Confusion Abounds Post Supreme Court Order

Dear friends,


The Hon’ble Supreme Court’s order banning sale of BS III vehicles w.e.f. 1st April 2017 has come as the bolt from the blue for the automobile dealer fraternity across the country. The letter and spirit of the notifications issued by the Government is that the appointed date of 1st April 2017 is for the manufacture. In other words, the understanding was that all vehicles manufactured on or after 1st April 2017 shall be BS IV compliant and that the BS III vehicles manufactured up to 31st March 2017 would be allowed to be sold post 31st March 2017 in keeping with the practice followed in the past when the country migrated to BS II and BS III emission standards.


The sudden departure from the past practice put paid to all the expectations within the automotive industry and retail trade, resulting in humongous loss to the industry and my fellow dealers.


The apex court’s order is giving rise to various problems in that the different states are interpreting the order differently. Besides, a number of automobile dealers from various States have reported technical problems in registration of vehicles online on 30th & 31st March 2017 due to the Transport Departments’ servers slowing down and the systems collapsing, arising from the huge rush for registration. As a result, the data of vehicles sold on 30th & 31st March could not be transmitted to those RTOs online on the same day in such cases.


There is a peculiar problem in Delhi and, perhaps also at other places, where quite a few dealers are not online. These dealers take vehicles and the necessary documents to their respective RTOs for registration of vehicles sold by them. The fees and taxes are paid at the time of submission of registration documents. There is no provision or system whereby they can remit the payments to the RTOs online on the same day. These dealers are left high and dry, as the Transport Department in Delhi is not registering these vehicles on the basis of a circular issued by EPCA. Hopefully, the problem will be resolved soon.


It may be mentioned here that there is no system of temporary registration for private vehicles in Delhi. Even in the case of commercial vehicles, there is no requirement of temporary registration, if the vehicle is registered within 30 days of sale, except in cases where the chassis is sent outside Delhi for body building.


FADA, as a body of automobile dealers, has written to the Ministry of Road Transport & Highways for an early clarification to obviate the confusion prevailing currently. While EPCA is playing a significant role in improving environment and road safety,  the alacrity and the overzealousness displayed by it is giving rise to a lot of confusion and disruption in the market.


We hope, the Central Government or, for that matter, EPCA will issue the clarifications at the earliest so that the vehicles sold by 31st March can be registered without further delay.


Adverting to the auto market, while the sales numbers for March 2017 sound good, the auto market that was recovering gradually after the shock of demonetisation, may be relapsing into the phase of uncertainty, owing to the blow inflicted by the Supreme Court order. However, I am sanguine that the auto market will take this disruption in its stride and march forward on a growth path, as it has done in the past.


Regarding the activities of FADA, by the time this issue of FADA Journal reaches you, we would have concluded the Council Meeting, Regional Meeting and Awards presentation ceremony scheduled for 22nd April 2017 at Jaipur.


We are eagerly looking forward to the event, as two important sessions, namely, (i) Interaction with the Transport Minister, Government of Rajasthan and (ii) Presentation on GST are integral part of the programme. We shall also have a session by the senior officials of Facebook India on the role of social media in the current and emerging automobile business environment.


With best wishes,


Yours sincerely,


John K Paul

 

 

 

 Preparing Disruption

Dear friends,


The contours and dynamics of retail automotive business are changing at alarmingly fast pace. The competition is intensifying with each passing day. The fierce competition apart,  there are other challenges galore – Road safety and environment concerns inviting outcry of NGOs and people, Judicial activism and overreach, proliferation of mobile telephony and increasing use of digital technology for marketing and other business operations, and growing presence and influence of social media.


Above all, the businesses will soon be confronted with the GST, which is going to become a reality shortly. There is no gainsaying that the GST is the biggest tax reform ever undertaken since independence and is going to be a game-changer in the tax administration. Automobile dealer fraternity is hopeful that the GST will help avoid cascading effect of multiple taxes and streamline the tax system. At the same time, there are apprehensions that it will bring in new challenges and complexities never confronted before.


