SC seeks report on iron ore allocation to JSPL

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Sep 18 2013, 08:05am hrs
The Supreme Court has sought a report from the CEC on an application alleging that Naveen Jindal's flagship Jindal Steel and Power, one of India's major steel producers, colluded with the Orissa government to get the Thakurani iron ore mines block recommended in its favour and also for accessing iron ore from its group mining associate Sarda Mines at rates below the market price, causing a loss of R8,100 crore to the state exchequer.

A green bench headed by Justice AK Patnaik sought response within six weeks from the court-appointed committee, MoEF, the governments of Orissa and Chhattisgarh and others on an application filed by an Oriya journalist alleging nexus between

JSPL and mid-sized iron ore miner Sarda Mines.

He also alleged that both the firms had indulged in a criminal conspiracy and colluded with state government officials and the forest department to get the mines recommended in their favour.

Rabi Das, a veteran journalist, said, Based on the production of iron ore from the Thakurani iron ore mines block, ostensibly by Sarda Mines and factually mined and controlled by Jindal, the total loss of revenue in the form of royalty, sales tax, and income tax is a sum of approximately R8,100 crore over 12 years of operation... by Jindal. The loss of income tax is R6,246 crore, VAT/sales tax is R675 crore/year. If interest and penalty is assessed to this amount the figure will exceed R20,000 crore till 2013.

Alleging that the state government is hand- in-glove with Jindal, Sarda Mines and others as they are deliberately permitting the blatant violation of Rule 37 of the MC Rules, Das said the Sarda Family, despite being entitled to renewal of a mining lease for Thakurani mines A and B blocks, surrendered a block with an estimated reserves of 270 million tonnes after the family dispute was settled through the offices of promoters of Jindal.

Even before the actual surrender, Jindal was granted the mining lease within two years of applying in March 2000 and that too when the renewal of the lease was pending and under litigation since 1968, he said. Besides, the iron ore from the block was purportedly sold to Jindal by the Sarda family members approximately at 1/10th of the market price for a short duration before the former could sell iron ore fines to third parties, Das pointed out, adding that even the fines are being sold by JSPL to either itself or its sister concerns, Natma Sponge.

Sales tax returns (July 2002) filed by the Sarda family members showed that iron ore was being sold at R325 and R500 per mt for two sizes of ores to Jindal alone. This price was a hugely depressed price as the market rate at the time for similar ore was in the range of R3,000 to R4,000 per mt. Accordingly, very substantial loss of revenue was being clearly caused in various forms including sales tax, VAT, income tax and entry tax. Further, the sale was being shown as out-of-state sale when, in fact, it was within Orissa attracting higher rate of tax, the application filed through counsel T Harish Kumar stated.

Sarda Merchandise and Sarda Heights and Dales also took unsecured loans of about R4 crore from Natma Securities and one of the directors of the latter has been a director of one of the Jindal group of companies.

Natma Securities has financial transactions with various Jindal group firms to the extent of over R138 crore in the form of unsecured loans, Kumar said.

Besides, there have been violations of the forest laws by both Jindal and Sarda Mines, it alleged.