Tamil Nadu Tax Authority Issues Rs 231-Crore GST Demand Notice to IRFC

The Tamil Nadu Goods and Service Tax ( GST ) Department issued a GST demand notice to the Indian Railway Finance Corporation ( IRFC ) of  ₹231 crore pertaining to discrepancies in GST compliance related to specific financial transactions. The notice resulted from scrutiny under GST rules to ensure accurate reporting and tax payment.

The IRFC provides a dedicated source of funding for Indian Railways, ensuring timely availability of funds for infrastructure development and rolling stock acquisition. The organisation contended the demand, stating that it is not maintainable and plans to file an appeal against the order. The demand notice comprises a tax demand of Rs 209.59 crore and a penalty of Rs 20.96 crore. The Tamil Nadu tax authority has disallowed certain GST credits claimed by the IRFC and raised a demand for reverse charge mechanism(RCM) for the financial year 2020-21.

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The IRFC has responded that it will take all necessary steps to defend its position and that the demand notice will not have any material impact on its financial position. As it is important to leverages its strong financial position and creditworthiness, they will defend its position by substantiating evidences suchs as documents and proofs.

The organisation is a dedicated funding arm of Indian Railways which was established to mobilize funds from domestic and overseas markets to meet the financial needs of Indian Railways.  While primarily financing  the acquisition of rolling stock assets like locomotives, passenger coaches, and freight wagons, it also provides lending and other fundraising.

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