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Business News/ Companies / News/  Hindustan Zinc gets 91 crore GST demand, Company plans legal challenge, HZL stocks in green

Hindustan Zinc gets ₹91 crore GST demand, Company plans legal challenge, HZL stocks in green

Hindustan Zinc Limited received around ₹92 crore demand for Goods and Services Tax (GST) on statutory levies. HZL plans to challenge this order in court, citing a similar successful case from the previous year.

Hindustan Zinc CEO Arun MisraPremium
Hindustan Zinc CEO Arun Misra

Hindustan Zinc Limited (HZL), a subsidiary of Vedanta Ltd, disclosed that it has received an order from the Additional Commissioner, Central Excise and CGST Commissionerate, Udaipur, demanding payment under the Central Goods and Services Tax Act, 2017, as per a regulatory filing. The company has been directed to pay 91,90,16,104 as GST, along with an equivalent amount of penalty and applicable interest.

The stocks of Hindustan Zinc Limited were up 0.94 per cent at 296.75, at 1:51 pm on March 22, on BSE. HZL's stock is around 13 per cent down from its 52-week high of 344. The company enjoys a market capitalisation of 1,25,386 crore.

Additionally, the restructuring plan of Hindustan Zinc Ltd (HZL), aimed at creating two distinct entities, may be postponed for the time being. This comes as the government, holding a 29.54 per cent stake in the company, has shown reluctance towards the proposal.

In response to inquiries, HZL's Chief Executive Officer, Arun Misra, informed Mint, "Based on the findings of a reputable consultant, we strongly believe that demerging HZL to establish separate entities for Silver and Zinc could enhance the company's overall market capitalization, thereby unlocking value for all shareholders. We have received a response from the Ministry of Mines, which is yet to be deliberated upon by the board along with our observations."

Hindustan Zinc, a leading integrated producer of zinc, lead, and silver, is a subsidiary of the diversified natural resources company Vedanta Ltd.

In light of the merits of the case, the company has expressed its intention to file a writ petition before the High Court, challenging the order.

Notably, in an identical matter for the previous year, Hindustan Zinc had received an interim stay order from the Rajasthan High Court against a similar demand order.

The order, dated March 20, 2024, and received by the company on March 21 at 4:30 PM, pertains to the levy of GST on statutory levies like the District Mineral Fund (DMF) and the National Mineral Exploration Trust (NMET) contributions to the state exchequer.

The company has stated that it does not expect the said order to have any material financial impact on its operations, given the legal recourse available and the precedent of an interim stay granted by the High Court

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Published: 22 Mar 2024, 03:02 PM IST
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