Timken India Limited has received an unfavorable order from the Commissioner (Appeals), Central Goods and Service Tax & Central Excise, upholding a previous ruling. The appeal contested a demand for additional GST of Rs. 8,19,15,057/-, along with interest and penalty, related to the classification of royalty payments for technical services. The company argued for classification under SAC 9973 (12% GST), while the authorities classified it under SAC 9983 (18% GST).
GST Appeal Rejected by Commissioner (Appeals)
Timken India Limited has been informed that its appeal against an order concerning the Goods and Services Tax (GST) has been rejected by the Office of the Commissioner (Appeals), Central Goods and Service Tax & Central Excise. This decision upholds the earlier order that classified royalty payments made by the company as fees for technical services under SAC 9983, attracting an 18% GST rate under the Reverse Charge Mechanism (RCM).
Disputed Classification and Tax Demand
The original order, dated 21 October 2024, from the Office of Commissioner CGST and CEX, Jamshedpur, classified the royalty payments under SAC 9983. Timken India had previously classified these services under SAC 9973, which carried a lower GST rate of 12% under RCM. This reclassification led to a demand for additional GST amounting to Rs. 8,19,15,057/-, plus applicable interest and penalty, for the period from July 2017 to October 2021. The company had filed an appeal against this demand.
Company’s Stance and Next Steps
The company had argued that the royalty payments were for the use of intellectual property rights and should fall under SAC 997336. However, the appellate authority disagreed, considering the services more akin to franchise services under SAC 998396, which attracts the higher 18% GST rate. Timken India has expressed its opinion that the order is not sustainable and is taking necessary steps to file a further appeal before the appropriate authority. The company currently anticipates no immediate financial or monetary impact from this decision.
This update follows an earlier intimation dated 30 October 2024 regarding the initial order. The order received on 2 November 2026 at 12:00 noon was subject to a delay in submission due to the company’s evaluation of the impact and materiality.
Source: BSE
