23 Jun, 2024

DGGI seeks higher GST from auto parts makers

Goods and services tax authorities have raised higher tax demands to several automotive component manufacturers, citing a Supreme Court judgment regarding a company owned by the West Bengal government.

The Directorate General of Goods and Services Tax Intelligence (DGGI) sent notices to at least 17 such companies in the last 45 days alone with total tax demands of over ₹1,200 crore, said people were close to the development. Officials said the amount could go up further as more notices will be sent.

“Going by the Supreme Court order in the case of M/s Westinghouse Saxby Farmer, parts used exclusively for the auto industry have to pay higher tax and there cannot be two principles of taxation for the two industries,” a senior tax official told ET .

The matter involves manufacturers of engines, horns, locks, lights, sensing devices, valves, switch panels, LCD screens used in dashboard displays, oil seals and other electronic components, among other vehicle parts.

While these manufacturers have been paying GST on the parts at lower rates, usually 18%, tax authorities have claimed that a rate of 28% is applicable since that is the GST rate applicable on ‘parts and accessories of motor vehicles’ as per the

1 min read