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The Sahara Group on Monday told the Supreme Court (SC) that it has remitted over Rs 700 crore to the exchequer in the form of tax deducted at source (TDS) from interest paid on optionally fully convertible debentures (OFCDs).
The claim, which came during the hearing of a contempt petition filed by the Securities and Exchange Board of India (Sebi), surprised the court as the group had earlier claimed that the majority of investors in these instruments were small investors investing anything from a few hundred rupees to a few thousands.
“Sahara India Real Estate Corp and Sahara Housing Invest Corp have deducted TDS on the interest paid to OFCD holders. The aggregate amount is more than Rs 700 crore,” Sahara counsel S Ganesh said. He added that if the depositor produced a PAN (Permanent account number), the tax deducted would be 10 per cent and if he did not, TDS would be 20 per cent. The group even issued TDS certificates to the depositors so that they could claim tax exemptions when they file their annual returns. Judge J S Khehar expressed surprise. “When you argued the main matter about the identity of investors, we were given the impression that these are poor agriculturists who do not even have a bank account. Not once was it said these were PAN card holders,” Khehar said.
He also asked the group to submit details of how much of this TDS was remitted before the August 31 order of the Supreme Court, which directed the two companies refund Rs 24,029 crore collected by issuing OFCD through Sebi, and how much after that.
Ganesh said the refunds made after the August 31 order were “negligible” compared to those made before that and even these were necessitated by the grave law and order problems created in 2,000-odd rural centres due to the huge publicity of the SC order by Sebi. “They caused a run on us,” Ganesh said, adding “for reasons completely beyond our control, we had to make direct redemptions.”
Earlier, Sahara argued that Sebi’s attachment order passed in February this year was based on “wrong assumptions” and had “no legs to stand”. According to Sahara, Sebi wrongly rejected over 31,670 cartons containing over 5.28 crore pages of original documents, application forms and redemptions vouchers on the grounds that “application forms and redemption vouchers were separated (by Sahara ) and they were hopelessly mixed.”
Ganesh argued that it was the standard record keeping practice of the Sahara Group to have the application form and redemption vouchers in separate files and they did not separate it deliberately.
He further pointed out that Sebi had called for tenders for two agencies: one for digitising the records submitted by Sahara and creating a database second for verification.
It had given timelines of six months and one year, respectively for these agencies to complete this job.
“But before even this job could commence, Sebi rejected the documents in their entirety,” the counsel said.
Judge K S Radhakrishnan pointed out, “It was your burden. If you had given the records properly, this would not have happened. A company which properly keeps records, it is a matter of ten minutes.”
