Aarti Drugs GST case 2026: SC appeal over ₹230.7 cr

What Aarti Drugs disclosed to exchanges

Aarti Drugs Limited informed stock exchanges that the GST Department has filed a Special Leave Petition (SLP) before the Supreme Court of India. The SLP challenges a Bombay High Court order that was favourable to the company. According to the company’s disclosure, the High Court had set aside an order passed by the CGST and Central Excise Authority. The dispute relates to alleged liabilities connected to IGST refunds and proposed tax demands under the CGST and IGST framework. Aarti Drugs said the matter is now sub-judice in the Supreme Court. The company also stated that it will continue to take appropriate legal steps to defend its position. It said it will update the exchanges on any material development.

The core issue: an IGST refund-linked demand

The dispute centres on a proposed demand of ₹230.70 crore. The company described this figure as comprising IGST, applicable interest, and penalties. The period referenced in the disclosure spans FY2017-18 to FY2021-22. Separately, the company referred to an erroneous IGST refund demand of ₹20.72 crore along with a related penalty. In another part of the disclosure trail, an original show cause notice for FY2023-24 was described as including a ₹20.72 crore IGST refund demand and a ₹209.98 crore demand referenced as a withdrawal under the CGST/IGST Acts. Across the disclosures, the common thread is a large disputed amount linked to IGST refunds and rule-based eligibility conditions. Aarti Drugs has maintained that financial implications cannot be assessed conclusively until the Supreme Court decides.

Key numbers and periods cited so far

The company’s communication contains multiple monetary references across different stages of the dispute and legal proceedings. The largest headline figure is ₹230.70 crore for IGST, interest, and penalties. The ₹20.72 crore figure appears as an erroneous IGST refund demand and also as a penalty amount in certain references. The dispute period is stated as FY2017-18 to FY2021-22 for the ₹230.70 crore proposed demand. A separate reference points to a show cause notice for FY2023-24 with components of ₹20.72 crore and ₹209.98 crore. Aarti Drugs has not stated whether the full ₹230.70 crore and the FY2023-24 references overlap or represent different proceedings, and it has described the matter as complex and under adjudication. The company has repeatedly indicated that the outcome depends on court proceedings.

How the matter reached the Bombay High Court

Aarti Drugs challenged actions taken by CGST authorities by filing a writ petition before the Bombay High Court. The petition was aimed at contesting the confirmed demand and a penalty linked to the IGST refund dispute. The company’s updates refer to a show cause notice dated August 2, 2024 and an Order-in-Original dated February 3, 2025. These were stated to be based on Rule 96(10) of the Central Goods and Services Tax Rules, 2017. Aarti Drugs sought writs to quash and set aside the impugned order. In the course of this litigation, the High Court issued interim and then further orders that provided relief to the company against recovery actions.

The May 6, 2025 ad-interim relief on coercive recovery

A key turning point mentioned by the company is an ad-interim order of the Bombay High Court dated May 6, 2025. The High Court directed the CGST and Central Excise Authority to refrain from taking coercive measures to recover the disputed penalty. The company described this as interim relief that prevented immediate enforcement while the case continued. The order, as summarised, was limited to recovery actions and did not finally decide the merits of the tax dispute at that stage. Aarti Drugs stated that this provided temporary protection and stability while the matter was adjudicated. The company’s narrative indicates that the relief was important because the demand size was significant. It also framed the relief as one part of a broader landscape of regulatory challenges it was navigating.

The October 6, 2025 update and the High Court setting aside order

Aarti Drugs referenced an earlier intimation dated October 6, 2025 relating to a Bombay High Court order. In that communication trail, the company said the High Court allowed its writ petition and set aside the prior order issued by the CGST and Central Excise Authority. The company’s latest disclosure states that the GST Department is now challenging this favourable High Court outcome. This sequencing is important because it clarifies that the dispute moved from interim protection to an order that set aside an authority action, before the matter shifted to the Supreme Court. The company did not provide the full text of the High Court reasoning in the disclosure summary. But it clearly stated that the High Court’s decision was favourable enough for the Department to file an SLP.

What the Supreme Court SLP means for the case

The filing of an SLP by the GST Department shifts the dispute to the Supreme Court’s docket. Aarti Drugs has stated that the matter is sub-judice, and therefore the financial impact is difficult to assess at this stage. The company’s disclosure does not state whether any interim stay has been granted by the Supreme Court, or whether the High Court relief continues pending further hearings. It also does not specify a date for the Supreme Court hearing. What is clear is that the Department is seeking redressal against the High Court’s setting-aside order through the SLP route. For investors, the key takeaway is that the dispute remains unresolved and is now at the apex court stage. Aarti Drugs has indicated it will continue its legal defence and keep exchanges informed.

Why Rule 96(10) and IGST refunds matter in this dispute

The company’s case references show cause and adjudication orders based on Rule 96(10) of the CGST Rules, 2017. The dispute is described as linked to IGST refunds and alleged non-compliance with applicable conditions. While the disclosure does not elaborate on the specific factual findings by the department, it indicates the demand has been framed around refund eligibility and associated liabilities. Such matters typically involve documentation, eligibility under export or refund rules, and interpretation of rule-based restrictions. The disclosure highlights that the matter involves IGST, interest, and penalties, suggesting that the authorities have treated the issue as having both tax and enforcement dimensions. Aarti Drugs has challenged these conclusions through writ proceedings and continues to contest the outcome.

Market impact: what is known, and what remains uncertain

Aarti Drugs has not quantified the potential financial hit beyond stating the disputed amounts and indicating uncertainty. The company explicitly said management currently finds it difficult to assess the financial impact because the matter is before the Supreme Court. From a compliance and disclosure standpoint, this means investors should treat the liability as contingent on litigation outcomes. The earlier High Court direction against coercive recovery reduced immediate collection risk relating to the penalty recovery that was stayed. But the Supreme Court appeal introduces a new layer of uncertainty because it seeks to overturn a favourable High Court order. The company has not indicated any operational disruption arising directly from the court orders described. It has also not disclosed any accounting provisioning decisions in the provided text.

A brief timeline of disclosed milestones

The dispute has moved through departmental orders, High Court proceedings, and now a Supreme Court appeal. The dates disclosed provide a clear structure to track the case. The show cause and adjudication steps are referenced in 2024 and early 2025, followed by interim relief in May 2025. A later High Court setting-aside order was referenced in an October 2025 intimation. The latest update is the Department’s decision to file an SLP in 2026.

What to watch next

The next key trigger is the Supreme Court’s handling of the SLP, including whether it issues notice, grants interim relief, or lists the matter for detailed hearing. Aarti Drugs has said it will continue legal steps to defend its position. Investors will likely track any further exchange filings for updates on hearing dates or any interim orders. The company has also indicated it will provide updates on material developments, which may include changes in the status of recovery, demand quantification, or court directions. Until then, the disputed amounts remain subject to judicial outcome, as the company itself has emphasised.

Company contact details (as disclosed)

Aarti Drugs’ investor contact information shared in the material includes an email address investorrelations@aartidrugs.com and a website http://www.aartidrugs.co.in. The address mentioned is Plot No. 198, M.I.D.C., Palghar District, Maharashtra, Pin Code 401506. Telephone and fax numbers listed are 24072249 and 24073462, respectively. These details appear in the disclosure material alongside the legal update.