However, the order today includes an interest element and charges a penalty of ₹8.6 crore.
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However, the order today includes an interest element and charges a penalty of ₹8.6 crore.
Maruti Suzuki India Ltd. (MSIL) announced that its wholly owned subsidiary, Suzuki Motor Gujarat Pvt. Ltd. (SMG) has been issued an Appellate Order by the Gujarat CGST Authority upholding a previously raised tax demand of ₹86.1 crore for April 2020-August 2022. This figure, pertaining to reverse charge tax liability on specified services, had already been remitted by SMG prior to the issuance of the original Show Cause Notice. However, the order today includes an interest element and charges a penalty of ₹8.6 crore.
The official communication sent to the NSE and BSE states that the appellate order confirms the core demand and also:
Maruti Suzuki stated that this regulatory update will have no material financial or operational effect on the company, and SMG would pursue a further appeal in the tax tribunal.
Although ₹86.1 crore in tax and ₹8.6 crore in penalties might be large in absolute terms, Suzuki Motor Gujarat is a big production facility, and Maruti Suzuki's consolidated quarterly revenues typically run above ₹30,000 crore. Therefore, this issue of non-compliance accounts for less than 0.3 per cent of one quarter's revenue and will not likely impact financial guidance or investor sentiment substantially.
While it does indicate ongoing vigilance by tax authorities and the need for strong GST compliance systems, particularly as reverse charge methods become more prevalent across service procurements.
Maruti Suzuki said that SMG will challenge the order before the relevant tribunal. The company also intends to apply for amnesty consideration for prior periods under dispute, which may result in waiver or mitigation of penalties and interest if granted.
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