Runwal Enterprises challenges confirmed Rs 189.068 crore GST demand

Runwal Enterprises is challenging a confirmed Rs 189.068 crore goods and services tax, or GST, demand for financial years 2018-19 and 2019-20. The December 30, 2025 order also imposed an equal Rs 189.068 crore penalty after the tax authority found that Runwal Enterprises had not documented payment of GST on Rs 1,050.379 crore of differential turnover.

Why is Runwal Enterprises challenging the confirmed GST demand?

Runwal Enterprises challenges the Rs 189.068 crore GST demand because it says the tax authority compared figures prepared under different revenue-recognition rules. The Office of the Principal Commissioner of Central Goods and Services Tax and Central Excise, Mumbai-East Commissionerate issued a show-cause notice on June 26, 2025 under Section 74 of the Central Goods and Services Tax Act, 2017, or CGST Act, following scrutiny of a mismatch between Form GSTR-9 and audited financial statements for financial years 2018-19 and 2019-20.

The notice identified Rs 1,050.379 crore of unrecognised taxable turnover and proposed GST of Rs 189.068 crore, along with interest under Section 50(3) and penalties under Sections 74 and 122 of the CGST Act. Form GSTR-9 is the annual GST return. The question in the dispute is whether the difference represented GST that was unpaid or a difference in when customer receipts and financial revenue were recorded.

Runwal Enterprises said its financial accounts follow the project-completion method, whereas GST liability arises at the time of supply. The disclosure defines time of supply as the earlier of invoice issuance or receipt of payment. Under Runwal Enterprises' explanation, GST can become payable on customer collections before the related amount is recognised as revenue under project-completion accounting.

What did Runwal Enterprises submit to support its reconciliation?

Runwal Enterprises submitted that appropriate GST had been paid on all customer collections and that the Rs 1,050.379 crore difference was not unpaid taxable turnover. In its November 24, 2025 reply to the show-cause notice, Runwal Enterprises said a comparison of project-completion revenue with turnover measured at time of supply used non-comparable figures.

Runwal Enterprises also relied on its Form GSTR-9C disclosure, which it said had explicitly stated the reason for the variance and was certified by a chartered accountant. It submitted a chartered accountant certificate stating that appropriate GST had been paid on customer collections. Runwal Enterprises denied suppressing facts and argued that the demand should be examined under Section 73, rather than Section 74, making it time-barred under the limitation framework it cited.

Runwal Enterprises further objected to the June 26, 2025 notice covering two financial years in one proceeding. Its representatives had requested that the show-cause notice be issued during the pre-consultation hearing because they needed more time to prepare data for adjudication. In its reply, Runwal Enterprises sought cancellation of the tax demand and proposed penalties, arguing that the combined notice and use of Section 74 were invalid.

Why did the authority reject Runwal Enterprises' explanation?

The authority rejected the reconciliation because it concluded that Runwal Enterprises had not produced documentary evidence that GST was paid on the Rs 1,050.379 crore differential turnover. In the order-in-original dated December 30, 2025, the Commissioner acknowledged the stated difference between revenue-recognition principles but held that a reconciliation sheet alone did not prove payment of GST.

The order said Runwal Enterprises had not provided documents including demand letters, invoices, sale registers or occupancy certificates to support its reconciliation. An occupancy certificate is a document associated with a building's completion and occupation. The authority found that the discrepancy would have gone unnoticed without the CERA audit and treated the failure to provide complete details and supporting records as suppression of material facts with intent to evade tax.

That suppression finding allowed the authority to apply the extended limitation period under Section 74 and reject Runwal Enterprises' argument that the demand was time-barred. The authority also rejected the challenge to combining financial years 2018-19 and 2019-20 in one notice, stating that the CGST Act contains no express prohibition on that procedural mechanism. The order therefore focused on the evidence supporting tax payment, rather than denying that project-completion accounting and time-of-supply reporting use different timing rules.

What did the December 2025 order require Runwal Enterprises to pay?

The December 30, 2025 order confirmed GST of Rs 189.068 crore under Section 74(9), applicable interest under Section 50(3), and a penalty equal to the tax demand under Section 74(9) read with Section 122(2)(b) of the CGST Act. The stated tax and equal penalty total Rs 378.136 crore before interest. The disclosure does not quantify the interest liability.

The confirmed tax demand of Rs 189.068 crore matched the amount proposed in the June 26, 2025 show-cause notice. The order did not accept Runwal Enterprises' submission that the chartered accountant certificate and reconciliation established payment of GST on all customer collections. It instead held that the supporting record was insufficient to substantiate the claimed payment against the differential turnover.

The order dropped a separate penalty proposed under Section 122(1)(xvi) for alleged non-maintenance of records. The authority said a penalty for the same omission could not be imposed under another provision after imposing the Section 74 penalty, and that delayed submission of records did not by itself establish that records had not been maintained. This relief did not reduce the confirmed GST demand or the equal penalty.

What is the current status of the Runwal Enterprises GST case?

Runwal Enterprises filed a writ petition before the High Court of Judicature at Bombay on March 27, 2026 under Article 226 of the Constitution of India, and the matter remains pending. The petition seeks to quash the December 30, 2025 order-in-original and obtain interim protection against further proceedings arising from it.

Runwal Enterprises has argued in the writ petition that combining multiple financial years in a single show-cause notice was impermissible, that the order did not consider its reconciliation and documentary submissions, and that the demand was arbitrary and unsustainable in law. The supplied disclosure does not state that the High Court has granted a recovery stay, set a hearing date or decided any of those arguments.

The pending writ means the December 30, 2025 administrative order remains the disclosed determination, rather than a cancelled or reduced demand. The tax, penalty and interest outcome can change only if the court provides relief or the underlying order is otherwise modified. No later update in the supplied disclosure reports either event.

Conclusion

Runwal Enterprises' challenge centres on whether a Rs 1,050.379 crore gap between GST-return turnover and audited financial-statement revenue was an accounting-timing difference or evidence of unpaid tax. The authority accepted that project-completion accounting and time-of-supply GST rules differ, but confirmed Rs 189.068 crore of GST and an equal penalty because it found the company had not substantiated GST payment with underlying documents.

The next matter to watch is the Bombay High Court's consideration of the March 27, 2026 writ petition, including the objection to one notice for two financial years, the alleged non-consideration of submitted materials and the Section 74 suppression finding. The supplied disclosure records no court ruling or interim protection, leaving the December 30, 2025 order as the current administrative outcome.