Did Bajaj Auto face a Rs 34.74 crore tax demand over spare parts misclassification?
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Synopsis
Bajaj Auto is facing a tax demand of Rs 34.74 crore from Uttarakhand tax authorities due to alleged misclassification of spare parts. The company plans to contest the demand, asserting its compliance with classification rules.
Key Takeaways
- Bajaj Auto received a tax demand of Rs 34.74 crore.
- A penalty of Rs 3.47 crore has been imposed.
- The company disputes the classification of spare parts.
- Bajaj Auto plans to challenge the demand legally.
- No significant financial impact is expected.
Mumbai, Dec 2 (NationPress) Bajaj Auto announced on Tuesday that it has received a tax demand of Rs 34.74 crore from the Uttarakhand tax authorities regarding the alleged misclassification of spare parts provided by the company.
Additionally, a penalty of Rs 3.47 crore has been levied, according to a regulatory filing from the company.
“The Company has been served an order demanding Rs 34,73,88,774. This demand is based on the alleged misclassification of spare parts supplied by the company,” the automaker stated.
“The order further imposes a penalty of Rs 3,47,38,877. The tax authorities argue that since Bajaj Auto manufactures automobiles, the spare parts being customized exclusively for vehicle manufacturing should be classified as auto parts, ignoring the general rules of interpretation,” it continued.
The order was issued by the Deputy Commissioner in Rudrapur, who indicated that as a manufacturer of automobiles, the spare parts provided by Bajaj Auto ought to be categorized as auto parts.
Authorities claimed that these parts are tailored specifically for vehicle manufacturing and should therefore be subject to a different tax classification.
Bajaj Auto has contested this order, asserting that it has accurately classified its parts for over thirty years.
The company maintains that its classification adheres to the General Rules of Interpretation, along with relevant section notes, chapter notes, and HSN explanatory notes. It has also cited previous judicial decisions that support its position.
Bajaj Auto insists that the tax demand is not legally justifiable and plans to challenge the order.
The company stated that it will pursue the appropriate legal avenues for appeal and noted, “There is no significant impact on the financials, operations, or other activities of the Company.”
Following the announcement, Bajaj Auto’s shares were trading 0.46 percent lower at Rs 9,051 on the BSE.
Point of View
The ongoing tax dispute involving Bajaj Auto highlights the complexities of tax classification for manufacturers in India. The implications of this case extend beyond the company itself, potentially affecting industry standards and practices. NationPress is committed to providing insightful analysis on such pivotal issues.
NationPress
02/12/2025
Frequently Asked Questions
What is the reason for the tax demand on Bajaj Auto?
The tax demand of Rs 34.74 crore is based on the alleged misclassification of spare parts provided by Bajaj Auto, according to Uttarakhand tax authorities.
How does Bajaj Auto plan to respond to the tax demand?
Bajaj Auto intends to contest the tax demand, asserting that it has classified its spare parts correctly for over thirty years.
What penalty has been imposed along with the tax demand?
In addition to the tax demand, a penalty of Rs 3.47 crore has also been imposed on Bajaj Auto.
What impact will this tax demand have on Bajaj Auto's operations?
Bajaj Auto stated that there is no material impact on its financials, operations, or other activities due to the tax demand.
Where was the tax demand issued?
The tax demand was issued by the Deputy Commissioner in Rudrapur, Uttarakhand.
