Hyundai Motor India hit with ₹258.67Cr GST Compensation Cess and 100% Penalty for alleged Short-Payment on SUV Sales
A Hyundai spokesperson maintained that the legislative amendments and clarifications provided by the CBIC are in favour of the automobile manufacturer.
Hyundai Motor India Ltd (HMIL) on Tuesday confirmed that it has received a demand of ₹517.34 crore from Indian tax authorities. The significant demand amount comprises a Goods and Services Tax (GST) compensation cess of ₹258.67 crore and an equal amount as penalty, levied for alleged short payment of tax on select SUV models. The developments were disclosed by the Indian enterprise...
Hyundai Motor India Ltd (HMIL) on Tuesday confirmed that it has received a demand of ₹517.34 crore from Indian tax authorities. The significant demand amount comprises a Goods and Services Tax (GST) compensation cess of ₹258.67 crore and an equal amount as penalty, levied for alleged short payment of tax on select SUV models.
The developments were disclosed by the Indian enterprise of the Korean-origin automobile manufacturer through a regulatory filing and noted that the order was issued by the Commissioner (Appeals), CGST Department, Tamil Nadu.
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Hyundai has maintained that the demand pertains to the period between September 2017 and March 2020 and arises from the allegation that the company underpaid the GST compensation cess applicable to certain sport utility vehicle (SUV) models.
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What is the GST Compensation Cess?
The GST Compensation Cess is a levy imposed on luxury and sin goods to compensate states for revenue losses after the implementation of GST in July 2017. The scope of the Compensation Cess also extends to high-end automobiles as well.
Hyundai clarified that the order was received by the company via email on July 21 and the total demand includes a 100% penalty of ₹258.67 crore, in addition to the primary cess demand amount.
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Hyundai however did not specify which of its SUV models are involved in the ongoing tax dispute.
A company spokesperson responded to the development stating, “HMIL is of the view that the amendment and the clarifications given by the Central Board of Indirect Tax and Customs (CBIC) to resolve the issue faced by the industry on this matter are in favour of the company. We are in the process of reviewing the order and will exercise the right to seek a legal remedy through an appropriate forum.” as reported by The Economic Times’ CFO platform.
Over the past year, several carmakers in India have come under the radar of the GST authorities for similar alleged short payments of compensation cess, with total industry-wide notices reported to be in the range of ₹8,000 crore to ₹10,000 crore.
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SUVs typically attract a base GST rate of 28%, coupled with an additional compensation cess of 22% depending on specific parameters such as engine capacity, ground clearance and vehicle length.
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The manufacturer has maintained that the present developments shall have no immediate bearing on its financial, operational, or other activities as a result of the order and that it intends to challenge the order through the appropriate legal route.
A Hyundai spokesperson maintained that the legislative amendments and clarifications provided by the CBIC are in favour of the automobile manufacturer.
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