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Supreme Court of India gave much-needed relief to the manufacturers of car mats in its latest judgement. The apex court said that mats made for the car and for home use will not be differentiated for levying tax purpose. The judgement means that the car mats will become cheaper as it will attract lower tax rates. A division bench of Justice Deepak Gupta and Justice Aniruddha Bose upheld a tribunal view by dismissing the appeal filed by the Tax Department. The matter is related to the Central Tax Excise regime but the ruling will be applicable to the present GST norms. Now vehicle mattings would attract an excise duty of 8 percent and not 16 percent as applicable earlier to vehicle accessories.
The honourable court judgement will be a major relief for the customers who buy floor mats for their cars from after market. With the Supreme court decision, the customers will pay lower price for car mats. There might not be much relief for input providers as they get credit for tax paid on inputs.
The matter reached apex court after the Income Tax department challenged the order of tribunal which gave relief to Uni Products India Ltd. According to the Tribunal judgement, the car mats would come under the category 'carpets and another textile flooring' and not the 'other' sub-head from the vehicle accessories category. The Supreme Court held that Chapter 87 of the Central Excise Tariff of India does not contain car mats as an independent tariff entry, so car mats to be included under the residuary sub-head “other”. Now, carpet/mattress used in car will not be called as accessories and taxed differently than other accessories or components.