The Odisha Government appears to be mulling a tough stand against the Indian Oil Corporation limited (IOCl) over nonpayment of Value Added Tax (VAT) as the Central PSU is in no mood to share information with it or deposit the VAT.
State Government sources said, “The IOCl’s continued stance of not depositing VAT as per the tax collection mechanism appears to be completely inappropriate.”
Though it was decided at the last Working Group meeting held on July 28 under the chairmanship of the Union Petroleum Secretary, who requested both the State Government and the IOCl to recalculate their minimum requirement -- up to what extent fiscal incentives can be borne by the State Government and up to what extent fiscal incentives are necessary to make the project viable – the IOCl is not responding to the State Government in sharing any information on the viability of the Paradip Refinery Project, said the sources.
The State Government has pointed out that at the time of signing the MoU in 2004, the total financial loss to Government was estimated at Rs 6,666 crore and the project completion scheduled for 2009-10.
Due to the delay in commissioning the project, the financial implication is now estimated at around Rs 69,900 crore for 11 years, and the loss to the State is around Rs 24, 800 crore.
The State Government has pointed out that the IOCl without its consent enhanced the capacity of the Paradip Refinery from 9 million metric tonne per annum (MMPTA) to 15 MMPTA with an estimated investment of over Rs 25,600 crore.
The State Government has brought to the notice of the Union Ministry of Petroleum & Natural Gas that the IOCl has not shared any information on viability of the Paradip Refinery Project though officials feel that viability has improved in a big way due to its enhanced capacity and reduction in crude oil
prices, deregulation in prices of refinery products and several other factors.
Against this backdrop, the State Government said there should be renegotiation of fiscal incentives and a fresh MoU signed between the two
parties. It has also sought that the IOCl should continue payment of VAT till consensus is arrived at over the issue, said the sources.
While the IOCl is not sharing the information for review and renegotiation of the terms and conditions of the MoU in the changed circumstances, the Central PSU has unilaterally withheld VAT amount of Rs 585 crore due to the State Government for the tax period of December 2015 to June 2016.
The State Government has termed this action of the IOCl as “inappropriate” and brought it to the notice of the Ministry of Petroleum and Natural Gas, but the Centre is yet to take action in this regard, State Government officials said.