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• Annual Report 2018-19
Shaping the future of software driven business
Notes forming part of consolidated financial statements (Contd.)
39. Auditors’ remuneration
(In
`
Million)
For the year ended
March 31, 2019
March 31, 2018
As auditor*:
- Audit fee*
9.20
8.00
- Tax audit fee
-
-
In other capacity:
- Other services*
12.51
1.07
Reimbursement of expenses
-
-
21.71
9.07
* Does not include payment to local auditors of subsidiaries.
40. Research and development expenditure
The particulars of expenditure incurred on in-house research and development are as follows:
(In
`
Million)
For the year ended
March 31, 2019
March 31, 2018
Capital
0.46
-
Revenue
865.21
882.97
865.67
882.97
41. Contingent liabilities
The contingent liabilities as on March 31, 2019 were
`
299.14 million (previous year
`
51.91 million).
Persistent Systems Limited (“the Holding Company”) had received a show cause notice from Commissioner of Service
Tax on December 19, 2016 for non-payment of service tax of
`
452.15 million under import of services on reverse charge
basis, excluding interest and penalty if applicable. The issue relates to the professional and technical services rendered by
overseas subsidiaries on behalf of the Holding Company to its overseas customers for the period 2011-12 to 2014-15.
Post representations made by the Holding Company, the Learned Principal Commissioner of Service Tax, Pune, adjudicated
the aforesaid show-cause notice and issued an order on May 29, 2017, reducing the demand to
`
165.51 million based on the
period of limitation and as a result of that, the said demand now covers financial year 2014-15.
The Holding Company has filed an appeal against the order passed by Learned Principal Commissioner of Service Tax,
Pune with the Hon’ble Central Excise and Service Tax Appellate Tribunal (CESTAT) on September 23, 2017.
The Holding Company, based on independent legal opinion obtained in respect of issues related to this matter, believes
that the liability is not likely to arise and therefore, no provision is considered necessary in the financial statements. If the
appeal filed as mentioned above results in a demand, there will be no impact on the profitability as the Holding Company
will be eligible to claim credit/refund for the amount paid.
The GST department has filed an appeal on October 11, 2017 with appellate authorities against the Order passed by Learned
Principal Commissioner of Service Tax, Pune. Though the GST department has acknowledged the ground of revenue
neutrality, the said appeal mainly questions non-application of extended period of limitation. The Holding Company has
filed reply to this appeal on December 18, 2017.
Considering the view of the Service Tax Authorities, based on legal advice, and due prudence, the Holding Company has
deposited, an amount of
`
647.36 million towards service tax in respect of the above matter, for the period from April 01,
2014 to June 30, 2017, under protest.
As on March 31, 2019, the pending litigations in respect of direct taxes amount to
`
268.74 million and in respect of indirect
taxes amount to
`
30.40 million (excluding the show cause received from Commissioner of Service Tax on May 29, 2017 of
`
173.78 million under import of services on reverse charge basis as mentioned above). Based on the advice obtained and
judgments in favour of the Company at the first appellate authority in the earlier years, management does not expect any
outflow in respect of these litigations.