Shemaroo Entertainment said on Friday that it would challenge a claim made by a tax authority after three of its top executives were arrested and then released on bail following a search of its premises.

What Happened: The Mumbai-based media and entertainment firm said in an exchange filing that a court had held the arrests to be illegal and the remand of the company's officials was not warranted.

It also said that it would fight claims made by the Central Goods and Services Tax (CGST) and Central Excise Departments, saying “all the statutory dues and compliances have been duly paid and filed by the Company”.

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A Tax Saga: On September 5, the CGST and Central Excise Department conducted a search operation at the premises of Shemaroo Entertainment. On September 6, the company’s top executives, joint managing director Atul H Maru, CEO Hiren Gada and CFO Amit Haria, were detained in connection with the ongoing investigation into possible non-payment of certain dues.

However, bail was granted to the detained executives on September 7.

At this stage, the exact impact on the company’s operations and the extent of the alleged misconduct remain uncertain.

Shemaroo currently operates three TV channels, including Shemaroo TV, a Hindi general entertainment channel, Shemaroo Umang, a Hindi channel targeting women with light-hearted stories, and Shemaroo MarathiBana, the company’s first regional channel.

Price Action: Shemaroo’s share price bottomed out, down 5% at ₹131.15 in early trade on Friday.

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