Maruti Suzuki India is advocating for an 'as-is' settlement option or an amnesty scheme to resolve long-standing indirect tax disputes, aiming to provide certainty for businesses and boost growth in the automotive sector.
Key Points
- Maruti Suzuki India (MSIL) has urged the central government to introduce an amnesty scheme or an 'as-is' settlement option to resolve past indirect tax disputes for the automotive industry.
- MSIL CFO Arnab Roy highlighted that resolving historical tax disputes is crucial for providing long-term business certainty and unlocking capital.
- MSIL and its subsidiary, Suzuki Motor Gujarat, have faced significant indirect tax demands, including Rs 173.9 crore from Gujarat GST authority and Rs 139.3 crore from Haryana GST Commissioner.
- Roy advocated for seamless transfer of central input tax credit across different state GST registrations and better alignment between the Companies Act and tax laws.
- The company also called for expanding advance pricing agreements (APAs) to cover Customs and GST matters, involving international trade partners, and establishing independent appellate review mechanisms.
Maruti Suzuki India (MSIL) on Thursday urged the central government to introduce an amnesty scheme or an "as-is" settlement option to resolve past indirect tax disputes, enabling the automotive (auto) industry to clear legacy litigation and focus on growth.
Speaking at the 3rd Siam Automotive Taxation Conference, Arnab Roy, chief financial officer (CFO) of MSIL, emphasised that resolving historical tax disputes is critical to providing long-term certainty for businesses.
He said the government must find a "smarter way to address the past".
Addressing Legacy Litigation
"Because now that we have room for the future (due to Goods and Services Tax/GST 2.0), we need to find a smarter way to address past litigation.
"Either we take an as-is position, or we find some kind of amnesty solution, so that we can really get these past litigations out of the way in a smarter way," Roy said.
An amnesty scheme is a government relief programme that allows companies to pay the principal tax dues while waiving interest and penalties. An "as-is" position means accepting past tax filings as final without raising retrospective tax demands.
Roy's call for an amnesty mechanism comes as MSIL and its wholly owned subsidiary, Suzuki Motor Gujarat, have themselves been involved in multiple indirect tax disputes in recent years.
In January 2024, the Gujarat GST authority passed an order upholding a tax demand of Rs 173.9 crore, along with a Rs 17.4 crore penalty, against Suzuki Motor Gujarat over reverse charge GST liability on certain services for the period from July 2017 to August 2022.
In October 2024, the Haryana GST Commissioner (Appeals) also upheld a Rs 139.3 crore tax demand against MSIL for the same period.
The carmaker has also been contesting Customs-related notices and other state GST matters.
Impact of GST 2.0 and Future Reforms
Roy, in his speech at the conference, credited recent reforms under "GST 2.0", particularly the decision to maintain a uniform tax rate for auto parts, with lifting demand without creating supply-side bottlenecks.
"The industry per se has grown by 25 per cent, which itself speaks to the impact of the new reform," he said, while urging the government to introduce a similar single-rate structure for Customs duties.
A key demand raised by Roy was the seamless transfer of central input tax credit across different state GST registrations.
Input tax credit allows businesses to offset the tax paid on purchases against the tax payable on sales.
He said companies setting up large manufacturing plants often accumulate sizeable tax credits at specific locations.
"At least if the central part is seamless, because ultimately it's one revenue bucket, things become much smoother... It can unlock a lot of capital that is locked up.
"It can also eliminate many of the procedural hassles involved in filing refunds and so on," Roy said.
He added that large exporters such as Volkswagen also face substantial accumulation of input tax credit because of the current registration-based system.
Streamlining Tax Laws and Dispute Resolution
Roy also called for better orientation between the Companies Act and tax laws to avoid disputes arising from differing definitions, such as the treatment of capital and revenue expenditure.
The CFO urged the government to issue clearer guidance on eligible GST input tax credits and product classification to reduce avoidable litigation.
To speed up dispute resolution, Roy advocated expanding advance pricing agreements (APAs) beyond transfer pricing to cover Customs and GST matters.
APAs are formal agreements between taxpayers and tax authorities that determine how certain transactions will be taxed in advance.
He also called for involving international trade partners in such agreements, setting up independent appellate review mechanisms, and creating regular industry-government fora outside the court system.
Roy also urged tax professionals to adopt a digital-first mindset, move away from legacy processes, and shift from defending tax disputes after transactions to planning tax strategy before transactions.
He said tax teams should be integrated into five-year business plans, supply chain design, and modular manufacturing operations.
