Infosys vs DGGI | ₹32,403 Cr GST Bomb Diffused: Victory for Logic or Loophole?
Let’s call a spade a spade. This isn’t just another “clean chit” story—it’s a landmark event in India’s GST jurisprudence that calls out the DGGI’s overreach and exposes deep cracks in enforcement strategy.
Here’s what really happened, and why it matters to every CA, CFO, tax head, GST consultant and IT company out there.
🧾 The Case
DGGI went after Infosys alleging it evaded ₹32,403 Cr of IGST on services received from its own foreign branches.
Their logic: “Foreign branches = separate person → Import of services → Pay IGST under Reverse Charge Mechanism (RCM).”
Infosys stood its ground: “Branches are same legal entity, no supply between them. And CBIC’s Circular 199/2023 backs us.”
👉 Bottom line: DGGI dropped the case. Not even a show-cause. Infosys wins.
⚖️ The Legal & Technical Analysis
1️⃣ Same Entity = No Supply
Under GST, distinct person concept doesn’t apply cross-border unless separate GSTINs are involved (which branches abroad don’t have).
The foreign branch = extension of Indian company. No "contract," no "consideration" → No "supply."
2️⃣ Circulars Still Rule
CBIC’s clarification (Circular 199/2023) is crystal clear: services from own foreign branches are NOT liable to IGST.
The DGGI’s claim was, therefore, legally shaky and contrary to policy guidance.
3️⃣ fishing expeditionAttempted Backdoor Taxing
The DGGI’s ₹32K Cr claim smelt like a fishing expeditionfishing expedition. No show cause, just soft notice, inflated numbers, and pressure tactics.
Why? Possibly to create fear across the IT sector. Infosys just had the guts—and the legal muscle—to fight back.
📣 What This Means for Everyone
💼 For IT/Consulting Giants: Big win, but not blanket immunity.
Documentation and inter-branch invoicing practices must be watertight.
Get your place of supply and contractual arrangements GST-proofed.
🧠 For GST Practitioners:
Watch how DGGI reads “import of services” going forward.
Don’t ignore CBIC circulars—they still hold legal value in audits and litigation.
Expect "test cases" where DGGI will pick weaker targets than Infosys.
⚠️ For Mid-Sized Exporters & Service Providers:
If you’ve got foreign branches or shared resources across borders, this is a wake-up call.
Fix your inter-office cross-charge strategy before you’re next.
🔥 Final Word This wasn’t just a tax claim—it was a power struggle between enforcement ambition and statutory logic. DGGI lost, but they’ll be back—leaner, meaner, and more surgical. This Infosys closure sets a precedent—but not a shield. Every business needs to treat cross-border operations with caution. Because next time, it might be your balance sheet on the line.
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