It is, therefore, incumbent on the automobile dealerships and, for that matter, other businesses to keep pace and change in tune with the fast changing scenario and business paradigm. Otherwise, they would not be able to survive the disruption caused by host of these challenges. Gearing for the disruptions is the need of the hour for the automobile dealers.


This message came out loud and clear from the deliberations of the Regional Meeting organised by Federation of Automobile Dealers Associations (FADA) at Jaipur on 22nd April 2017. The meeting was organised jointly with Authorised Motor Vehicle Dealers Association, Rajasthan (AMVDA).


The Regional Meeting at Jaipur gave me an opportunity to meet and interact with my fellow dealers in Rajasthan. I am enthused by the overwhelming response evoked by the Regional Meeting. As majority of the issues facing automobile dealers are local and State specific, FADA would like to have strong associations of automobile dealers at the local and regional levels, which will not only take up local issues in a concerted manner, but will also act as bridge between FADA and automobile dealers spread across the country.


We, in FADA Council, are continuing our endeavours to build connect and deepen relations with all stakeholders. Following series of meetings with SIAM, individual OEMs and Government authorities, a 4-member team of FADA, led by our Vice President – Ashish Kale, met Mr Ashok Lavasa, Finance Secretary, Government of India on 2nd May 2017. The meeting gave an opportunity for FADA team to share our apprehensions on GST. As I understand from the members who attended the meeting, FADA’s inputs and suggestions were well-received. The FADA team also requested the Finance Secretary to use his good offices for favourable consideration and an early outcome of the submissions made by FADA at the meeting with the Hon’ble Finance Minister on 2nd January.  


The Supreme Court order of 29th March 2017 has given a jolt to the automotive industry and dealers. We, in FADA as responsible corporate citizens, welcome the measures aimed at promoting clean environment and road safety. However, there is an imperative need for a holistic approach to tackle this twin-problem. The isolated knee-jerk reactions not only lead to uncertainty and disruption but also do not yield the desired results. All stakeholders, including the Government, industry, trade, NGOs and experts, must join hands and lay down a clear roadmap to achieve the objectives of clean environment and safe motoring.


Needless to mention, automobile dealers are left with a sizable stock of unsold BS III vehicles for no fault of theirs. We would urge the OEMs to extend necessary support to their dealers, enabling them to recover from the huge financial loss.


Look forward to your inputs and suggestions.


With best wishes,


Yours sincerely,


John K Paul

 Hello GST

Dear friends,


As expected, GST has become a reality effective from 1st July 2017. While the implementation of GST is a revolutionary step and will avoid multiplicity of taxes and cascading effect thereof in the earlier tax regime, there are a lot of apprehensions and a number of grey areas concerning compliances, classification and rates.


For automobile dealers in particular, the taxation of secondhand vehicles, including taxation of resale of demo cars and company owned cars; taxation of repair & servicing of motor vehicles, entailing sale & replacement of parts and consumables; taxation of insurance claims for repair and painting of accident vehicles; and non-availability of input tax credit for duties paid on stocks more than one year old on the appointed date, are some of the major issues, which need to be addressed at the earliest. There are host of other issues as well, which are bugging the automobile dealer community.


I wish to assure my dealer friends that we, in FADA, are alive to the challenges of GST implementation. We have taken up the major issues of concern to the automobile dealers with the Government and are awaiting the clarification. We are also trying to meet the concerned officials within the GST Council and CBEC in order to expedite the response to the issues taken up by us.


To guide and educate automobile dealers on the implications of GST and the preparedness required on their part for smooth transition, an initiative was taken to organise series of seminars on GST in various parts of the country. 14 seminars on GST have been held under the banner of FADA in Mumbai, Delhi, Raipur, Lucknow, Nagpur, Aurangabad, Kochi, Chennai, Bangalore, Vijayawada, Kolkata, Guwahati, Hyderabad & Jaipur. What is heartening is that the seminars received massive response, with each seminar attracting over 150 participants.


