The tax authority alleged that JK Tyres has availed Input Tax Credit (ITC) pertaining to Compensation Cess on the domestic portion of Karnataka GST Turnover to the extent of ₹ 7.20 cr out of which the department appropriated ₹ 7.07 cr and accordingly, there is a net demand of Rs.13.07 lakhs.
The department has also demanded interest and imposed a penalty of ₹ 7.20 cr.
The demand order is based on the alleged non-reversal of ITC of Compensation Cess on Coal for the period July 2017 to March 2022 pertaining to the Domestic Portion of Karnataka State GST Turnover, which was kept unutilized in Electronic Credit Ledger.
The company states that “ITC pertaining to Compensation Cess on the domestic portion of Karnataka GST Turnover has been reversed/appropriated except to the extent of Rs. 13.07 Lakhs arising out of the difference in the method of calculation used by the Department, which is contestable.”
“There is no case for imposing Interest and penalty as there was no intention to utilize ITC since the final products do not attract Compensation Cess,” JK Tyre said in an exchange filing.
The company is likely to challenge the aforesaid order before the appellate authorities.
