The development comes three days after Infosys acknowledged receipt of a notice for alleged evasion of over Rs 32,000 crore ($3.8 billion) in integrated goods and services tax (IGST) between July 2017, when the levy was rolled out, and FY22. On Friday, Karnataka withdrew the pre-show cause notice it had sent to the company on the matter and asked Infosys to submit further responses on the demand to DGGI.
Also read: Infosys accused of Rs 32,000-crore GST evasion: Here are 10 things to know
There wasn’t any clarity on the demand pertaining to the period between FY19 and FY22 in Saturday’s statement. Infosys didn’t respond to queries.
“The company had received and responded to a pre-show cause notice issued by DGGI for the period July 2017 to March 2022,” the company said in the Saturday exchange filing.
The tax demand had sparked a backlash. On Thursday, industry lobby group Nasscom said it reflected the GST enforcement mechanism’s lack of understanding of the IT industry operating model as this wasn’t ‘import of service’ by a head office from a branch. Nasscom had asked the finance ministry for a clarification so that the industry could avoid litigation risk.
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CA Parag Mehta, Partner, indirect tax, N A Shah Associates LLB, said, the time limit for fiscal 2018 case is getting over on August 5th, and the matter doesn’t appear to invoke the extended period of limitation. Hence subsequently the matter for fiscal 2019 and fiscal 2020 should also get dropped. However, it appears that the department will issue notices for fiscal 2021 and fiscal 2022 within the normal time limit for issuing notices.” He added that issue doesn’t appear to have been closed at the moment for fiscal 2021 onwards.
