Pricol, a prominent manufacturer of instrument clusters, faces a significant tax inquiry following a Show Cause Notice ( SCN )from the Directorate General of GST Intelligence, Gurugram Zonal Unit. The notice could result in a tax demand exceeding Rs 380 crore, alongside interest and penalty charges.
The investigation, part of a broader GST probe into industry practices, centers on the classification of instrument clusters. While Pricol classified these clusters under Chapter 90 of the Tariff Schedule, subject to an 18% tax rate, the department suggests classification under Chapter 87, with a higher tax rate of 28%.
In response, Pricol defends its classification methodology, citing adherence to internationally accepted principles under the GST scheme. The company emphasised that the SCN represents the tax department’s viewpoint and necessitates clarification from Pricol.
Notably, Pricol noted similar instances within the auto component industry, where manufacturers face comparable demands. However, the company underscores that such notices are routine and underscores a need for explanation rather than immediate liability.
Pricol highlights a prior case in Andhra Pradesh, where a similar notice was resolved in its favor after adjudication. This precedent offers assurance amid the current inquiry.
The company promptly disclosed the notice, received on February 5, 2024, in an exchange filing on February 26, 2024. Delays in disclosure were attributed to the meticulous consideration and legal consultation with experts, reflecting Pricol’s commitment to transparent communication with stakeholders.
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