TeamLease to Challenge Rs. 32 Crore GST Penalty in High Court

TeamLease has received a penalty order from the GST authorities claiming issuance of invoices without underlying supply of services in respect of manpower services rendered by the Company during the period July 2017 to July 2022 and have imposed a penalty under Section 122(1)(ii) read with Section 74 of the CGST Act, 2017.

The company argues that it did provide manpower services, paid salaries with deductions, and paid GST, so the order is legally flawed and ignores evidence.

The Company added that the impugned order suffers from significant jurisdictional, legal infirmities, and violation of the principles of natural justice including non-consideration of material evidence and summary disposal of multiple appeals through a common order.

A similar case was re-opened under section 147 of the Income Tax Act, 1961 by issuance of notice under section 148 for the period FY2019 till FY2022. Income tax department found all the records and transactions in order and the re-assessments were closed with NIL observations.

The penalty upheld is about Rs 32.29 crores, but no tax demand was raised, meaning business operations are not materially affected.

TeamLease plans to challenge the order in the Karnataka High Court. and has disclosed the matter as a contingent liability in its financial statements, assuring investors that future notices will be reported properly.