Andhra HC tells Satyam to pay Rs 350 crore to CBDT

HYDERABAD: In a major setback to Mahindra Satyam, the Andhra Pradesh High Court on Wednesday asked the company to issue bankers' cheques worth Rs 350 crore to the Central Board of Direct Taxes (CBDT). The company was also asked to provide an unconditional bank guarantee worth Rs 267 crore to the tax authorities.

The interim order comes after Mahindra Satyam moved the high court last week seeking a stay on the proceedings related to 617-crore claim made by tax authorities. The I-T department's claim is based on 345 crore foreign tax credit availed by the former management of Satyam Computer Services headed by Ramalinga Raju during 2002-08, which the present management believes is forged.

The court has given three weeks to the CBDT for filing the counter. The case will now come up for hearing on April 20.

However, a Division Bench comprising Justice VVS Rao and Justice Ramesh Ranganathan has allowed Mahindra Satyam to access its bank accounts worth Rs 1,300 crore. Earlier the court had prevented both Mahindra Satyam and the I-T department from accessing the company's bank accounts.

This will be a relief to the company as senior counsel for Mahindra Satyam, S Ganesh, had pleaded with the judges to release the accounts to pay salary for the company's employees. The counsel was requesting the court to pass relief orders before the banking time gets over.

Considering that the order came on March 30, the company will now be able to access its accounts on March 31. The senior counsel has also assured the judges that the company would provide the required cheques and guarantees on Thursday. As per the policy followed by the company, it will have to pay salary to its employees on the last working day of every month.

According to T Hari, chief people officer and chief marketing officer of Mahindra Satyam, the attachment of accounts would not affect the company's day-to-day operations. "We have already made arrangements for the salary of employees," he said. However, he refused to explain how this money was organised.

As per Mahindra Satyam's last quarter result, salary bills account for about 70% of its total revenues. So, every month it will have to shell out about Rs 298 crore for paying salaries.

The company's senior counsel also admitted that the company does not have any proof to show that the foreign tax credits were fictitious.

The Division Bench of the high court pointed out that the company cannot base its arguments on Ramalinga Raju's confession letter as he has not been found guilty.

Source: EconomicTimes