What’s new

• The DGGI Delhi Zonal Unit issued a show cause notice for FY21 to FY25.
• The demand equals 7.3% of the company's ₹115 cr market cap.
• Authorities allege wilful misstatement and suppression of facts under Section 74 of the CGST Act.

Why it matters

The DGGI is accusing a nano-cap firm of intentional tax evasion, not just a clerical HSN error. With potential penalties matching the tax demand, the total liability could double the current financial hit, threatening the company's cash position.

What we’re watching

• The company's formal legal response to the DGGI notice.
• Any potential impact on operations across the four involved states.
• Whether the company sets aside provisions for the potential penalty.

The full read

Purple Wave Infocom is under scrutiny from the Directorate General of GST Intelligence. The agency issued a show cause notice alleging the company short-paid ₹8.39 crore in GST between FY21 and FY25.

It is a serious charge.

The DGGI claims Purple Wave intentionally misclassified LED video wall products to pay a 18% tax rate rather than the applicable 28%, invoking Section 74 of the CGST Act which specifically targets cases of fraud, wilful misstatement, and suppression of facts. For a company with a market cap of only ₹115 crore, this demand is material, and the potential penalty could reach another ₹8.39 crore, effectively doubling the liability and creating significant governance risk while the company attempts to defend its position across four different state jurisdictions.

Primary source: BSE · NSE