NSE/BSE Codes: BSE: 539658, NSE: TEAMLEASE

Summary of Key Information:

Nature of Event / Disclosure:

Regulatory disclosure of receipt of a Show Cause Notice (SCN) from the Department of Commercial Taxes, Government of Karnataka under Section 73(1) of the Karnataka Goods and Services Tax Act, 2017 (KGST Act) and the Central Goods and Services Tax Act, 2017 (CGST Act) for FY 2022-23.

Involved Parties / Authorities:

  • Deputy Commissioner of Commercial Taxes (Large Taxpayers Unit)-03, Bengaluru
  • Department of Commercial Taxes, Government of Karnataka

Date / Timeline of Event:

  • Date of Notice: September 29, 2026
  • Date of Receipt: September 29, 2026
  • Reference Number: JCCT(A)/LTU/JDN/64/2026-27 dated July 31, 2026
  • Reply Deadline: October 29, 2026
  • Disclosure Date: October 13, 2026 (with 13-day delay)

Brief Description of Outcome / Dispute:

The company received a Show Cause Notice pertaining to two issues from an original nine raised in an earlier intimation (Form GST DRC-01A). Seven issues were dropped based on the company's submissions. The two remaining issues are:

1. Issue 8: Adjustments in turnover for reasons not listed, reported under Table 5O of GSTR-9C, amounting to INR 42,47,67,225. The department alleges no reply was submitted for this item and proposes tax at 18% on the entire amount (INR 7,64,58,100).

2. Issue 9: Alleged under-reporting of exempted/nil rated/Non-GST outward supplies. The dispute involves a difference of INR 81,86,92,852 between values reported in GSTR-3B (INR 18,15,74,312) and Table 7(b) of GSTR-9C (INR 1,00,02,67,164). The department proposes tax at 18% on this differential amount. Additionally, the notice proposes tax on the entire exempt supply of INR 18,15,74,312 at 18% each under CGST and SGST due to absence of documentary evidence.

Impact of Outcome:

Financial Impact:

The total financial implication as per the notice is INR 52,76,08,537 (Rupees Fifty-Two Crores Seventy-Six Lakhs Eight Thousand Five Hundred and Thirty-Seven Only), comprising:

  • Tax: INR 28,91,89,566
  • Interest: INR 20,95,00,014 (computed up to the date of notice, subject to change)
  • Penalty: INR 2,89,18,957

The company notes that the tax on exempt supplies under Sl. No. 9 has been computed at 18% each under CGST and SGST instead of 9% each, resulting in the tax demand being overstated by INR 3,26,83,376.

Operational / Business / Strategic Impact:

The company has strengthened its internal reporting process between indirect tax and secretarial functions to prevent recurrence of communication gaps that caused the 13-day disclosure delay.

Next Steps / Required Actions:

The company is evaluating the notice and will file its reply in Form GST DRC-06 on or before October 29, 2026. The company remains committed to ensuring full compliance with applicable laws and will keep stock exchanges informed of material developments.