Eicher Motors Subsidiary Receives GST Show Cause Notice for ₹168 Crore

Eicher Motors Limited announced today that its material subsidiary, VE Commercial Vehicles Limited (VECV), has received a demand-cum-show cause notice from the office of the Commissioner, CGST & Central Excise, Ujjain Commissionerate, Ujjain, Madhya Pradesh. The notice, dated July 3, 2025, alleges contraventions of the Central Goods and Services Tax Act, 2017, the Madhya Pradesh Goods and Services Tax Act, 2017, and the Integrated Goods and Services Tax Act, 2017, specifically pertaining to the financial year 2017-18.

The notice demands that VECV show cause within 30 days of its receipt as to why Goods and Services Tax (GST) amounting to ₹168.19 Crores, along with an equivalent penalty and applicable interest, should not be demanded from the company. This demand is raised under Section 74(1) of the CGST Act, 2017, and other relevant provisions.

Eicher Motors stated that VECV has assessed the demand as "not maintainable." The subsidiary is currently evaluating the matter and plans to submit its reply within the stipulated time frame. Eicher Motors also communicated that it does not anticipate any significant impact on its financials, operations, or other activities as a result of this notice. The company disclosed the 50-page notice today after completing its internal assessment.

Perspective on the Notice:

This show cause notice, issued for the financial year 2017-18, falls within the initial period of GST implementation in India. The GST regime, introduced in July 2017, represented a significant overhaul of the country's indirect tax structure. During the early years of such a transition, it is common for tax authorities to issue show cause notices to companies. These notices often arise from differing interpretations of the new, complex tax laws, discrepancies identified during audits, or challenges in compliance by businesses adapting to the new system.

The substantial amount of ₹168.19 Crores suggests a significant alleged shortfall in tax payment or reporting. Tax authorities typically issue a "demand-cum-show cause notice" as a preliminary step, providing the taxpayer an opportunity to present their case and explain their position before a final tax demand is confirmed. VECV's stance that the demand is "not maintainable" indicates a disagreement with the tax department's assessment, setting the stage for a formal response and potential legal proceedings.