Srinagar, Mar 24: J&K Bank has received a GST demand order of Rs 200.20 crore from the Additional Commissioner, Central GST Commissionerate, Jammu, for transactions linked to its Transfer Price Mechanism (TPM), the bank said in a regulatory filing on Tuesday.
The demand pertains to the period from February 23, 2020 to March 2024 and relates to internal transactions under the bank’s TPM framework.
Explaining its position, the bank said it operates as a single legal entity comprising its corporate headquarters and all branches, and is required to present consolidated financial statements under applicable regulatory norms. “All the TPM entries are purely notional in nature and when entity-level financial statements are prepared, the expenditures and incomes accruing from within the bank on account of TPM interest distribution are nullified,” the filing said.
The bank noted that the TPM framework is followed by all banks in India in line with Reserve Bank of India guidelines issued in 1999 on risk management systems, which recommend a fund transfer pricing mechanism to support asset-liability management.
J&K Bank asserted that it has a strong case on merits and, based on expert opinion, believes the demand lacks legal justification and is likely to be set aside by a competent court.
It further stated that the demand order is not expected to have any material impact on its financials, operations or overall business activities.
The bank also pointed out that the High Court of Jammu and Kashmir and Ladakh at Srinagar has already granted a stay on a similar GST demand related to TPM transactions under another registration within the Union Territory.
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