Rs 34.2 cr ST notice slapped on SKS Microfinance

SKS Microfinance said it has received a showcause notice from authorities demanding Rs 34.2 crore rpt 34.2 crore rpt service tax. The company has received show-cause notice from service tax authorities on October 23 to explain as to why the assignment of portfolio loans should not be classified under recovery service agent and the related income from the asset assignment transaction should not be subjected to service tax, SKS Microfinance said in a statement.

The SCN (showcause notice) relates to the period FY 2007-08 to FY 2011-12 and indicates an amount of Rs 3424.94 lakh as service tax on the income on asset assignment during the said period, it added. The authorities gave 30 days time to the company to respond, the micro lender said. The company will explain its stand to the authorities.
Based on the merits of the case, the management including its tax advisers said that its position is likely to be upheld in the appellate process, it said. Accordingly, the company did not made any provisioning in the financials of July-September period of the current fiscal.
Meanwhile, the company today said that it has suffered Rs 262 crore net loss for the quarter ended September 30, 2012, on a standalone basis. It had incurred a loss of Rs Rs 385 crore in the same quarter last fiscal.
The company's standalone total income from operations stood at Rs 78 crore against Rs 122 crore in the corresponding period last fiscal. The company made Rs 234 crore towards provisioning and write-offs during the quarter, SKS said in a statement. The company's Andhra Pradesh portfolio was reduced to nil from a high of Rs 1,491 crore at the start of Andhra Pradesh microfinance crisis in October 2010.
With this last and final provisioning for Andhra Pradesh exposure, SKS Microfinance Ltd looks beyond the Andhra Pradesh microfinance crisis, the company said in the statement.
The company has cash and bank balances of Rs 358 crore as on September 30, 2012. In addition, the unavailed deferred tax benefit stands at Rs 557 crore and will be available to offset tax on future taxable income, the statement added.
PTI