Image Source : A2Z Taxcorp LLP
Akzo Nobel India Ltd, a leading player in the Indian paints and coatings sector, has recently secured an amnesty order from the Karnataka GST Department, marking an important development in its ongoing tax-related issues. This order effectively annuls a previous substantial demand order, bringing significant relief to the company amid regulatory scrutiny.
Key Highlights of the Amnesty Order and Background
The amnesty order was received on August 26, 2025, from the Karnataka GST Department. It nullifies an earlier tax demand order issued on January 16, 2025.
Previously, the Karnataka GST authorities had raised a major demand concerning Input Tax Credit (ITC) disallowance for the period April 2020 to March 2021. The initial tax demand was valued at approximately ₹44.48 crore, including tax, interest, and penalty components.
Following the company's submissions and legal responses, the demand was considerably reduced by the department, first reflected in an order dated February 25, 2025, which lowered the demand to around ₹3.92 lakh.
The latest amnesty order now annuls the earlier demand order, signifying a regulatory concession and an important easing in the company's tax liabilities for the contested period.
Detailed Developments in the Karnataka GST Proceedings
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Original Demand: The Karnataka GST Department had issued a Show Cause Notice owing to the disallowance of Input Tax Credit under Section 73 of the CGST/SGST Act, 2017. The raised demand included tax, interest, and penalty.
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Company’s Legal Strategy: Akzo Nobel India submitted detailed responses with supporting documents to contest the tax demand, resulting in a significant reduction in the demanded amount.
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Reduction and Amnesty: The Deputy Commissioner of the LTU in Bengaluru reviewed the submissions and issued a revised order on February 25, 2025, dramatically lowering the payable amount.
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Amnesty Order Significance: The recent amnesty order officially annuls the prior demand order, effectively wiping out the financial liability sought by the GST department for this case. This move aligns with government policies encouraging taxpayers to settle disputes under amnesty schemes, fostering compliance and reducing litigation.
Wider Context of GST Litigation Involving Akzo Nobel India
Akzo Nobel India has faced multiple GST-related challenges across different states, reflecting a complex tax environment in the Indian coatings sector.
Prior to Karnataka’s resolution, the company dealt with a GST appeal order from Telangana and an appeal order from Tamil Nadu GST authorities, involving disputes over input tax credits and demand quantums.
The company is actively engaging with GST authorities, submitting objections and representations where necessary to protect shareholder interests and ensure regulatory compliance.
Corporate and Market Implications of the Amnesty Order
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Financial Relief: By receiving the amnesty order, Akzo Nobel India limits potentially large cash outflows related to tax, interest, and penalty payments for past periods.
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Investor Confidence: Resolving such tax disputes positively impacts market sentiment and reassures investors about the company’s management of regulatory risks.
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Strategic Focus: The company’s handling of the GST dispute allows it to focus on ongoing strategic priorities, including the pending acquisition transition to JSW Group announced earlier in 2025.
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Regulatory Outlook: This order exemplifies the evolving dynamics of GST enforcement in India, with authorities willing to offer relief under amnesty provisions amid compliance verification processes.
Summary of Key Takeaways
Akzo Nobel India received an amnesty order on August 26, 2025, from Karnataka GST Department, annulling a major GST tax demand order from January 16, 2025.
The original demand arose from disallowed Input Tax Credit claims for FY 2020-21, initially amounting to ₹44.48 crore but reduced through company appeals and departmental review.
The Deputy Commissioner’s revised order drastically scaled down liabilities before the amnesty order completely withdrew the outstanding demands.
This development reduces financial burdens, boosts investor confidence, and reflects positive engagement between corporate taxpayers and Indian GST authorities.
Akzo Nobel India continues to navigate GST litigations in other states while steering key business transitions such as its sale to JSW Group.
Sources: TradingView Reuters News, Market Screener India, Economic Times Corporate News, Official Akzo Nobel India Disclosures, Moneycontrol News, StockInsights.ai, ScanX Trade News
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