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Old 20th October 2014, 18:10   #1
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Default Maruti Suzuki to pay Rs. 150 crore extra as additional excise duty

Maruti Suzuki, India's largest carmaker in terms of sales has been asked to pay an amount of Rs. 150 crore as excise duty by the Customs Excise and Service Tax Appellate Tribunal. This amount will have to be paid by 14 December 2014 failing which, the company could have to pay interest and a penalty which could amount to a sum in excess of Rs. 800 crore. The case has been running for a long time and if Maruti pays the amount in time, the recovery of balance excise duty, interest and penalty shall be stayed until the final disposal of the appeal. The tribunal found Maruti guilty of producing cars at a higher price than it was claiming in its excise returns to the government. The amount of Rs. 150 crore was determined as the excise duty the company ought to have paid the government over the past five years.

The tribunal claims that Maruti dealers run promotional schemes including offering of discounts. These schemes or promotional expenses are adjusted by the company from the dealers through the margins offered on the automobiles to them.

Maruti Suzuki had claimed that the promotional schemes were offered by dealers after the cars were sold to them. The tribunal did not accept this argument and has held that since the dealers and Maruti enter into written agreements under which the former promise to conduct such road shows, these are taxable as part of the cost of the cars sold by the company. Dealers are known to recover the costs of these campaigns from customers by terming them as handling charges.

Source: Financial Express
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