Shree Cement Faces ₹588.65 Crore Tax Demand Amidst Ongoing Review

Shree Cement Hit with ₹588.65 Cr Tax Demand for FY22; Firm Calls It “Legally Unfounded”

New Delhi, July 2025 — Shree Cement Ltd has found itself at the receiving end of a hefty tax demand from the Income Tax Department, amounting to ₹588.65 crore for the financial year 2021–22. The notice, served under Section 143(3) of the Income Tax Act, follows a detailed scrutiny of the company’s annual filings.

The order, issued by the Assistant Commissioner of Income Tax (Central Circle), Ajmer, is primarily based on disallowances of deductions that the cement major had claimed in its return. These disallowances have sharply inflated the company's assessed tax liability.

But Shree Cement isn’t taking the matter lying down. The company has called out what it describes as “prima facie errors” in the assessment order and believes that the deductions in question are not only standard in nature but also backed by established tax treatment and precedents.

A person with knowledge of the development, who didn’t wish to be named given the legal sensitivities, said the management believes the assessment has “several inconsistencies” that can be corrected through rectification or by appealing before the appropriate authorities.

In its official statement to stock exchanges, the company also hinted that part of the tax demand may be offset against refunds already due, thereby easing any immediate strain on its cash flows.

Importantly, the cement major reassured investors that the dispute is unlikely to shake its financial stability or operational momentum. “We do not expect any material impact on our ongoing business or financials,” the company said, pointing to past instances where similar disputes were eventually resolved in its favour.

A Glance at Shree Cement’s Strength

Kolkata-headquartered Shree Cement ranks among India’s top three cement manufacturers, with a total installed capacity of 50.9 million tonnes, including overseas facilities. The company also runs significant captive power operations, including a 105 MW diesel-based plant, supported by additional gas-based capacities through rentals and joint ventures.

While the tax demand is substantial, analysts tracking the company say its strong balance sheet and consistent legal track record suggest the matter, though serious, won’t derail its broader growth strategy.