The document states that Infosys is under the scanner for the ‘non-payment of IGST on import of services as recipient of services.’
The DGGI states that as the company creates overseas branches to service clients as part of its agreement with the clients, those branches and the company are each treated as ‘distinct persons’ under the IGST Act.
“Thus, in lieu of receipt of supplies from overseas branch offices, the company has paid consideration to the branch offices in the form of overseas branch expense. Hence M/s Infosys Ltd Bengaluru is liable to pay GST under the reverse charge mechanism on supplies received from branches located outside India,” the document states.
It adds that further investigation is under process. In typical DGGI investigation, it will progress to a case report and either a visit from a DGGI official or a demand of information and a summons.
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A source informed about the matter says that Infosys has received the notice about the investigation from the DGGI but the company believes it is in full compliance with state and central GST laws. Infosys did not immediately respond to calls and emails seeking comment.
This will not be the first time the company has fallen foul of the GST Department, whose platform it built, though the scale of this investigation dwarfs the earlier issue. In April, the company said the Odisha GST Authority imposed a penalty of Rs 1.46 lakh for availing ineligible input tax credit.
