Eicher Motors Subsidiary Gets ₹168 Crore GST Demand Notice

1. Introduction

Eicher Motors, a leading name in the Indian automotive industry and the parent company of Royal Enfield, has come under the spotlight following a significant tax-related development. Its subsidiary, VE Commercial Vehicles Ltd. (VECV) — a joint venture between Eicher Motors and the Volvo Group — has received a demand-cum-show-cause notice from tax authorities. The notice, amounting to ₹168.19 crore, pertains to alleged violations under the Goods and Services Tax (GST) Act for the financial year 2017–18.

2. Issuing Authority and Jurisdiction

The notice was issued by the Office of the Commissioner of Central Goods and Services Tax (CGST) & Central Excise, located in Ujjain, Madhya Pradesh. The regulatory body is responsible for enforcing GST law, investigating evasion cases, and ensuring proper tax compliance across its jurisdiction.

3. Date of Notice and Response Window

Date of Issue: July 3, 2025

Response Deadline: The company has been granted 30 days from the date of receipt to respond to the notice.

This response may be in the form of a written explanation or personal hearing before the adjudicating authority (Additional/Joint Commissioner of CGST).

4. Legal Framework and Allegations

The tax notice has been issued under the following legal frameworks:

Central Goods and Services Tax (CGST) Act, 2017

Integrated Goods and Services Tax (IGST) Act, 2017

CENVAT Credit Rules, 2004

The allegations include:

Wrongful or excess Input Tax Credit (ITC) claims

Non-compliance with GST regulations

Potential misstatements in tax filings during FY 2017–18 — the initial year of GST implementation in India.

5. Company’s Official Standpoint

In its stock exchange filing, Eicher Motors has stated:

The notice is not legally sustainable and is being thoroughly reviewed.

VECV will respond within the stipulated timeline, presenting legal and factual justifications.

The company has emphasized that the notice will not have any material adverse impact on its:

Financial position

Operational continuity

Business prospects

This is a standard response by listed companies when a notice is considered procedural or defendable in nature.

6. Stock Market Reaction

Following the disclosure:

Eicher Motors’ stock price dipped nearly 1%, reflecting cautious investor sentiment.

However, since the company has clarified that the issue is manageable, there was no panic selling or major volatility.

Investors are expected to monitor the outcome of VECV’s response and any further action taken by the tax department.