The Orissa High Court on Thursday ordered to “keep in abeyance” a demand notice of VAT recovery issued by the Odisha Government in February this year asking the Indian Oil Corporation limited (IOCl) to deposit a tax of about `1485.98 crore for sale of finished products from its Paradip Refinery, which was commissioned in November 2015.
A Division Bench comprising Justices Indrajit Mahanti and Biswajit Mohanty while adjudicating a petition filed by the IOCl also ordered a high-level working group formed By the Union Petroleum and Natural Gas Ministry to look into the concerns of raised by the State Government and the IOCl within two months.
The Odisha Government after unilaterally striking down a vital clause from the 2004-MoU signed between itself and the IOCl had withdrawn the mutually agreed tax incentive to the IOCl and placed the tax recovery notice on the company.
The clause related to grant of interest-free loan to Odisha equivalent to the tax payable to the State on the finished products of the refinery during its first 11 years of commercial production.
The deferment of tax for 11 years was essential for setting up of the refinery and a consideration for the project to be located in the State, the IOCl petition had said, adding that the company has already invested nearly `35,000 crore in the refinery alone and over `50,000 crore in other projects in the State, making it the single-largest investor in the State.
Urging to quash the recovery notice, withdrawal of the tax incentive clause from the MoU and the rescinding of the earlier notification of granting of deferred payment of VAT for 11 years by the State Government, the IOCl had approached the court earlier this month.