India’s largest carmaker Maruti Suzuki India (MSI) shares dropped as much as 1.2% to ₹11,820.00 apiece on the BSE in early trade today after a Haryana GST appeals authority confirmed a tax demand of ₹139.3 crore against the company, according to the company’s announcement in a release on Wednesday. At the time of reporting, Maruti Suzuki shares were trading 1.22% lower at ₹11,817.20, with a market cap of ₹3,71,535.81 crore.
Maruti Suzuki India shares opened slightly higher today at ₹11,965.05 against the previous close price of ₹11,963.15. Over the past month, the stock has dipped 7.20%, while it dropped 8.67% in the last six months. On the year-to-date (YTD), the counter surged 14.96%.
The carmaker revealed in a filing exchange that the commissioner (Appeals) upheld the demand for the period from July 2017 to August 2022, concerning tax liability under the reverse charge mechanism for certain services.
“The Company had already paid the tax amount of ₹1,393 million before the issuance of Show Cause Notice dated 28th September 2023,” it adds.
The company informed that MSI plans to appeal the decision before the tribunal and noted that the order will not significantly affect its financial, operational, or other activities.
Recently, tax notices amounting to ₹10,000 crore were reportedly issued by the central government to automobile manufacturers for not paying the compensation cess under the GST on utility vehicles. The tax demand pertains to utility vehicles sold prior to 2022, affecting popular models such as Mahindra’s Thar and Scorpio, Tata Motors’ Safari and Harrier, Hyundai’s Creta, and Maruti’s Brezza.
Notices were sent by the GST authorities to most automakers for the alleged non-payment of the SUV sales cess during the financial years 2018 to 2022.
The GST Council clarified in July 2022 that the cess would apply to all utility vehicles. Subsequently, in December 2022, it provided further clarification that the tax and cess would apply to all SUVs with an engine capacity over 1,500 cc, a length exceeding 4 metres, and a ground clearance of at least 170 mm.
Earlier in June, MSI received a GST demand notice of ₹5.4 crore from the GST Department in Gujarat. This notice pertained to the period from July 2017 to March 2023 and was issued due to the denial of input tax credit on certain services.
In August, MSI reportedly began exporting its 'Made-in-India' Fronx to Japan. Manufactured at Maruti Suzuki's Gujarat plant, the Fronx was set to be the first SUV from India’s leading carmaker to debut in Japan. The initial shipment, consisting of more than 1,600 vehicles, departed from Pipavav port in Gujarat.
