LTIMindtree, a tech consulting firm, is challenging a hefty tax bill of Rs 155.7 crore issued by the Maharashtra GST department. This sum includes penalties and interest charges levied on the company.
The dispute stems from a tax demand order received on May 6, 2024, pertaining to the financial year 2018-19.
According to the GST department, LTIMindtree owes them Output IGST (tax applicable on interstate transactions) due to their disapproval of the company’s claim for Zero-Rated Supply.
The Central Board of Indirect Taxes and Customs ( CBIC ) defines Zero-Rated Supply as the sale of goods or services that are exempt from GST altogether. LTIMindtree believes the tax demand, including the added interest and penalty, is unfounded.
The intention of making exports zero-rated is to make the entire supply chain of exports tax-free. However, Rule 89(4)(c) restricts the refund in case of export made through the LUT model to 1.5 times the value of “like goods” domestically supplied.
The Letter of Undertaking is a document submitted by the exporter in order to export goods or services without the payment of taxes.
In case the LUT is not filed, the exporter may export by payment of IGST and then claim the refund of tax paid. Further, the said rule is violative of Articles 14 and 19(1)(g) of the Constitution of India.
Articles 14, 19, and 21 of the Indian Constitution are known as the “Golden Triangle”. These articles are interdependent and cannot be interpreted separately. For example, the right to equality under Article 14 cannot be achieved without the freedom of speech and expression guaranteed by Article 19.
The company, through a stock exchange filing, has declared its intention to pursue legal action against the order in consultation with its advisors. They have also reassured investors that this dispute is unlikely to significantly impact their financial performance or daily operations.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
