Maruti Suzuki India recently announced that it received a show-cause notice from the GST Authority. This notice outlines a demand for interest and penalty in addition to the appropriate tax already paid, totalling Rs 139.3 crore.
The issuance of this notice is related to a tax liability, specifically concerning the reverse charge mechanism applied to certain services spanning from July 2017 to August 2022. The company made this disclosure through an official regulatory filing.
Maruti Suzuki India has indicated that it will respond to the show cause notice with the Adjudicating Authority. Furthermore, the company has highlighted that the notice has not had any adverse impact on its financial stability, operations, or other business activities.
In addition to the previous announcement, Maruti Suzuki India shared a significant legal development. The company received a highly favourable judgment from the High Court of Punjab and Haryana. This legal decision pertains to a series of appeals initiated by the Central Excise Department, spanning from June 2006 to March 2011.
The essence of the matter was that the Central Excise Department had contested a previous ruling made by a tribunal in August 2016, which had ruled in favour of Maruti Suzuki India. This tribunal decision allowed the company to claim input service credits for specific services and, importantly, waived the penalty imposed on the company.
The importance of this favourable ruling lies in its validation of the tribunal’s decision, essentially endorsing Maruti Suzuki India’s stance on the issue. Consequently, the High Court dismissed the appeals filed by the Central Excise Department.
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This decision not only upholds the business’s legal stance but also has financial ramifications because Maruti Suzuki India is no longer responsible for paying the disputed tax and penalty sum.
