Hero MotoCorp Faces Rs.17 Crore Tax Demand from Delhi GST Authorities

Hero MotoCorp, formerly known as “Hero Honda,” is one of India’s biggest motorcycle manufacturers, announced on Sunday that it has received a major tax demand notice from Delhi GST authorities, of over Rs.17 crore. The notice, dated August 17, 2024, majorly talks about the disallowance of input tax credit for the financial year 2019-20. According to the notice, the breakdown includes a tax demand of Rs 9,38,66,513, interest of Rs 7,32,15,880, and a penalty of Rs 93,86,651 respectively.

Company’s Stance

Hero MotoCorp is pushing back against this demand, arguing that the tax claim is not legally valid. The company asserts that the input tax credit was correctly claimed according to GST laws but was disallowed due to non-compliance by a supplier- a problem, they say, that should not fall on their shoulders. Hero MotoCorp plans to challenge the notice through appropriate legal channels, including filing an appeal.

Impact on Operations

Despite the sizable amount involved, Hero MotoCorp insists that this tax issue won’t have a serious effect on its operations or financial health. The company has reassured that it’s prepared to manage the situation without any major disruptions to its business. As of  August 2024, the market capitalization of the company stands at Rs.1.04 trillion.

Broader Implications

This tax dispute could have broader implications for other businesses dealing with similar GST issues. Hero MotoCorp’s approach to contesting the demand might set a precedent for how companies handle such disputes, particularly those involving supplier-related compliance issues. 

Conclusion: Hero MotoCorp’s receipt of a Rs.17 crore tax demand notice from Delhi GST authorities shows the ongoing challenges with tax compliance. While the company disputes the validity of the demand, claiming it is due to supplier-related issues, it assures stakeholders that this matter will not disrupt its operations or financial stability. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.