The penalty is related to the erstwhile two-wheeler business of Mahindra Two Wheelers Ltd (MTWL), which underwent demerger and subsequent merger with M&M.
“…we would like to inform you that the company has received an order from the Deputy Commissioner, State Tax, Audit Wing, Indore-01, Madhya Pradesh imposing a penalty u/s 74 of CGST Act, 2017 amounting to ₹4,11,50,120/- in relation to the two-wheeler business of Mahindra Two Wheelers Limited (MTWL), which was demerged from MTWL and has since been merged with the company,” according to a stock exchange filing.
The penalty, issued on December 28, 2023, is attributed to two key reasons. Firstly, discrepancies were noted in the reporting of invoices on which the input tax credit (ITC) was claimed by MTWL.
These invoices, crucial for GST returns, were allegedly not reported by vendors, leading to their absence in the auto-populated GSTR-2A. Secondly, the order disallowed the carry forward of the education cess credit balance from the pre-GST regime to the GST regime.
Reacting to the development, M&M said, “The Order dated 28th December 2023 has been received by the Company on 28th December 2023 around 03:35 P.M.”
While acknowledging the penalty, M&M remains optimistic about a favourable resolution. The company plans to file an appeal, confident that the appellate level will rule in its favour.
“Based on the company’s assessment, an appeal will be filed and the company is hopeful of a favourable outcome at the appellate level and does not reasonably expect the said order to have any material financial impact on the company,” M&M said.
Shares of Mahindra and Mahindra Ltd ended at ₹1,726.30, down by ₹8.30, or 0.48%, on the BSE.
Source from: https://www.cnbctv18.com/business/companies/mahindra-mahindra-hit-with-rs-4-12-crore-gst-penalty-18675961.htm