look news india
A major legal and taxation related development has come to light regarding India’s pharmaceutical sector leader and Mumbai-based manufacturing company Unichem Laboratories Ltd. The Goods and Services Tax (GST) authorities have issued a huge demand order of ₹93.66 crore to the company, which mainly includes the liability of huge penalty and interest. In a formal regulatory filing to the stock exchanges on Saturday, September 19, the pharma giant clarified that it has received the order-in-appeal from the office of the Commissioner (Appeals), Thane. Despite this huge tax demand, the company management has assured its shareholders and investors that this administrative order will not have any adverse or material impact on the core financial health, day-to-day operations or business activities of the company.
According to official details shared by Unichem Laboratories, penalties constitute the largest portion of the total liability of ₹93.66 crore. The order imposes a net penalty of approximately ₹87 crore, imposed under the stringent provisions of Section 74(1) and Section 122(2)(b) of the Central Goods and Services Tax (CGST) Act, 2017. These sections are generally invoked in cases of discrepancies in tax assessments, delays in assessment of tax liabilities or input disputes. Additionally, interest liability of ₹6.58 crore has also been assessed on the Company due to delay in settlement of tax liability. The company received this formal order after 2:00 pm on September 18, 2026, following which the information was immediately transmitted to the stock exchanges in accordance with regulatory standards.
According to tax experts, this entire case against Unichem Laboratories is related to the internal allocation of shared services in the corporate structure i.e. ‘cross-charging’ arrangement. It is alleged that the tax liability was settled after the time of supply of services provided between the corporate office and other subsidiary units. The tax authorities have considered this to be a violation of the mandatory statutory provisions of Section 13 of the CGST Act, 2017 and Rule 47 of the CGST Rules, 2017. Under these rules, there is an obligation to issue challan within the prescribed time limit and deposit the tax due on time. Due to this technical interpretation of the rules, the tax department passed this order while calculating interest and punitive penalty.
Clarifying its stand on this huge tax demand, Unichem Laboratories has said that it is conducting a legal review with experts and senior tax advisors. The company believes that the issue of cross-charging is a matter of legal interpretation and that it has sufficient legal grounds to file an appeal against this order. The pharma company has confirmed that it will exhaust all legal remedies available under the law and formally challenge this order before the relevant appellate authority or GST Appellate Tribunal (GSTAT) within the stipulated time frame.
Unichem Laboratories has also been in the news in recent months over audits by international regulators. Earlier in February, the company had revealed in a regulatory filing that the US Food and Drug Administration (USFDA) had completed a comprehensive inspection of its Active Pharmaceutical Ingredients (API) manufacturing plant in Kolhapur, Maharashtra. This regulatory investigation was conducted between January 27 and February 2. At the end of the inspection, the US health regulator issued Form 483 and recorded five technical observations. The company had clarified at that time that it would submit its detailed and satisfactory response to the USFDA along with corrective actions within the stipulated time limit of 15 working days.
Despite the backdrop of GST notice, Unichem Laboratories shares gained ground on Dalal Street. At the end of the trading session on Friday, September 18, the shares of Unichem Laboratories Limited successfully closed at ₹545.25 with a rise of ₹7.60 or 1.41 per cent on the Bombay Stock Exchange (BSE). Market analysts assess that investor confidence remains intact due to the company indicating legal appeal and announcing that the operational impact will be zero. However, investors will keep a close eye on the hearings at the appellate forums and the final closure report on USFDA’s Kolhapur plant in the coming quarters.