Income Tax Trouble: Sapphire Foods Slapped with Rs. 27 Cr Demand Notice

Sapphire Foods India Limited, the master franchisee for brands such as KFC, Pizza Hut, and Taco Bell in India, has received an order and a show cause notice worth Rs 272.03 million (Rs 27.2 Crore). The company has made a formal disclosure to the National Stock Exchange (NSE) and BSE under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, regarding the tax-related matter. One order is from the Income Tax Department, and another is the show cause notice from the Goods and Services Tax (GST) authorities.

Income Tax Order

As per the disclosure, the Commissioner of Income Tax, Appeals, Ranchi, issued an order under Section 250 of the Income Tax Act, 1961, dated 24th June 2025, demanding Rs 170.41 million (including interest of Rs 39.12 million). The order relates to Assessment Years (AY) 2016-17 and 2018-19 to 2023-24. The income tax department claims that the company did not deduct TDS on certain year-end provisions.

GST Show Cause Notice

The company has also received a Show Cause Notice dated 25th June 2025 from the Additional Commissioner, CGST Commissionerate, Rohtak, Haryana, under Section 74 of the CGST Act, 2017, demanding Rs 101.62 million. As per the GST Department, the notice has been sent because the company claimed excess Input Tax Credit (ITC) when compared to its GSTR-2A returns and incorrectly utilised ITC against outward GST liabilities.

The company mentioned that it had filed an appeal with CIT(A) for the above tax demand, but it was rejected by CIT(A).

The company does not agree with the claims made by the authority and is planning to take the required action to challenge the order and the notice. The company also stated that the above order and notice have no significant impact on the financial and operational performance of the company.