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BENGALURU: A day after Infosys received a Rs 32,400 crore “pre-show cause” GST notice, the company on Thursday said the Karnataka authorities have informed about the withdrawal of a similar notice issued by them and have directed the company to submit further response to DGGI, the central authority on this matter.
Amid one of the largest tax claims, lobby group Nasscom came out in support of the poster boy of the Indian IT sector, arguing that the latest tax action reflected a lack of understanding of the operating business model.
“This is an industry-wide issue, and multiple companies are facing avoidable litigation, uncertainty, and concerns from investors and customers. The issue at hand involves the applicability of GST through the reverse charge mechanism (RCM). GST enforcement authorities have been issuing notices for remittance by the Indian head office to its foreign branches for cases where there is no service between the head office and the foreign branch for this RCM, ignoring that this is not a case of ‘import of service’ by the head office from the branch. This is not a new problem, and courts have been ruling in favour of the industry in these cases,” Nasscom said in a statement.
Last year, the Karnataka high court had stayed proceedings against LTIMindtree after GST authorities raised a claim of Rs 4,831 crore. The company had filed a writ petition challenging the ‘Intimation of liability’ under the state GST law for tax on services rendered outside India and Karnataka during 2017-18 to 2020-21. Nasscom said it had approached the finance ministry to issue a circular clarifying the position so that industry can avoid litigation risk.
Amid one of the largest tax claims, lobby group Nasscom came out in support of the poster boy of the Indian IT sector, arguing that the latest tax action reflected a lack of understanding of the operating business model.
“This is an industry-wide issue, and multiple companies are facing avoidable litigation, uncertainty, and concerns from investors and customers. The issue at hand involves the applicability of GST through the reverse charge mechanism (RCM). GST enforcement authorities have been issuing notices for remittance by the Indian head office to its foreign branches for cases where there is no service between the head office and the foreign branch for this RCM, ignoring that this is not a case of ‘import of service’ by the head office from the branch. This is not a new problem, and courts have been ruling in favour of the industry in these cases,” Nasscom said in a statement.
Last year, the Karnataka high court had stayed proceedings against LTIMindtree after GST authorities raised a claim of Rs 4,831 crore. The company had filed a writ petition challenging the ‘Intimation of liability’ under the state GST law for tax on services rendered outside India and Karnataka during 2017-18 to 2020-21. Nasscom said it had approached the finance ministry to issue a circular clarifying the position so that industry can avoid litigation risk.
