Dreamfolks Services has reportedly received a show-cause notice proposing ₹78.86 lakh in tax and an equal penalty over input tax credit (ITC) claimed on invoices from a supplier whose GST registration was cancelled retrospectively. The notice concerns FY 2021–22. It is a proposed demand, not a final order confirming that Dreamfolks owes the amount.
Why did Dreamfolks receive the GST notice?
According to StudyCafe’s account of the company’s disclosure, the demand-cum-show-cause notice concerns ITC claimed on invoices issued by a supplier whose GST registration was cancelled with retrospective effect. Dreamfolks reportedly said the supplier had deposited the applicable GST. That statement is the company’s reported position; it does not by itself establish whether Dreamfolks was legally entitled to the disputed credit.
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The notice is reported to have been issued by the Office of the Commissioner of CGST (Audit), Gurugram, under section 74(1) of the Central Goods and Services Tax Act, 2017, read with section 20 of the Integrated Goods and Services Tax Act, 2017, and rule 142 of the CGST Rules, 2017.
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How much is proposed, and what does it include?
| Component | Reported amount |
|---|---|
| Tax | ₹78.86 lakh |
| Penalty | ₹78.86 lakh |
| Interest | Applicable interest is additional; the report does not quantify it. |
The tax and proposed penalty together are approximately ₹1.58 crore before interest. The reported figure is rounded, and should not be read as an exact total inclusive of interest.
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Has the GST department confirmed the demand?
No final adjudication is reported in the available coverage. A demand-cum-show-cause notice sets out a proposed position and gives the company an opportunity to respond; it is not the same as a final order establishing liability. The coverage does not report a payment, appeal, resolution, or later outcome.
What has Dreamfolks said about its response and business impact?
Dreamfolks reportedly said it was preparing a detailed and appropriate reply within the prescribed time. The company also said it did not expect an immediate material impact on its financial, operational, or business activities. That is the company’s assessment, not an independent conclusion about the case’s merits or eventual financial effect.
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What remains unclear?
The reported coverage does not establish the supplier’s identity, invoice-level facts, exact interest amount, response deadline, or the notice’s complete allegations. The underlying notice and primary exchange filing have not been independently examined here, and no subsequent company update or final outcome is established by the cited coverage.
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