Hyundai India gets ₹517 crore demand notice to recover compensation cess

Hyundai Motor India Ltd said on Tuesday it has received an order from Indian tax authorities demanding ₹258 crore in GST compensation cess, along with an equal amount in penalties, for allegedly underpaying taxes on certain SUV models sold between September 2017 and March 2020.

In a stock exchange filing, the company disclosed that the order was issued by the Office of the Commissioner (Appeals) – GST & Central Excise, Tamil Nadu, and was received via email on July 21.

The dispute stems from an alleged short payment of the GST compensation cess, a levy imposed on luxury goods such as SUVs to compensate Indian states for potential revenue losses under the GST regime, which came into effect in 2017.

“The Company has received an Order from Commissioner (Appeals), CGST Dept, Tamil Nadu, confirming GST Compensation Cess demand of ₹258.67 crores along with Penalty of ₹258.67 crores on the allegation of short payment of GST Compensation Cess on Certain SUV Models for the period September 2017 - March 2020,” Hyundai said in its regulatory disclosure.

Hyundai confirmed it is currently reviewing the order and intends to file an appeal.

“HMIL is of the view that the amendment and the clarifications given by the Central Board of Indirect Tax and Customs (CBIC) to resolve the issue faced by the industry on this matter are in favour of the company,” an HMIL spokesperson said in a statement. “We are in the process of reviewing the order and will exercise the right to seek a legal remedy through an appropriate forum.”

Despite the size of the demand, Hyundai said the order will not have any immediate financial or operational impact on the company.

The company did not name the specific SUV models involved in the dispute. Shares of Hyundai Motor India Ltd ended at a price of ₹2,113.90, down 1% from Monday's close on the BSE.