Cr Tax Demand Over Misreported IGST

Mahindra Holidays & Resorts India Ltd (MHRIL) has disclosed in a regulatory filing that it has received a substantial tax demand notice amounting to over Rs. 363 crore from the Goods and Services Tax (GST) authorities in Chennai.

The notice, issued by the State Tax Officer from the Central Board of Indirect Taxes and Customs (CBIC) at Anna Salai, pertains to the financial year 2018–2019.

According to the filing, the show-cause notice demands Rs. 181.54 crore in tax and an equivalent amount as a penalty, bringing the total to Rs. 363.07 crore. The tax authorities have cited incorrect classification and reporting of tax liability—specifically, the company allegedly reported Integrated GST (IGST) on club membership services instead of the applicable Central GST (CGST) and State GST (SGST). Additionally, the notice highlights a significant drop in IGST payments since August 2023, which followed a change in the company's registered office.

MHRIL has stated that, based on its internal assessment and legal counsel’s advice, the demand is not expected to have any financial impact on the company. It also confirmed that it is preparing to take appropriate legal action and will challenge the notice before the relevant authority.

This is the second time this year that the hospitality company has come under scrutiny from tax authorities. On March 1, MHRIL received another demand order totaling over Rs. 17.59 crore for the financial year 2020–21. That demand included interest of Rs. 6.12 crore and a penalty of Rs. 1.11 crore. Authorities alleged discrepancies related to turnover reporting, input tax credit reversals, and credit notes, as well as claims involving vendors whose GST registrations had been cancelled.