National Fertilizers Ltd Receives ₹116.01 Crore SCN for Alleged Wrong GST Refunds
National Fertilizers Ltd has received a Rs. 116.01 crore GST notice for alleged wrongful refunds, with the company planning to contest the demand.
National Fertilizers Limited (NFL), a government-owned fertilizer producer, has received a Show Cause Notice (SCN) for Rs. 116.01 crore from the GST Department over allegations of wrong tax refunds under the inverted duty structure for the financial year 2022-23. The Office of the Commissioner of Central Tax in Guntur issued the notice on June 26, 2025, and NFL informed the National...
National Fertilizers Limited (NFL), a government-owned fertilizer producer, has received a Show Cause Notice (SCN) for Rs. 116.01 crore from the GST Department over allegations of wrong tax refunds under the inverted duty structure for the financial year 2022-23.
The Office of the Commissioner of Central Tax in Guntur issued the notice on June 26, 2025, and NFL informed the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) about it on July 4, 2025, following SEBI’s disclosure norms.
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The GST department claims that NFL’s Vijayawada unit claimed undue refunds on accumulated Input Tax Credit (ITC) under the inverted duty structure, where tax rates on inputs are higher than on finished goods. The department now seeks to recover these refunds, citing it as an erroneous claim by the NFL.
In its disclosure, NFL clarified that this notice would not have any material impact on its financial and operational activities for now. The company has stated it is reviewing the contents of the show cause notice carefully and plans to file an appeal before the Commissioner (Appeals) to contest the demand.
Such notices are part of routine tax compliance and audit procedures, and NFL has expressed confidence in handling the matter as per legal processes without disrupting its business plans.
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NFL has been actively working on expanding its operational footprint in the fertilizer sector:
In Q1 FY26, NFL recorded a 9% increase in fertilizer sales due to strong monsoon predictions and higher demand from farmers, which is expected to support the company’s revenue growth in the coming quarters. The company announced plans to expand its neem-coated urea production capacity by 15% by the end of FY26, which will help it cater to the increasing domestic demand for fertilizers.
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NFL is also focusing on reducing energy consumption in its manufacturing plants to lower costs and improve operational margins, aligning with its sustainability goals. Recently, NFL signed a Memorandum of Understanding (MoU) with Indian Oil Corporation to explore green hydrogen projects to diversify into clean energy initiatives, supporting India’s energy transition goals.
Despite the recent GST notice, NFL remains focused on growth, operational efficiency, and contributing to India’s food security and clean energy future.
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