Page 182 - Tata_Chemicals_yearly-reports-2021-22

Integrated Annual Report 2021-22

Litigations and claims (refer notes 2.3.4, 2.22, 18 and 41.1 to the Standalone Financial Statements)
The Key Audit Matter How the matter was addressed in our audit
The Company operates in various states within India, exposing it Our audit procedures included:
to a variety of different Central and State laws, regulations and • Obtaining an understanding of actual and potential
interpretations thereof. The provisions and contingent liabilities outstanding litigations and claims against the Company
relate to ongoing litigations and claims with various authorities. from the Company’s in-house Legal Counsel and other
Litigations and claims may arise from direct and indirect tax senior personnel of the Company and assessing their
proceedings, legal proceedings, including regulatory and other responses;
government/department proceedings, as well as investigations • Assessing status of the litigations and claims based on
by authorities and commercial claims.
correspondence between the Company and the various
Resolution of litigations and claims proceedings may span over tax/legal authorities and legal opinions obtained by the
multiple years beyond March 31, 2022 due to the complexity Company;
and magnitude of the legal matters involved and may involve • Testing completeness of litigations and claims recorded by
protracted negotiation or litigation.
verifying the Company’s legal expenses and the minutes of
The determination of a provision or contingent liability requires the board meetings;
significant judgement by the Company because of the inherent • Assessing and challenging the Company’s estimate of the
complexity in estimating whether it is probable that there will be possible outcome of litigations and claims. This is based on
an outflow of economic resources. The amount recognized as a applicable tax laws and legal precedence by involving our
provision is the best estimate of the probable expenditure. The tax specialists in taxation related matters and discussing
provisions and contingent liabilities are subject to changes due with the Company’s internal legal counsel;
to the outcomes of litigations and claims over time as new facts
emerge as each legal case progresses. • Evaluating the Company’s internal control and judgements
made by comparing the estimates of prior year to the actual
There is an inherent complexity and magnitude of potential outcome;
exposures is significant across the Company. Significant judgment
is necessary to estimate the likelihood, timing and amount of the • Assessing and testing the adequacy and completeness
cash outflows, interpretations of the legal aspects, legislations and of the Company’s disclosures in respect of litigations and
judgements previously made by the authorities. Accordingly, this claims.
is identified as a key audit matter.

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