Apex court orders ‘status quo’ on Rs617 crore tax demand on Satyam till tomorrow
07 Apr 2011
In a breather to Mahindra Satyam, the apex court yesterday ordered a 'status quo' till tomorrow on the income-tax demand of Rs617 crore on the company.
Mahindra Satyam had challenged the Andhra Pradesh High Court order for issuance of a banker's cheque for Rs350 crore. Additionally, the court had also demanded and an unconditional bank guarantee for Rs267 crore (towards interest on the Rs350 crore) to additional commissioner (income tax) within a week from 30 March.
According to legal experts the status quo ordered by the apex court meant that neither the company nor the tax authorities would be able to operate the amount in the bank account. All transactions on the account would be suspended till tomorrow they say.
The apex court in its interim order has also asked the additional commissioner (income tax) to submit by tomorrow the tax department's assessment of the chart submitted by Satyam regarding its actual income and tax liabilities.
The demand was raised by the tax department on the basis of Rs345 crore worth foreign tax credit availed by the former management of the company in the period 2003-09. However, according to the company's present management the amount was fictitious and had arisen from the inflation of revenues by Ramalinga Raju, the company's tainted founder.
Earlier this month, the company reportedly informed he Bombay Stock Exchange that it would submit to the tax authorities the amount (Rs617 crore) under the foreign tax credit liability following which the additional commissioner (income tax) would withdraw the garnishee orders and defreeze the bank accounts of the company.
According to the High Court, its garnishee orders against Satyam's bank accounts ( which amount to freezing of the company's bank accounts) would be lifted only against payment of the tax amount by the company. The High Court's prohibitory orders had led to Rs1,300 crore lying frozen.
The High Court will take up the matter for further hearing on 20 April.
