VE Commercial Vehicles Ltd (VECV), a subsidiary of Eicher Motors Ltd, has come under the scanner of the Goods and Services Tax (GST) authorities after receiving a tax demand running into nearly ₹192 crore. The dispute stems from alleged irregularities in the timing of reporting credit notes pertaining to the financial year 2017–18, one of the earliest years of GST implementation in India.
Background of the GST Dispute
According to disclosures made by Eicher Motors in a regulatory filing, VECV was issued a show cause notice (SCN) in July 2025 by the Commissioner of Central GST and Central Excise, Ujjain Commissionerate, Madhya Pradesh. The notice accused the company of contravening provisions of the Central Goods and Services Tax Act, 2017, primarily on account of delayed declaration of credit notes issued to customers.
The tax department alleged that the delayed reporting resulted in excess reduction of output tax liability, thereby warranting recovery of GST along with penalty. The SCN initially proposed a tax demand of ₹168.19 crore, accompanied by an equivalent penalty, effectively doubling the potential financial exposure.
Demand Order Issued After Adjudication
Following submission of its reply and participation in adjudication proceedings, VECV received the final demand order on December 29, 2025. While the adjudicating authority reduced the tax liability substantially from the amount proposed in the SCN, it nevertheless confirmed a tax demand of ₹96.18 crore.
In addition to the confirmed tax amount, the order also imposed an equivalent penalty and applicable interest, taking the total demand to approximately ₹192.36 crore.
Company’s Response and Legal Position
Eicher Motors has stated that VECV strongly disputes the findings of the GST department. Based on an internal assessment and legal advice received, the company believes that the demand order is unsustainable in law and lacks merit.
The company has indicated that VECV will challenge the order before the appropriate appellate forum within the statutory timelines prescribed under the GST law.
Importantly, Eicher Motors clarified that the disputed demand is not expected to have any material impact on the company’s financial position, operational performance, or ongoing business activities.
Broader Implications for Industry
The case highlights the continuing legacy issues arising from the initial years of GST rollout, particularly concerning transitional compliance, return filing timelines, and reporting of credit notes. Several companies across sectors have faced similar disputes where tax authorities have taken a strict view of procedural delays, even in the absence of revenue loss allegations.
Tax experts note that appellate authorities and courts have, in many cases, examined whether such delays justify invocation of penalty provisions, especially when transactions are genuine and duly accounted for.
