Max Healthcare Institute's wholly owned subsidiary, Alps Hospital, has received a show-cause-cum-demand notice involving ₹165.7 crore in tax and proposed penalties over alleged non-payment of GST on variable management fees. According to an exchange filing by Max Healthcare, the notice was issued by the Directorate General of Goods & Services Tax Intelligence (DGGI), Mumbai Zonal Unit. The dispute centres specifically on the tax treatment of variable management fees, on which the DGGI has alleged that GST was not paid.
The DGGI has alleged a GST liability of ₹55.23 crore, along with applicable interest. It has also proposed a penalty of ₹55.23 crore under Sections 74(1) and 74A(5)(ii) of the Central Goods and Services Tax Act, 2017, and another ₹55.23 crore under Section 122(2)(b). Together, the alleged tax liability and proposed penalties amount to about ₹165.7 crore, excluding interest. As reported by CNBC TV18, the notice does not amount to a final tax order and establishes that Alps Hospital owes the entire ₹165.7 crore. The company has not provided further details in its disclosure on the nature of the management-fee arrangements or the period to which the alleged liability relates.
Max Healthcare said its management is preparing submissions against the demand. According to the company's disclosure, Alps Hospital can submit its response to the DGGI challenging the alleged tax liability and penalties. The eventual financial impact will depend on the outcome of those proceedings. Max Healthcare has not provided further details in its disclosure on the nature of the management-fee arrangements or the period to which the alleged liability relates.
