MUMBAI: Den Networks Limited has found itself in the middle of a tax showdown, with authorities in Lucknow and Kochi slapping it with two Goods and Services Tax (GST) penalties totalling nearly Rs 38 crore. The company, however, has strongly refuted the allegations, calling the orders erroneous and confirming plans to file appeals against them.

Dismissing both allegations, Den Networks has reiterated that these tax demands do not impact its day-to-day operations, and that the financial exposure is limited to the penalty amounts. The company remains confident of a favourable outcome in the appeals process. With a legal battle looming, the GST dispute is far from settled Den Networks is preparing to make its case, challenging the tax authorities' interpretation in an attempt to reverse the penalties and clear its name.

The first order, issued by the CGST and Central Excise Commissionerate, Lucknow, on 31 January 2025, imposed a penalty of Rs 4.75 crore under Section 74 of the Central Goods and Services Tax Act, 2017 and the Uttar Pradesh Goods and Services Tax Act, 2017. Tax authorities claimed that Den Networks had wrongfully adjusted deferred revenue for FY 2017-18, allegedly leading to lower GST payments. The company insists this assessment is incorrect.

The second order, passed by the CGST Kochi Commissionerate on 3 February 2025, demanded a staggering Rs 33.25 crore in differential tax, along with an equal penalty amount under Section 122(2)(b) read with Section 74(9) of the Central Goods and Services Tax Act, 2017, and corresponding Sections of the Kerala State Goods and Services Tax Act, 2017, for the period from July 2017 to March 2022. The dispute centres on how GST should be applied—tax authorities argue it should be charged on the total amount collected by local cable operators (LCOs) from subscribers, rather than on the revenue received by Den Networks from LCOs. The company maintains that it has calculated and discharged GST correctly as per regulatory norms.