The Goods and Services Tax Appellate Tribunal (GSTAT), Lucknow, has allowed a departmental appeal concerning the compensation cess payable on Hyundai Creta, Alcazar and Tucson vehicles, restoring a differential cess demand of ₹25.67 lakh against Natasha Automobiles Private Limited.
The Bench of Santosh Kumar Srivastava (Judicial Member) and Arvind Kumar (Technical Member) has observed that the vehicles satisfied the relevant SUV classification criterion and that the manufacturer’s specifications constituted relevant evidence for determining ground clearance. It also recorded that suppression of facts with intent to evade tax had been established.
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The dispute arose from the dealer’s payment of compensation cess at 20% instead of the 22% rate claimed by the Department under Entry 52B of Notification No. 05/2017–Compensation Cess (Rate). According to the Department, the vehicles met the prescribed conditions for the higher rate, including ground clearance of 170 mm or above.
The Department raised a differential cess demand of ₹25,66,695, together with interest and penalties, invoking Section 74 of the Central Goods and Services Tax Act, 2017.
The central issue was how ground clearance should be determined for the vehicles before July 26, 2023, and whether the technical material supported their classification for the higher compensation cess rate.
The First Appellate Authority had granted relief to the dealer by setting aside the original adjudication order. It held that ground clearance for the period before July 26, 2023, was to be determined in the laden condition. On its assessment of the relevant technical evidence, the vehicles had ground clearance below 170 mm.
The department challenged that decision before GSTAT, contending that the vehicles were popularly known as SUVs and attracted compensation cess at 22%.
The Tribunal accepted the departmental appeal. According to the order summary, it examined the classification issue and treated the manufacturer’s specifications as relevant evidence for determining ground clearance. It concluded that the differential cess demand was sustainable.
The Tribunal also found suppression of facts with intent to evade tax, thereby sustaining the Department’s invocation of Section 74 in the proceedings.
Consequently, the Bench set aside the Order-in-Appeal, and restored the Order-in-Original. The matter was decided in favour of the department without a remand.
The demand table accompanying the summary records determined compensation cess of ₹25,66,695 and a penalty of ₹51,33,390. These two quantified components together amount to ₹77,00,085. Although the narrative refers to interest as part of the demand proceedings, the table does not quantify a determined interest amount.
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