MSTC’s Growth Story Continues: Tax Notice Sparks Determined Legal Response

Government-held online shopping and trade behemoth MSTC Ltd has been sent a demand notice by the Income Tax Department of ₹1.06 billion (₹105.55 crore), including ₹424.5 million (₹42.45 crore) interest, for assessment year 2019-20. The notice under Section 156 of the Income Tax Act, 1961, is received during a period when MSTC's recent quarter financial performance has been good.

 

Important Highlights:

 

The tax notice comprises both principal tax and interest accrued, with the total being ₹105.55 crore.

 

MSTC explained in its regulatory filings that the notice will not have any material effect on its financial or operational activities, considering the company's strong profitability and cash flows.

 

The firm will challenge the estimate and will appeal before Commissioner of Income Tax (Appeals), Kolkata, reflecting optimism in its legal status.

 

Not withstanding the notification, MSTC fundamentals are sound: the firm delivered a 506% sequential increase in net profit to ₹250.9 crore in Q3FY25 on account of an extraordinary gain of ₹275.5 crore and a 12.8% increase in revenue from operations.

 

The market was shaken by the news with MSTC shares falling 4.11% at ₹434 on the BSE.

 

MSTC assured investors that the demand will not interrupt the current business activities or its growth path, as the company continues to expand its e-commerce and trading business.

 

Market observers and investors will closely watch the proceedings of MSTC's appeal and any subsequent regulatory developments.

 

Sources: CNBC-TV18, MarketScreener, Studycafe, Bajaj Broking