SC notice to RIL, Centre, others on UP VAT issue

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Jul 9 2013, 08:31am hrs
The Supreme Court on Monday sought response from the Reliance Industries, the Centre and others as to why the Mukesh Ambani firm should not be asked to pay value-added tax (VAT) to the tune of R900 crore on the sale of natural gas to fertilser units in Uttar Pradesh during 2009-10.

A Bench headed by Chief Justice Altamas Kabir issued notice to RIL, the Ministry of Petroleum & Natural Gas, National Thermal Power Corporation, Kribhco Shyam Fertilisers, Indo Gulf Fertilisers Ltd, IFFCO and Tata Chemicals on an appeal filed by the Uttar Pradesh government, which stated that the Allahabad High Court's decision to quash the 2010 assessment order passed by the state authorities in 2010 deprived it of R900 crore.

The HC judgment in September last year had held that the UP government had no jurisdiction or statutory right to impose VAT on the supply of piped natural gas as the sale transaction was in the nature of inter-state sale and not intra-state sale. Besides, the HC said there appeared to be blatant abuse of power by the state authorities while imposing the VAT and directed the authorities to refund R240 crore tax collected from RIL, which is engaged in extracting and refining petroleum and petrochemical products.

RIL senior counsel Harish Salve argued that gas produced in Andhra Pradesh pass through various states before being supplied to fertiliser companies located in UP and no state other than the latter wants the company to pay VAT. On staying the HC judgment, he said the company does not want to run the risk and would collect the tax from the consumers and pay the government.

Senior counsel Vivek Tankha for Tata Chemicals said that RIL can't recover such tax from the PSUs and even the Centre is supporting them.