Directorate General of GST Intelligence, Gurugram Zonal Unit issues a show cause notice to Pricol demanding a tax of Rs 380 cr including interest and penalty.
Pricol is a leading manufacturer of instrument clusters. As per the exchange filing, the notice was obtained “as part of an industry-wide Goods and Services Tax (GST) investigation, concerning the classification of instrument clusters”.
The classification of the company is directed to an 18% tax rate the method of counsel is directed to a 28% tax rate.
The company is not the only firm that is facing the demand from the counsel, exchange filing mentioned. It mentioned that proceedings have been executed through the counsel against distinct auto element manufacturers engaged in the supply of instrument clusters.
The filing exemplified what the company has laid on for following its classification method: “Following the scheme of classification proposed under GST, which is established on internationally accepted principles, the Company had categorized instrument clusters under Chapter 90 of the Tariff Schedule as Speed Indicators and Tachometers and supplied the same on payment of GST @18%.”
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The company in the filing mentioned the view of the company including the financial impact it can have, as per the notice the counsel asked the company to elaborate on the classification of the instrument clusters under Chapter 90, as against the classification under Chapter 87 offered through the Department. INR 3800.5 million is the demand frontage. The SCN offered to levy the interest and penalty.
In the filing, it mentioned that the SCN is just the proposal to secure the reasonable demand established on the understanding of the Tax Department, and the company is now solely called upon to elaborate its perspective.
It was also stated by the company that these department notices are not uncommon and that its body in Andhra Pradesh was in receipt of the same notice stating GST payment for the alleged misclassification of instrument clusters. It included that the matter concluded in the favour of the firm and the Adjudicating Authority agreed with its classification under Chapter 90.
As per the exchange file, the company received the notices on February 5, 2024, from the zonal unit on February 15, 2024. The company furnished grounds for the being in intimating exchanges, in the February 26 filing.
The company wishes to reveal the information of the aforesaid GST show cause notice to the stakeholders including the information of the impact on the financial, operation, or additional companies activities because of the said notice. We had approached M/s. Lakshmikumaran and Sridharan Attorneys, a leading law firm in GST practice, strived to their view and after consideration of the case, they furnished their view dated 26th February 2024.
