Sapphire Foods India GST notice: ₹977m demand in 2026

What Sapphire Foods disclosed, and why it matters

Sapphire Foods India Ltd, a quick service restaurant operator, disclosed that it received show cause notices from Tamil Nadu GST authorities involving a cumulative demand of ₹977.06 million. The notices alleged excess availment of input tax credit (ITC) when compared with GSTR-2B. The company told stock exchanges that it was evaluating the notices and would respond to the authorities. It also said the claims raised by the department were “not maintainable,” and that it did not expect a material impact on its financials or operations due to the notices.

For investors, the episode mattered because tax disputes can create uncertainty around cash flows, compliance, and potential contingent liabilities. The case also highlighted the scrutiny around ITC reconciliation under GST, particularly where mismatches are alleged against GSTR-2B data.

The Tamil Nadu GST show cause notices: core allegations

According to the company’s exchange filing referenced in the report, the notices were issued by the Office of the Assistant Commissioner (ST), Koyambedu Assessment Circle, Chennai, Tamil Nadu. The action was initiated under Section 73 of the Tamil Nadu SGST Act, 2017, through DRC-01.

The allegation was that Sapphire Foods availed excess input tax credit compared with the amounts reflected in GSTR-2B for the relevant periods. The cumulative demand covered two assessment windows: April 2022 to March 2023 and April 2023 to March 2024. The notice date was May 26, 2026, and the company said it received both notices on May 26, 2026.

Amount involved: ₹977.06 million (₹97.71 crore)

The demand amount stated in the coverage was ₹977.06 million, which the company also described as ₹97.71 crore. This figure was repeatedly cited as the cumulative amount linked to the alleged excess ITC.

Sapphire Foods stated it was reviewing the notice and would take necessary steps, including filing a detailed response with the tax authorities. It also clarified that it saw no material impact on its financial or operational activities from the issuance of these notices.

Exchange intimation and regulatory context

The company had earlier informed stock exchanges about the notice on May 27, 2026. The report also noted that the notices were received a day earlier, on May 26, 2026. Such disclosures are typically made under SEBI listing regulations when an event is considered material or relevant for investors’ assessment.

The company’s communication, as reflected in the report, focused on three points: the source of the notice, the alleged ITC mismatch with GSTR-2B, and the company’s position that the claim is not maintainable.

Orders later dismissed the Tamil Nadu demand, company said

The same coverage also stated that Sapphire Foods later received favourable orders in the dispute with the Tamil Nadu commercial tax department. The orders related to the same demand of ₹977.06 million.

Tamil Nadu GST authorities dismissed the ₹97.71 crore demand tied to alleged excess ITC for April 2022 to March 2024, with orders dated June 23, 2026 and June 26, 2026. The Assistant Commissioner, Koyambedu, passed orders in favour of Sapphire Foods, dismissing the demand for the periods April 2022 to March 2023 and April 2023 to March 2024. The report described these orders as settling the matter in the company’s favour.

Separate smaller order disclosed as immaterial

In addition to the large demand, Sapphire Foods also disclosed a separate, smaller order of ₹2.06 million (approximately ₹0.21 crore). The company described this smaller amount as immaterial under SEBI regulations, as per the report.

While the smaller figure was not positioned as a major financial risk, it was disclosed alongside the broader GST-related developments.

Quick timeline of the key dates

The case sequence in the report spans from issuance and receipt of the show cause notices to the later favourable orders. The dates are important because they show when the demand was raised and when the company said it was resolved in its favour.

Key facts table: authority, period, and amounts

The dispute, as described, was anchored to an ITC mismatch allegation and a single cumulative demand figure for two periods.

Market impact: “in focus” but no quantified move reported

The report said Sapphire Foods India shares were likely to remain in focus after the disclosure of the show cause notices and the cumulative tax demand. However, no specific share-price movement, trading volume data, or index comparison was provided in the text.

From a market perspective, the most concrete update in the coverage was the later dismissal of the demand through orders dated June 23 and June 26, 2026. This directly addressed the key overhang related to the ₹977.06 million demand described in the notice.

Broader context: another GST demand order disclosed earlier

Separately, the article text also referenced a different GST matter involving Haryana tax authorities. Sapphire Foods disclosed receiving a GST demand order worth ₹2,032.5 million (₹203.25 crore) for alleged excess ITC claims during April 2018 to March 2022. The demand included ₹1,016.2 million (₹101.62 crore) as tax liability and an equal penalty amount of ₹1,016.2 million.

That Haryana order was stated to be issued by the Office of Principal Commissioner, Central Goods & Services Tax Commissionerate, Rohtak, Haryana, dated December 31, 2025. The disclosure was stated to have been made under Regulation 30 on January 1, 2026, and it followed a show cause cum demand notice initially received on June 26, 2025 under Section 74 of the CGST Act 2017.

Conclusion

Sapphire Foods India’s disclosure centred on a Tamil Nadu GST show cause notice alleging excess ITC, with a cumulative demand of ₹977.06 million for April 2022 to March 2024. The same coverage later reported that the Tamil Nadu GST authorities dismissed this demand through orders dated June 23 and June 26, 2026. Investors will watch for any further regulatory correspondence the company discloses, including documentation of the dismissal and closure procedures linked to the June 2026 orders.