Britannia Receives ₹25 Crore GST Demand Over Product Classification and Tax Credit Issues

Britannia Receives ₹25 Crore GST Demand Over Product Classification and Tax Credit Issues

May 10, 2025 | Business & Taxation | By TE NOW

Britannia Industries Ltd, one of India’s leading packaged food companies, has been served a demand notice exceeding ₹25 crore by the Central Goods and Services Tax (CGST) authority, as per a recent regulatory filing.

The order, issued by the Additional Commissioner of CGST & Central Excise (Kolkata North), pertains to the tax periods between July 2017 and March 2023—covering nearly six years of the company’s operations under the Goods and Services Tax (GST) regime.

Key Areas of Dispute

According to Britannia’s disclosure, the demand is related to:

• Classification of a product sold by the company: Disagreements over product classification under GST slabs can lead to significant tax liabilities, especially in sectors like FMCG, where multiple rates may apply to similar goods.

• Input Tax Credit (ITC) on certain goods: The GST authority has raised concerns about ITC claimed on specific inputs, which could indicate a dispute over eligibility or documentation.

The company did not disclose the exact product under dispute but stated that it is currently evaluating the order and intends to take appropriate legal recourse.

Impact on Operations

While ₹25 crore is relatively modest in comparison to Britannia’s overall revenue scale, tax disputes such as this can:

• Lead to cash flow constraints

• Result in additional compliance burden

• Create precedents affecting future product classifications

Britannia has confirmed that the order does not immediately impact its routine operations and that it will contest the matter in accordance with legal provisions.

Industry Context

Tax classification issues under GST remain a common challenge in the FMCG sector, where products often straddle multiple GST rates based on ingredients, packaging, or branding.

In recent years, several FMCG giants have faced similar disputes, prompting calls for clearer classification norms and faster dispute resolution mechanisms.

Next Steps

Britannia is expected to file an appeal before the appropriate appellate authority. The company reiterated its commitment to full legal compliance and expressed confidence in addressing the matter through statutory channels.

Investors and market analysts are watching closely to see if the case signals broader scrutiny of GST compliance in the food and consumer goods segment.