The State Government would lose over Rs 2,000 crore in 2016-17 due to deferment of value added tax (VAT) to the Indian Oil Corporation’s (IOCl) Paradip Oil Refinery.
The loss to the exchequer would be 11.42 per cent of the commercial tax target of Rs 17,500 crore fixed by the State Government for the 2016-17 fiscal. “It is apprehended that the total deferment of VAT, being availed by IOCl unilaterally in violation of the provisions of the OVAT Act, is likely to exceedRs 2,000 crore in 2016-17,” said Commercial Tax Commissioner Saswat Mishra in a letter to the Additional Chief Secretary (Finance).
“Such a huge loss cannot be compensated by any other means,” stated the letter, requesting for necessary action in this regard.
IOCl has commissioned the 15 million tonne crude oil refinery at Paradip at a cost of Rs 34,555 crore.
According to a pact signed by the Odisha Government with IOCl, VAT deferment is for 11 years from the date of commercial operations of the refinery.
However, the State Government in its argument said since the IOCl refinery was already delayed by over three years, the tax concession seemed unjustifiable.