Mumbai, February 2, 2025
New India Assurance Company Limited (NIACL) has received an Order In Original from the Additional Commissioner, CGST & CX, Palghar, concerning an industry-wide issue related to GST applicability on salvage and wreck sales in motor vehicle claims. The total alleged tax demand stands at ₹70.44 crore, with an additional penalty of ₹70.44 crore, bringing the total potential liability to ₹140.89 crore plus applicable interest.Key Financial and Regulatory Details
| Parameter | Details |
|---|---|
| Authority | Additional Commissioner, CGST & CX, Palghar |
| Order No. | PLG/ADC/VRR/DGGI/CGST/22/NIA/2024-25 |
| Show Cause Notice | DZU/INV/C/GST/1658/2021 (dated June 30, 2023) |
| Date of Order | January 24, 2025 |
| Date of Receipt | February 1, 2025 |
| Tax Demand | ₹70.44 crore (CGST: ₹35.22 crore, SGST: ₹35.22 crore) |
| Penalty | ₹70.44 crore |
| Interest | Applicable under Section 50 of the CGST Act, 2017 (amount unspecified) |
| Total Liability | ₹140.89 crore plus applicable interest |
| Violation Allegation | Non-payment of outward GST on salvage sales from vehicle repairs and claims settled on a non-owners’ basis (NOS) |
Legal & Financial Impact
- Contingent Liability: NIACL will assess the financial impact in its statements.
- Regulatory Compliance: The company intends to appeal before the Appellate Authorities and may explore a Writ Petition.
- Industry-Wide Issue: The case is part of broader disputes over GST applicability in the insurance sector.
Company Statement
NIACL stated that it will contest the order, emphasizing its position that the applicability of GST on salvage and wrecks in motor insurance claims remains a contentious industry issue. The company assured stakeholders that it is evaluating all legal options to challenge the demand.Investor Considerations
Investors may need to monitor NIACL’s regulatory proceedings as the demand could impact profitability and cash flow if upheld. The matter is expected to progress through appeals, potentially leading to an extended legal timeline.
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