United Spirits Hit with Twin Tax Demands Worth ₹3.45 Billion—Company Plans to Contest

United Spirits Ltd (NSE: UNSP.NS), India’s leading alcoholic beverage company and a subsidiary of global giant Diageo, has received two significant tax demand notices totaling ₹3.45 billion (₹1.79 billion and ₹1.66 billion respectively), according to regulatory filings. The demands were issued by tax authorities for alleged non-compliance and documentation gaps related to past transactions.

 

The company has stated its intent to challenge the demands through appropriate legal channels and emphasized that it does not expect any material financial impact based on its internal risk assessment.

 

Breakdown of the Tax Demands

The tax demands stem from issues related to statutory declaration forms and delivery proofs, particularly involving Pioneer Distilleries Ltd, which was merged with United Spirits effective December 30, 2023. The notices include:

 

₹1.79 billion: Related to legacy transactions and documentation lapses

 

₹1.66 billion: Additional demand possibly linked to GST inconsistencies or service tax assessments

 

These demands are part of a broader wave of scrutiny by tax authorities across India, targeting multiple companies for historical discrepancies in filings and compliance.

 

Company Response

United Spirits has responded swiftly, stating in its filings:

 

“The company will be contesting the matter by filing a rectification application or appeal before higher authorities. Based on our risk-assessment process, we believe we have a strong case and do not expect any material financial implication.”

 

This measured response reflects confidence in the company’s legal standing and internal compliance protocols. United Spirits has a history of successfully contesting tax demands, including a recent relief from a ₹1.94 billion service tax claim.

 

Market Reaction

Shares of United Spirits Ltd showed mild volatility following the announcement, dipping slightly as investors processed the potential implications. However, analysts noted that the company’s robust financials and history of legal wins may cushion any long-term impact.

 

As of the latest trading session, the stock closed at ₹1,149.75, down 0.70% on the BSE.

 

Industry Context

United Spirits is not alone in facing tax scrutiny. Several major Indian companies—including Zomato, Vedanta, and ICICI Securities—have received similar notices in recent months. The trend reflects tighter enforcement by tax authorities and increased focus on legacy compliance issues.

 

While such demands can create short-term uncertainty, most companies, including United Spirits, have mechanisms in place to address and contest these claims without significant disruption to operations.

 

Outlook

Despite the tax demands, United Spirits remains financially strong and operationally resilient. The company continues to lead the Indian spirits market with a diverse portfolio of premium brands and has shown consistent growth in revenue and profitability.

 

Looking ahead, the company is expected to:

Sources: Economic Times, ET Legal, usiness Standard, CNBC TV18