India’s Supreme Court on Monday set aside a ₹1.78 trillion tax demand against Tata Steel Ltd., ruling in favor of the company in a long-running dispute over alleged input tax credit irregularities.
The court quashed a show cause notice issued in June 2025 and subsequent orders by tax authorities in Jamshedpur, which had demanded ₹890.52 billion in tax, an equal amount in penalties and applicable interest. The alleged irregularities spanned fiscal years 2018-19 through 2020-21, with authorities claiming Tata Steel improperly availed input tax credits.
Tata Steel had contested the demand, arguing the credits pertained to one financial year but were claimed in a subsequent period, a practice it maintained was permissible under the Central Goods and Services Tax Act, 2017. The company also contended the notice was issued without jurisdiction and was time-barred.
The Supreme Court’s order follows a timeline of legal challenges. Tata Steel filed a writ petition in the Jharkhand High Court in February 2026, which was disposed of in April 2026. The company then secured a stay on further proceedings in May 2026 before the Supreme Court heard the case in August 2026. The court allowed the appeal, quashing the demand while permitting the tax department to initiate fresh proceedings under Section 74 of the CGST Act if deemed appropriate.
The tax department has until February 28, 2027 to take any such action. Shares of Tata Steel were not immediately available for comment on the ruling.
