I have my pyproject.toml in the parent directory of the one set to be checked by ruff. It's also the root directory of the repo.
With that setup, I expected setting src to the folder I'd like to check would still correctly find pyproject.toml, but apparently it doesn't:

Run astral-sh/ruff-action@v3
  with:
    src: ./python
    args: check
    github-token: ***
  env:
    PYTHONUNBUFFERED: true
    RUFF_OUTPUT_FORMAT: github
Could not find python/pyproject.toml. Using latest version.
Found ruffDir in tool-cache for 0.11.13
Added /opt/hostedtoolcache/ruff/0.11.13/x86_64 to the path
Set RUFF_OUTPUT_FORMAT to github
Successfully installed ruff version 0.11.13
/opt/hostedtoolcache/ruff/0.11.13/x86_64/ruff check ./python

I noticed this when I got unexpected ruff warnings in CI, which was due to the newest ruff version being used rather than the one specified in pyproject.toml (0.11.9).

Since ruff itself looks in parent directories for pyproject.toml when invoked, I think it would make sense for this to work for the action as well.