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Shaping the future of software driven business
Unconsolidated Financials •
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36. Contingent liabilities
Persistent Systems Limited (“the Company”) had received a show cause notice from the 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 Company to its overseas customers for the period 2011-12 to 2014-15.
Post representations made by the 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 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 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 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 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 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.
Persistent Systems Ltd has given a guarantee of $ 15.17 million on behalf of Persistent Systems Inc. (Previous year: $ 15.17
million).
37. Capital and other commitments
(In
`
Million)
As at
March 31, 2019
March 31, 2018
Capital commitments
Estimated amount of contracts remaining to be executed on capital account and not
provided for
204.45
40.44
Other commitments
Forward contracts
8,175.45
6,895.53
For commitments relating to lease agreements, please refer note 33.
38. Auditors’ remuneration
(In
`
Million)
For the year ended
March 31, 2019
March 31, 2018
As auditor:
- Audit fee
8.20
7.00
- Tax audit fee
-
-
In other capacity:
- Other services
5.53
1.07
Reimbursement of expenses
-
-
13.73
8.07
Notes forming part of financial statements (Contd.)