Taxed and Tested: HCL Infosystems Faces Excise Demand, Legal Strategy in the Works

HCL Infosystems Ltd. has announced that it received an order on June 16, 2025, from the Deputy Excise & Taxation Commissioner (Appellate Authority), Punjab, confirming a tax demand of ₹738.52 lakhs (₹7.38 crore). The demand, originally imposed by the Excise & Taxation Officer, Mohali, relates to the application of a higher tax rate on mobile/cell phone chargers sold in composite packs with handsets during FY 2010-11. This action follows the precedent set by the Supreme Court in the State of Punjab vs. Nokia India Pvt. Ltd. case. The company is currently evaluating its legal remedies and may challenge the order in accordance with the law.

 

This development comes at a challenging time for HCL Infosystems, which has been grappling with declining sales and profitability. The company recently reported a significant drop in profit after tax for the quarter ended March 2025, with net sales for the last six months falling by over 30% year-on-year. Legal and arbitration costs remain high, further impacting the company’s financial health.

 

Key Highlights

 

Tax Demand Confirmed: Punjab Appellate Authority upholds ₹7.38 crore tax demand on mobile phone chargers sold with handsets in FY 2010-11, referencing a Supreme Court judgment.

 

Company’s Response: HCL Infosystems is considering all legal options to challenge or mitigate the order.

 

Financial Pressure: The company’s profit after tax declined 71% in Q4 FY25 compared to the previous four-quarter average, and sales continue to slide.

 

Legal Costs Mount: Ongoing legal and arbitration proceedings are contributing to high expenses, as noted in recent financial disclosures.

 

Recent Announcements: HCL Infosystems also disclosed its FY25 results, reported book closure for the upcoming AGM, and filed annual compliance reports.

 

This tax setback piles further pressure on HCL Infosystems as it navigates a period marked by shrinking revenues, persistent losses, and mounting legal costs.

 

Source: The Economic Times, MarketsMojo, Screener.in