Notes to the Consolidated Financial Statements - Seylan Bank

338 North Bound > Seylan Bank Annual Report 2011
Notes to the Consolidated Financial Statements
3. There have been 6 cases DTR 003/2010, DTR 004/2010, DTR 006/2010, DTR 007/2010, DTR 008/2010
and DTR 009/2010 filed by former employees of Seylan Bank PLC against the Bank, share owning trust
companies Sotse (Private) Limited, Seyshop (Private) Limited, Seyfest (Private) Limited, Esots (Private)
Limited, Seybest (Private) Limited and Sesot (Private) Limited of the Bank and other defendants in the
District Court of Colombo. The cases relate to the respective trust properties owned by these trust
companies. Plaintiffs had obtained enjoining orders restraining the Bank from receiving the proceeds
of the sale of the respective trust properties and restraining the trustees from selling their shares of
Seylan Bank PLC. Plaintiffs also sought interim injunctions to the same effect to be effective till the
conclusion of this case. The Bank filed objections to the grant of interim injunctions and the order of
the District Court of Colombo (as to whether the interim injunctions will be issued or not) is due on
17th February 2012. The Seylan Bank Employees' Union has also applied to be added as a party to these
cases. The Bank objected to such intervention. Consequently the District Court upheld the objections
of the Bank and dismissed the application for intervention. Thereupon Seylan Bank Employees' Union
filed six appeals WP/HCCA/COL 131/2011 to WP/HCCA/COL 136/2011 before the Colombo Civil Appeal
High Court against the said orders of dismissal. These appeals are to be heard before the Colombo Civil
Appeal High Court on 27th February 2012.
Based on the available information and current status of the above cases, the Bank is not in a position to
quantify the potential financial impact if any, as at the Balance Sheet date. Further, based on legal advice
the Bank does not expect the outcome of any action to have a material effect on the financial position of the
Bank.
There are no pending litigations against Seylan Developments PLC.
42.2 Tax Assessments Against the Bank
1. Assessment No. VATFS/BFSU/2009/130 for VAT on Financial Services for 2007, Commissioner General
of Inland Revenue issued the determination with an additional liability of Rs. 118,733,184/-. Bank made a
notification to the Tax Appeals Commission indicating the disagreement on the assessment and currently
awaiting their response.
2. Assessment No. VATFS/BFSU/2010/263 for VAT on Financial Services for 2008, amounts to Rs. 174,148,569/-.
Bank is not in agreement with the settlement option at the unit level and the Bank requested to refer the
matter for Commissioner General Hearing. The Appeal Branch has communicated that they have referred
the same to the CGIR.
3. Assessment No. 6129284, for income tax year of assessment 2007/08, amounts to Rs. 316, 456,174/-
and penalty of Rs. 113,539,923/-. Bank made the Appeal and the Hearing of CGIR was held. Bank awaits
Commissioner General's Determination.