In a case similar to the issuance of show cause GST notice of over ₹32,000 crore to Infosys, the Karnataka High Court had stayed the notice against LTIMindtree.
The notice was for ₹3,000 crore. In the wake of these notices, experts have argued for clearer GST guidelines on inter-branch services.
- Also read: BL Explainer. What is the GST demand on Infosys and its impact on companies with foreign branches?
In show cause notices issued earlier this year to tech player LTIMindtre, it was alleged that company’s overseas branches rendered services to its Indian head office and the same is liable to be taxed under reverse charge mechanism in GST regime. The issue is similar to the notice in Infosys case. Arguing against the notices, the petitioner company argued before the court that the services are received outside India, location of service provider is outside India and location of service recipient is also outside India.
The petitioner also argued that there is no jurisdiction under GST law for India to tax the transaction and the place of supply is an issue that can decided only by an officer competent to do so, but certainly not the officer who issued the show cause notice..
The Karnataka High Court, in an order in April, stayed the proceedings under the notice.
According to, Sandeep Sehgal, Partner-Tax with AKM Global, the said case mirrors the Infosys matter, where Karnataka State Authorities indicated a withdrawal of pre-show cause notices. This ruling is significant for the IT and service sectors, highlighting the need for clear GST guidelines on inter-branch services and offering a precedent that may shield other companies from similar disputes.
“This shift towards a more industry-friendly interpretation of GST laws could reduce litigation and operational disruptions, creating a more supportive environment for businesses with international branches,” he said.