After Infosys, LTIMindtree gets order to pay Rs 62.4-cr GST on denial of zero-rated supply provision

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IT services major LTIMindtree on August 13 said it has received an order from the department of Goods and Service Tax (GST), Office of the Deputy Commissioner of State Tax in Mumbai to pay up Rs 62.4 crore, following the denial of zero-rated supply provision.

As per GST rules, zero-rated supply refers to supply of goods or services that are subject to nil GST. This means that the supplier does not have to charge any GST on the supply.

“The company has received an order under Section 73 of the Maharashtra Goods & Services Tax Act, 2017 raising a tax demand amounting to Rs 624 million (including penalty of Rs 30 million and interest as applicable) for FY 2019-20,” the company said in a BSE filing.

The reason for the penalty was “denial of zero-rated supply, thereby leading to proportionate reversal of Input Tax Credit.”

LTIMindtree called this order unjustified. “Based on assessment of facts and prevailing law, the company is of the view that the GST demand (including penalty and interest) is unjustified. The company will take appropriate legal course against the said order in consultation with its advisors,” LTIMindtree said in a statement.

“Accordingly, there is no likely material impact on the company’s financials or operations due to the said order,” it said.

The development comes close on the heels of its rival and the country’s second largest IT firm Infosys received demand for alleged tax evasion of over Rs 32,000 crore from the Directorate General of GST Intelligence (DGGI).