The Pune-based automotive giant revealed in a regulatory filing that the office of the Deputy Commissioner in Rudrapur, Uttarakhand, issued a tax demand amounting to ₹34.74 crore, accompanied by a penalty of ₹3.47 crore. This action stems from allegations that Bajaj Auto misclassified certain spare parts, which tax authorities contend should be treated strictly as auto parts used exclusively in vehicle manufacturing.

Tax officials argue that these spare parts, being customized and integral to vehicle production, should be classified as auto parts, overriding broader general rules of interpretation. Bajaj Auto, however, stands firm on its classification practices, emphasizing its compliance with the General Rules of Interpretation, relevant section and chapter notes, and Harmonized System of Nomenclature (HSN) explanatory notes. The company further cited decades of consistent practice and various judicial rulings supporting its position.

Declaring the tax demand as unsustainable in law, Bajaj Auto signaled its intent to pursue appropriate legal remedies against the order, which is appealable. The company’s shares experienced a marginal dip, trading down 0.46% at ₹9,051 on the BSE following the announcement.

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This case highlights ongoing challenges in tax interpretation within the manufacturing sector, particularly where product classifications impact duty and penalty liabilities. Bajaj Auto’s response will be closely watched as it sets a precedent for how spare parts classification disputes may be resolved going forward.

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