While arrangement with Ms Puloma Dalal for advising and guiding FADA members on GST/Service Tax continues, FADA is in touch with other GST Consultants as well to clarify the members’ queries on GST. Members’ queries are also being posted by FADA on Government’s GST Twitter handle.


Besides, FADA has tied up with GSTStreet.com to provide education and guidance on GST to its members through the latter’s GST Digital Learning Course. As part of the digital learning course, GSTStreet will create GST learning community for FADA members on its portal or any other technology platform, led by subject matter experts like Dr Sanjiv Agarwal to address questions of registrants enrolled for digital learning course, up to 2 return period.


FADA has created Statewise Groups of FADA Members on WhatsApp with objectives: (i) to sustain the interest of members and keep them abreast of FADA’s activities, (ii) to foster fellowship among members, (iii) to know what is happening in the industry and trade through sharing of experiences and information, and (iv) to receive feedback. I would urge my fellow dealers to join appropriate State WhatsApp Group, if you have not joined as yet.


As you are aware, sudden decision of General Motors India to stop sales in the Indian market from 1st January 2018 has left the automobile dealers and customers shell-shocked. This abrupt decision of General Motors India is contrary to the assurances given by the company from time to time and has caused huge loss to the company’s dealers, GMI dealers staged a dharna at Jantar Mantar, New Delhi on 27th June 2017 under the banner of FADA, which evoked a massive response and coverage in the media. Further measures to ensure justice to the GMI dealers are being contemplated.


Please feel free to send your inputs and suggestions.


With best wishes,


Yours sincerely,
John K Paul

 In the Thick of Action

Dear friends,


You will glad to know that the activities of FADA have gained momentum and attained feverish pitch.


As I write this message, it is more or less clear from the recent meeting of GST Council that Goods and Services Tax (GST) - a revolutionary tax reform, which will bring about a huge disruption and sea change in business practices, is set to be introduced with effect from 1st July 2017, unless technical glitches and/or unforeseen contingencies constrain the Government to postpone the GST implementation by a couple of months. In any case, we, in retail automobile trade, have to be geared to stand up to this gigantic challenge.


FADA, as the apex national body representing the retail automobile trade in India, is alive to the challenge, the implementation of GST is likely to pose for members of the automobile dealer fraternity. As such, an initiative was taken to organise series of seminars on GST in various parts of the country to guide and educate automobile dealers on the implications of GST and the preparedness required on their part for smooth transition.


I am happy to inform that as a part of this initiative, 12 seminars on GST have already been held under the banner of FADA in Mumbai, Delhi, Raipur, Lucknow, Nagpur, Aurangabad, Kochi, Chennai, Bangalore, Vijayawada, Kolkata and Guwahati. What is heartening is that the seminars received massive response, with each seminar attracting over 100 participants. I have been receiving congratulatory messages and very good feedback from my fellow dealers, who participated at the seminar. I must compliment the local associations that pitched in with their all-out support to make the seminars a tremendous success.


Let me assure you, FADA’s role is not limited to organising seminars alone. The concerns and queries arising out of the seminars are being collated and suitably taken up with the appropriate authorities. We are open to organising more seminars on GST in other places, if the members or their associations in these places, approach FADA. While FADA disseminates the information through its website, mail and FADA Journal and provides guidance, it is the local members who have to orchestrate the efforts  and make arrangements at the local level to organise the programme.


As far other activities of FADA, we, in FADA Council, are continuing our endeavours to strenthen and deepen relations with all stakeholders. To build this connect, we have held series of meetings with SIAM, individual OEMs and Government authorities, including the Hon’ble Finance Minister and Mr Ashok Lavasa, Finance Secretary, Government of India.  


On the heels of meeting with Mr Ashok Lavasa on 2nd May 2017, a 4-member FADA group held meeting with Mr Nitin Gadkari, Union Minister of Road Transport & Highways on 29th May 2017, wherein a number of issues of concern, including GST, vehicle scrapping policy, according industry status to auto retail and provision for auto clusters along national & state highways were discussed. I am happy to inform that the Hon’ble Union Minister of Road Transport & Highways was quite receptive to the suggestions made at the meeting.


