The Sajjan Jindal-led JSW Steel on Thursday denied allegations of R324-crore tax evasion made by the Karnataka Lokayukta justice Santosh Hegde against the company. Joint managing director and group CFO Seshagiri Rao defended the company?s ore procurement and transport process and denied it had bought land at inflated price from the family of the erstwhile chief minister BS Yeddyurappa, to get mining rights in Karnataka.
JSW is one of India?s largest steel companies with a 10 million tonne capacity plant in the Bellary-Hospet region of Karnataka. The company does not have a mining lease. The principal allegations made in the report against the company is that it received much more iron ore (about 12 lakh tonne) compared to the amount for which it had paid royalty and taxes to the state.
But denying the charges, Rao said the responsibility for the dues, if any, were on the suppliers of ore and not JSW. He said the ore was procured through companies like National Mineral Development Corporation and Vijayanagar Minerals and Mysore Minerals against ?valid purchase orders and the supplies were accompanied by requisite documents?. JSW Steel, he said, maintains accounts of all the iron ore it receives and uses. ?As negotiated with the sellers and suppliers of iron ore, the sale consideration as paid by JSW Steel included all applicable taxes and royalties. The sellers and suppliers are responsible for discharging their statutory obligations,? he said.
The company said if there were violations and illegal mining, the respective authorities should take appropriate action against the defaulting company. ?JSW Steel is in no way connected to these alleged illegal activities and unlawful extraction of minerals or default in payment of royalty/taxes by the mine owner to the state exchequer,? Rao said.
The Lokayukta has also alleged that JSW offered collateral benefits (buying land from Yeddyruppa’s family) to obtain the mining concessions. ?There is no question of collateral benefits. We have invested R33,500 crore in our steel plant. At the time of signing an agreement, we were assured that we would be given mining leases. It has been over 15 years and the company is still waiting for leases. Where is the case for collateral benefits?? Rao wondered.
The report and the consequent ban on mining in Bellary region ordered by the Supreme Court has forced JSW Steel to cut its production from its Vijayanagar plant by 32-35%. JSW Group is one of the biggest investors in Karnataka, having put in R40,000 crore. The company?s share has fallen 10% to R685.10 on the BSE since last Friday.
But JSW said though the Lokayukta has dragged its name into the controversy and defamed it, it will not take any immediate legal action. ?We are not looking at legal recourse on the issue for now, but may do so in future, if need be,? Rao said.
Lokayukta has also accused the company of transporting iron ore from the stock yard located near JSW Steel premises to Auto Nagar and Baba Plant and not adhering to the deal with Mysore Minerals. The company, however, said this stock yard is neither owned nor controlled by JSW.
?As far as non-adherence to agreement between Mysore Minerals is concerned, all actions including sale of low-grade iron ore lumps to South West Mining (Group Company) by VMPL during 2003-05 were in compliance with laws and was in line with commercial understanding between the parties,? he said.
Last Friday, Lokayukta justice Santosh Hegde told FE that he has recommended investigation into the involvement of corporates like JSW Steel and Adani Enterprises for buying illegally mined ore and, separately, for two transactions of up to Rs 30 crore allegedly with former chief minister BS Yeddyurappa’s family. The report also named over 100 private companies and even the state-run National Mineral Development Corporation. According to the Lokayukta report, around 12 lakh tonnes of iron ore had been supplied in excess to JSW during April 2009 and July 2010, causing loss of royalty to the state.