Key Quantitative Figures

The order demands additional GST of ₹8,19,15,057 (Rupees Eight Crores Nineteen Lakhs Fifteen Thousand Fifty-Seven Only) along with applicable interest and penalty for the period from 1st July 2017 to October 2021.

Dates of Action

  • Original Order-in-Original (OIO) passed by Joint Commissioner, CGST & C. EX, Jamshedpur: 21 October 2024
  • Appeal filed by Timken India Limited in FORM GST APL-01: 28 January 2025
  • Personal hearing before Commissioner (Appeals): 24 August 2026
  • Commissioner (Appeals) order date: 30 October 2026
  • Company received order via email: 2 November 2026 at 12:00 noon
  • Company disclosure date: 3 November 2026

Parties Involved

  • Appellant: Timken India Limited (GSTIN: 20AABCT0596J1ZG)
  • Authority: Office of the Commissioner (Appeals), Central Goods and Service Tax & Central Excise, Ranchi
  • Adjudicating Authority: Joint Commissioner of CGST & C. EX, Jamshedpur
  • Legal Representatives: Mr. Syed Peeran (Advocate), Ms. Abhilasha Bajraria (Consultant), Mr. Anish Kumar (Timken authorized representative)

Nature of Violation Alleged

Short payment of GST on royalty payment under Reverse Charge Mechanism (RCM). The authority classified royalty payments towards fee for technical services under SAC 9983 where applicable GST rate is 18% under RCM, as against the company's classification under SAC 9973 where GST rate is 12% under RCM.

Company's Position and Rationale

The company contends that:

  • Royalty payment is for permitting use of Intellectual Property Rights provided by their Group Company
  • Correctly paid GST @12% under RCM covered under SL No. 17(i) of Notification No. 8/2017-Integrated Tax (Rate)
  • Services should be classified under SAC 997336 (Licensing services for right to use trademarks and franchises)
  • The arrangement does not constitute a franchise agreement as Timken USA doesn't have significant control over operations
  • The matter is revenue neutral as input tax credit would be available regardless of classification
  • Extended period of limitation under section 74 cannot be invoked

Financial Impact Assessment

The company states: "The Company does not anticipate any immediate financial or monetary impact." The company is of the opinion that the order is not sustainable and is taking necessary steps to file appeal before appropriate authority to get relief.

Pre-deposit Payment

The company paid ₹81,91,509 as pre-deposit needed under Section 107(6)(b) of the CGST Act, 2017 for filing the appeal.

Outcome of Appeal

The Commissioner (Appeals) rejected all five appeals filed by Timken India Limited and upheld the original order dated 21.10.2024, confirming:

  • Short-paid tax of ₹8,19,15,057 under section 74(1) of CGST Act
  • Recovery of interest under section 50 of CGST Act
  • Penalty of ₹8,19,15,057 under section 74(1) of CGST Act

Next Steps

The company plans to file appeal before appropriate authority to seek relief.