Adverting to the auto market, I am sorry to note that the commercial vehicles have not been able to recover from the body blow dealt by the order dated 29th March 2017 of Hon’ble Supreme Court banning sale of BS III vehicles effective from 1st April 2017. We, in FADA as responsible corporate citizens, welcome the measures aimed at promoting clean environment and road safety. However, there is an imperative need for a holistic approach to tackle this twin-problem. The isolated knee-jerk reactions not only lead to uncertainty and disruption but also do not yield the desired results.


Look forward to your inputs and suggestions.


With best wishes,


Yours sincerely,


John K Paul
President

 Gaining Traction

Dear friends,


It is comforting to note that after the widespread disruption caused by the demonetisation of high-currency notes, the auto market is slowly but surely settling down, if the sales figures for the month of February are any guide.
A pragmatic Union Budget presented by the Hon’ble Finance Minister on 1st February has also, to some extent, improved the sentiment, and given boost to the auto market. The sales are yet to reach the numbers witnessed pre-demonetisation, though.


As informed through my previous column, a 35-member FADA delegation participated at the 2017 NADA Convention, which also marked the celebrations of 100 years of NADA that came into being in 1917 following the imposition of luxury tax on cars by the then US Government. NADA’s 100-year illustrious service to the automobile dealer fraternity and its phenomenal contribution in protecting and promoting the interest of auto retail market in the US, send out a strong message that an umbrella organisation like FADA can do wonders if the automobile dealers unite and organise themselves under its banner.


The delegation members also took the opportunity of visiting two automobile dealerships in Atlanta. The visit was quite an enriching experience for all the delegation members. It was also an occasion to rejoice and join NADA in its centenary celebrations. Besides, FADA’s relations with NADA and other auto retail organisations across the world got a further boost. More importantly, the participation of large delegation under the banner of FADA helped promote fellowship and goodwill among the members.


Regarding the other activities of FADA since my previous column, taking our agenda of deepening understanding and relations with OEMs forward, FADA team of office bearers held meetings with the CEOs and other senior officials of Ford India and Mercedes-Benz India, separately on 1st March & 2nd March, respectively. The discussion majorly centred around the issues of skilling & training of manpower, inventory control & management, and exit route for automobile dealers. It is heartening to note that most of the issues taken up and discussed at these meetings evoked positive response.


FADA team of office bearers also held a meeting with Mr Abhay Damle, Jt Secretary (Transport), Ministry of Road Transport & Highways (MoRTH) in his office at New Delhi to discuss the confusion caused by the media reports and orders of some of the State Governments that BS-III compliant vehicles would not be allowed to be sold or registered w.e.f. 1st April 2017. It was vehemently submitted to Mr Damle that banning sale or registration of BS-III vehicles, in stock with the dealers, from 1st April 2017 is contrary to the letter and spirit of notifications issued by the Government of India (MoRTH). FADA team pointed out that the designated date of 1st April 2017 for BS-IV vehicles is with reference to the manufacture or production.


I am happy to inform that the Ministry of Road Transport & Highways has taken a stand in the case: M C Mehta vs Union of India & Ors before the Supreme Court that BS-III vehicles stock in transit as at the end of the day on 31st March 2017 should be allowed to be sold on or after 1st April 2017, in keeping the intent of the notifications issued by the Ministry and the practice followed in the past. As I write this column, FADA is also filing an intervention application before the Supreme  Court.  The next hearing in the case is on 24th March 2017. We are hopeful of a favourable order in this regard.


The next meeting of FADA Council is scheduled for 22nd April 2017 at Jaipur. A regional meeting and an awards ceremony recognising the meritorious connected with the auto retail trade in the State of Rajasthan have also been dovetailed with the Council Meeting. Members are cordially invited to attend the Regional Meeting and the awards ceremony followed by dinner.


Look forward to your inputs and suggestions.


With best wishes,


Yours sincerely,


John K Paul

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