A possible crisis in the Uttar Pradesh farmlands has been averted as the Indian Farmers Fertiliser Cooperative (Iffco) has said it will continue to market fertilisers in the state.
India?s largest fertiliser company was caught unaware this week when Reliance Industries (RIL), the supplier of gas to Iffco, decided to pay its disputed tax dues, which would raise the price of fuel.
The payment is expected to raise the costs for Iffco. Since the price of its final product is fixed the company said it would be difficult to absorb the cost.
RIL has recently given an assurance to the Supreme Court (SC) that it would pay Value Added Tax (VAT) on sale of gas in Uttar Pradesh despite a case pending against the state government in the Allahabad High Court.
RIL?s move came as a surprise to the fertiliser companies since RIL had challenged the tax. Talking to FE, Balvir Singh, joint GM of Iffco in Uttar Pradesh, said, ??We will now have to pay R20 crore tax per month against our usual payment of R 2 crore to RIL. But that does not mean that we are going to shut operations in the state??. A cumulative writ of Indo-Gulf Fertilisers, Tata Chemical, Kribhco and Iffco is pending before the Allahabad High Court and a decision is still awaited from the court. The companies are hoping for a favourable verdict.
He went on to reiterate the fact that US Awasthi, MD Iffco, had met the Uttar Pradesh chief minister Akhilesh Yadav and the PWD minister, Shivpal Yadav last week and had stated categorically that the company was committed to supply as much fertiliser as was required by the cooperative sector in the state.
It may be mentioned that the previous Mayawati government had issued directions on imposing VAT on gas supply to UP based fertiliser companies by RIL, which was stayed by the High Court in July last year. The state government then appealed to the apex court against the stay order, demanding that since RIL is actually selling the KG Basin gas in Uttar Pradesh, it is UP that should get 21% VAT on the same instead of the CST that Andhra Pradesh was getting as its share of the gas production.