Maruti Suzuki Faces GST Authority's Show Cause Notice Over Tax Liability

Posted on    30 September 2023

In a recent development, leading automobile manufacturer Maruti Suzuki India found itself in the crosshairs of the GST Authority. On Friday, the company disclosed that it had received a show cause notice from the authority, raising concerns over tax liability under the reverse charge basis on certain services.

Tax Liability Dispute Spanning Five Years

The show cause notice pertains to a period spanning from July 2017 to August 2022. The GST Authority, in its notice, proposed not only to demand interest but also to impose penalties on Maruti Suzuki. Furthermore, they intend to appropriate the tax already paid by the company, with the amount in question standing at a staggering Rs 139.3 crore.


Maruti Suzuki's Response and Assurance

In response to the show cause notice, Maruti Suzuki India has asserted that it will duly file a reply before the adjudicating authority. The company, however, made it clear that this notice has not had any discernible impact on its financial, operational, or other activities. Maruti Suzuki remains steadfast in its commitment to addressing the matter through proper legal channels.

High Court of Punjab and Haryana Rules in Maruti Suzuki's Favor

In a separate legal victory, Maruti Suzuki India announced that it had received a favorable order from the High Court of Punjab and Haryana. This ruling marks the dismissal of an appeal filed by the Central Excise Department, which had been seeking to deny input service credit to the automaker.

Long-Running Dispute Settled

The dispute with the Central Excise Department dates back to a period from June 2006 to March 2011. In its appeal, the department contested an earlier tribunal order from August 2016, which had favored Maruti Suzuki. The tribunal's ruling allowed the automaker to claim input service credit on certain services while also dropping the associated penalty. The total tax and penalty amount involved in the department's appeal stood at Rs 57.2 crore.

Maruti Suzuki India's successful defense against the appeal is seen as a significant legal victory, while the ongoing dispute with the GST Authority remains a key concern for the automaker. The company is steadfast in its commitment to resolving these matters through the appropriate legal channels.

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