Sapphire Foods in the Hot Seat: Tax Appeal Loss Triggers ₹30.74 Million Hit

Sapphire Foods India Ltd, the master franchisee for KFC, Pizza Hut, and Taco Bell in India, faces a fresh tax setback after the Commissioner of Income Tax (Appeals), Ranchi, dismissed its appeal, thereby confirming a tax demand of ₹30.74 million. The order, received on June 25, 2025, pertains to alleged non-deduction of TDS on year-end provisions for assessment years 2016-17 and 2018-19 to 2023-24.

 

Key Highlights:

 

Appeal Dismissed: The company’s challenge against the income tax demand was rejected by the CIT(A), affirming the department’s claim under Section 201(1)/(1A) of the Income Tax Act, 1961. The total demand, including interest, stands at ₹170.41 million, but the current confirmed demand is ₹30.74 million for the relevant years.

 

GST Notice Adds Pressure: In addition to the income tax order, Sapphire Foods also received a show cause notice from the Additional Commissioner, CGST Commissionerate, Rohtak, Haryana, for allegedly availing excess Input Tax Credit (ITC) worth ₹101.62 million. Authorities claim discrepancies between the company’s claimed ITC and its GSTR-2A returns, as well as incorrect ITC utilization against GST liabilities.

 

Company’s Response: Sapphire Foods maintains that the claims are not sustainable and asserts there is no material impact on its financial or operational activities at this stage. The company is evaluating its legal options and intends to challenge both the income tax order and the GST notice at higher appellate forums.

 

Business Continuity: Despite these tax challenges, Sapphire Foods has assured stakeholders that its core operations and financial health remain unaffected.

 

Sources: NSE Corporate Disclosure, StudyCafe, India Filings Digest