TeamLease Services has informed the stock exchanges regarding the receipt of an Order-in-Appeal from the Commissioner of CGST & Central Excise (Appeals-III), Mumbai. The disclosure, made on May 06, 2026, pertains to a penalty imposed under the Central Goods and Services Tax Act, 2017, and was filed in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Background of the Order

The order arises from proceedings initiated by the Directorate General of GST Intelligence. The authorities alleged that the company issued invoices without an underlying supply of services in respect of manpower services rendered during the period from July 2017 to July 2022. Consequently, a penalty was imposed under Section 122(1)(ii) read with Section 74 of the CGST Act, 2017.

TeamLease Services has contested these allegations, stating that it duly rendered the manpower services, issued valid GST invoices, and processed payment of salaries with applicable statutory deductions. The company maintains that it discharged the requisite GST and that all transactions were appropriately reported in statutory returns and reflected in financial statements. The company further noted that the impugned order suffers from significant jurisdictional and legal infirmities, including violation of the principles of natural justice, non-consideration of material evidence, and summary disposal of multiple appeals through a common order. Additionally, a similar case re-opened under Section 147 of the Income Tax Act, 1961, for FY2019 to FY2022, was closed with NIL observations after the department found all records and transactions in order.

Financial Implications and Legal Response

The Order-in-Appeal has resulted in the upholding of a penalty of approximately Rs. 32.29 Crores. While no tax demand has been raised, the company stated there is no material impact on operations at this stage. The matter had previously been disclosed as a contingent liability under Note 46(f) in the standalone financial statements for FY25.

In response to the order, TeamLease Services is in the process of filing a writ petition before the Hon'ble High Court of Karnataka, Bengaluru, challenging the Order-in-Appeal. The company will seek appropriate interim relief, including a stay against recovery proceedings.

Key Details of the Order

The following table summarises the key particulars of the Order-in-Appeal as disclosed to the stock exchanges:

Disclosure Delay and Compliance Commitment

The company clarified that the delay in disclosure was due to an initial management decision to report the matter as a contingent liability in the standalone financial statements, given that there was no financial impact at the time the demand notices were received. Following internal discussions and a revised understanding of regulatory requirements, the company has committed to disclosing all Demand and Show Cause Notices based on materiality thresholds within prescribed timelines, irrespective of whether they are disclosed under contingent liability or carry no immediate financial impact. TeamLease Services reaffirmed its commitment to full compliance with applicable laws and regulatory requirements and stated it will keep stock exchanges and regulatory authorities duly informed of any material developments in this matter.

TeamLease Services Limited has received a show cause notice from the Employees' Provident Fund Organisation (EPFO) over alleged fund management issues. The regulatory action involves substantial disputed financial implications that could significantly impact the company's operations and compliance standing.

Notice Details and Timeline

The EPFO issued the show cause notice on April 13, 2026, which TeamLease Services received on April 23, 2026. The company disclosed this information to stock exchanges on April 28, 2026, noting a delay of 5 days due to administrative exigencies and time required to assess the materiality threshold.

Specific Allegations

The show cause notice alleges several contraventions related to the administration and management of funds by the Employees' Provident Fund Trust. The EPFO has raised concerns about multiple areas of fund management practices.

Financial Impact and Company Response

The quantum of implication as per the notice amounts to ₹1,84,58,42,073 including interest, which the company disputes. TeamLease Services has clarified that it previously sought guidance from the Regional Provident Fund Organisation, Bengaluru, regarding employer funding obligations.

The company stated that the employer is allowed to fund only to the extent of shortfall as per the Balance Sheet, and such funding was completed on March 30, 2022. TeamLease Services is working closely with the department to resolve the demand and remains committed to ensuring full compliance with applicable laws and regulatory requirements.

Regulatory Compliance

As a prominent player in the human resources and staffing industry, TeamLease Services manages provident fund contributions for numerous employees across its client base. The company has indicated it is currently evaluating the notice and will take appropriate legal action while keeping stock exchanges informed of any material developments in this matter.