The Sahara Group, struggling to pay the Securities and Exchange Board of India Rs 10,000 crore in return for its chief Subrata Roy’s freedom, would have to eke out an additional Rs 5,000 crore as the income tax department plans to claim first charge on Sahara’s deposits to retire pending tax demand.
The I-T department has conveyed to the law ministry that “its interest will be protected if the outstanding demand (of Rs 4,860 crore) could be recovered from the amount required to be deposited by the Sahara Group”.
“Income Tax is proposing to file a curative application before the Supreme Court seeking modification of direction of August 31, 2012 that such money shall be first used to discharge tax liability and thereafter the balance may be appropriated to the Government of India,” says a law ministry’s document.
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Roy was remanded to Tihar jail on March 4 along with two directors for failing to abide the court’s August 2012 order to pay Rs 24,000 crore with interest to Sebi to refund investors in two Sahara firms. The apex court wants Sahara to pay at least Rs 10,000 crore to prove its bona fides for Roy’s release.
The law ministry has put forth I-T department’s proposal to the Solicitor General for his “considered opinion” on the feasibility of filing an intervening application or curative petition before the court in the matter of Sahara India Real Estate Corp (SIRECL) and Sahara Housing Investment Corp (SHICL) versus Sebi.
The Solicitor General, during discussions with tax officials, informally conveyed that the department had “merit” in filing the appeal even though the law ministry feels that the appropriate course of action would be to invoke the Income Tax Act which contains provisions for recovery of dues.
Citing the Principle of Crown Debt, the legal-wing of the law ministry wrote that “chances of success in curative and intervention petition appears to be remote” and that “tax liability being a Crown Debt will have priority over all other creditors”.
“If Sebi, after due verification of the details (of subscribers) furnished, is unable to find the whereabouts of all or any of the subscribers, then the amount collected from such subscribers will be appropriated to the Government of India,” it said, adding that leftover money be used for tax dues. However, I-T officials want first charge on Sahara deposit as there is no firm estimate of the genuine subscribers and hence, of the balance money that would be available after paying them.
I-T department’s intervention would also dash Sahara’s request before the apex court to defreeze its accounts and properties to enable it to fulfill the conditions laid down by the court for Roy’s bail.
Sahara has paid only Rs 5,120 crore to Sebi but claims that SIRECL and SHICL unilaterally refunded Rs 17,443 crore and Rs 5,442 crore respectively to 95 per cent of the investors by cash.