Auto companies get relief in Fiat case, CBEC will not open past cases

Auto manufacturers and white goods makers have good news to cheer as they were paying excise duty at discounted prices due to the wrong tax laws. Finance ministry said tax authorities will not open past cases where manufacturers have taken price cuts to stay afloat or beat slowdown.

On the basis of the controversial verdict of Supreme Court in Fiat case, The Central Board of Excise and Customs has asked their field officials not to reopen cases upto 5 years. Usually authorities can re-open year old cases anytime.

Tax experts said that the circular will give some relaxation to industry still long term solution is only the amendment in law. Bipin Sapra, partner, EY said." As this clarification will reduce the duty exposure of the past period arising out after the fiat judgment, but the amendment is still required to put to rest the interpretation arising out of the Fiat judgment,"

Fiat decision cannot be applied in all cases until n unless the facts would not be verified by the commissioner that the goods are being sold at loss and the case is similar to the decision.

Pratik Jain, partner, KPMG India, said, with my point of view it is a welcome move, and as it is already said the long term solution would be only amendment in laws. Clearly said excise duty should be levied on the amount received from the buyer. This will be in line along with VAT principles across the globe.

Excise duty is a central indirect tax which has to be paid by the manufacturer at the factory gate, it is passed on to the customer for purchasing the goods.