Madras HC disposes of Renault Nissan petition in sales tax dispute case

The Madras High Court has issued an order disposing a petition of automobile manufacturer Renault Nissan Automative India Pvt Ltd (RNAIPL) leaving options for the company to approach the appellate authority in connection with a sales tax dispute it has with the State authorities.

The petition was filed by the company challenging an order by the Tax authorities revising the assessment made under the Central Sales Tax Act, for the assessment years 2014-15 and 2015-16. The dispute was related to the products the company sold to the neighbouring states, on which the State government has sought the Value Added Tax (VAT). The company has argued that it would fall under the Central Sales Tax Act, 1956 and the tax rate is two per cent.

Additional Advocate General Narmadha Sampath, who appeared for The Deputy Commissioner - II Large Tax Payer Unit, confirmed that such an order has been passed and said that the State government's argument has been accepted and the company has been asked to approach the appellate authority, which would require the company to deposit some money upfront on the dispute.

The State government has earlier alleged that the company floated two marketing firms within Tamil Nadu, selling all the products from manufacturing company to the marketing company, which would attract 14.5 per cent Value Added Tax, which has to be reimbursed by the State government according to an MoU signed between the company and the State government when the automaker set up its facility in Tamil Nadu.

It may be noted that the company has earlier approached the international arbitration tribunal over a Rs 50 billion unpaid incentives and damages. Both the sides has earlier informed the Madras High Court in another matter that negotiations are going on between the company and the State government on settling this dispute out of court.