Annexure XIV Continued… - Edelweiss

Our Company filed a review petition no. 16 of 2009 against the aforesaid order of CSERC which was rejected
by CSERC vide its order dated May 25, 2009. Thereafter, the CSERC and our Company preferred appeal no.
119 of 2009 and appeal no. 125 of 2009, respectively before the Appellate Tribunal for Electricity at New
Delhi. On February 09, 2010, vide its common order, the Appellate Tribunal for Electricity allowed the appeal
no. 125 of 2009 filed by our Company and dismissed the appeal no. 119 of 2009 filed by CSERC. Aggrieved
by the said order, CSERC filed a civil appeal no. 4698-69 of 2010 against our Company before the Supreme
Court of India. The Supreme Court vide its order dated July 30, 2010 admitted the appeal preferred by CSERC
and until further orders, has stayed the operation of the order dated February 09, 2010 passed by the Appellate
Tribunal for Electricity. The Supreme Court also ordered that the supply of electricity by our Company to its
washeries on payment of cross subsidiaries charges will continue till further orders are passed. The civil appeal
is currently pending.
Tax
Notices
1. Show Cause Notice dated October 24, 2008 bearing C. No. DL-II/ST/R-17/SCN/ACBPL/53/07/2079
issued by the Commissioner of Service Tax, Delhi
Our Company had received a show cause notice bearing no. DL II/ST/R-17/SCN/ACBPL/53/07/2079 dated
October 24, 2008 issued by the Commissioner of Service Tax, Delhi in relation to inter-alia (i) non-payment
of Service Tax on commission received as per the agreement between our Company and M/s. Electronic
Corporation of India dated December 10, 2002 ; (ii) short payment of Service Tax under section 68 of the
Finance Act, 1994 (“Finance Act”) on the gross value of taxable service received as consideration under the
aforementioned agreement; (iii) Service Tax payable under section 68 of the Finance Act on account of
provision of taxable service; (iv) service tax payable under section 68 of the Finance Act on account of
provision of cargo handling service; (v) differential amounts of taxable service in relation to financial years
2006 and 2007; (vi) irregular availment and utilization of Cenvat credit in contravention of Cenvat Credit
Rules, 2004; (vii) imposition of penalty in terms of section 76 of the Finance Act for failure to pay service tax
and education cess when due; (viii) failure to furnish prescribed returns with correct and complete details; (ix)
suppression and concealing the value of taxable services with the intent of evading payment of service tax and
education cess. Our Company has filed a reply to this show cause notice on May 5, 2009 alleging that the
demands raised therein are not sustainable and therefore the penal provisions under sections 76, 77 and 78 are
not invocable. Further, our Company prayed that the proceedings initiated by way of this show cause notice be
quashed. However, our Company has on August 6, 2009 received a letter from the Assistant Commissioner of
Service Tax, Delhi requisitioning further information for issuance of a subsequent show cause notice. The total
amount involved in the matter aggregates approximately to ` 175 million and the matter is currently pending.
2. Notice under section 154, 155 of the I.T. Act issued by the Deputy Commissioner of Income Tax
Our Company has received a notice under section 154, 155 of the I.T. Act dated March 15, 2011 issued by the
Deputy Commissioner of Income Tax Circle 2(1), New Delhi whereby the assessing officer has proposed to
amend the assessment order dated March 31, 2010 for the A.Y. 2008-09 by disallowing ` 8.92 million being
capital work in progress claimed as expense by our Company. The amount involved in this notice is ` 3.03
million Our Company has filed a reply dated April 6, 2011 with the assessing officer.
3. Our Company v. Commissioner of Service Tax- Appeal No. ST/471 of 2008 before the Customs, Excise
and Service Tax Appellate Tribunal, New Delhi
Our Company was issued two show cause notices dated September 7, 2006 bearing F. No.
DGCEI/MZU/I&Is‘D’/30-73/2006/8211 and IS “D”/30-73/2006by the Directorate General of Central Excise
Intelligence which alleged that from September 10, 2004 to March 31, 2006, an amount of approximately `
170 million was received as service charges by our Company including a bonus of ` 1.6 million from the
Maharashtra State Electricity Board for reducing the ash content in the beneficiated coal below the prescribed
limit constitutes the value of taxable service provided by our Company in the category of business auxiliary
service. Further, in respect of certain scrutinized contracts, it was alleged that our Company received an
amount of ` 9.7 million from August 16, 2002 to March 31, 2006 towards loading and unloading of coal,
which was taxable under the category of cargo handling service. Furthermore, it was alleged that our Company
recovered service tax of ` 1.17 million from cement and sponge iron manufacturers, which is payable under
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