Top Carmakers Get GST Notice Worth Rs 10,000 Crore For Non-Payment Of Compensation Cess

Top carmakers in India have received notices totalling between Rs 8,000 crore and Rs 10,000 crore for failing to pay compensation cess levied under the goods and services tax on utility vehicles, government officials aware of the matter told NDTV Profit.

The GST authority has issued notices to the majority of car manufacturers for alleged non-payment of cess from the financial year 2018 to 2022 on SUV sales, they said on the condition of anonymity.

In August, the carmakers appealed to the GST Commissionerate, citing a lack of clarity in the cess rules during the relevant period. They raised concerns about how SUVs were defined, particularly whether ground clearance should be measured "un-laden' or "laden." The determination that ground clearance would be measured 'unladen' was clarified only in July 2023, the automakers pointed out.

Currently, SUVs are subject to a GST rate of 28% and an additional compensation cess of 22%, depending on engine capacity, overall length, and ground clearance. Vehicles with an engine capacity greater than 1,500 cc, a length exceeding 4,000 mm, and ground clearance of 170 mm or higher attract the full 22% cess.

The Society of Indian Automobile Manufacturers has requested intervention from the Ministry of Finance regarding this issue.