Risks related to legal environment
Level of risk
- low
- medium
- high
Change in the level of risk compared to 2016
- decrease
- unchanged
- increase
Risk related to real estate tax
- high
- unchanged
The settlements of property tax made by the Group with respect to mine workings and plants (facilities) located on them are challenged by tax authorities, which is described in Section 6.9 of this report. Unfavorable results of proceedings pending before tax authorities as well as tax proceedings possibly initiated with respect to future periods may obligate the Group to pay overdue tax liabilities with default interest.
In its judgments, the Supreme Court of Administration upheld JSW’s stance that mine workings are not building structures, and therefore the value of a mine working thus defined (excavation costs) may not be included in the taxable base for real estate tax purposes. It is possible to impose a tax on facilities located in mine workings if they may be classified as building structures as defined in the Taxes and Local Charges Act, with relevant references to the construction law. In the course of pending proceedings, JSW, as a matter of principle, challenges the taxation of mining supports classified by the townships as structures and the value of facilities located in the workings determined on the basis of market valuations, despite the fact that JSW submitted the value of such facilities based on allocation of the original value of such workings.