Whether the logjam over tax collection from the Indian Oil Corporation limited’s (IOCl) Paradip Refinery would end is now being debated in political and industry circles as Chief Minister Naveen Patnaik and Union Minister of Petroleum & Natural Gas Dharmendra Pradhan would meet in New Delhi over the issue on Friday.
There have been several meetings between an Odisha team headed by Chief Secretary AP Padhi and Union Petroleum & Natural Gas Secretary KD Tripathy to sort out the issue, which is yet to be finalised.
Now, Dharmendra Pradhan has taken an initiative to resolve the issue through amicable consultations and Naveen Patnaik has also shown a positive attitude to come forward for discussion.
Notably, a memorandum of understanding (MoU) was signed between State Government and the IOCl on February 16, 2004 for setting up of the Paradip Refinery. As per the conditions stated in the MoU, the State Government would have no demand for VAT on sale of products of the refinery within the State for 11 years. However, the accumulated amount of VAT would be treated as loan which the IOCl would have to start repaying from the 12th year onwards.
The refinery, which started production from September 22, 2015, has collected VAT amounting Rs 1,485 crore by selling its products in Odisha till December 2016. But the State Government issued a demand note worth Rs 1,485 crore to the IOCl on February 27, 2017 asking it to repay the amount.
Challenging the State Government’s demand note, the IOCl moved the Orissa High Court, which directed the Government not to initiate any steps to collect the pending VAT to the tune of Rs 1,485 crore from the IOCl. The court on March 16, 2017, kept the State Government’s demand note in abeyance and directed the Working Group comprising officials of IOCl, Ministry of Petroleum and Natural Gas and State Government to settle the issue within two months.
Accordingly, several meeting were held between both the parties and nothing concrete came out from the rounds of discussions.
Now as Patnaik and Pradhan are meeting for a settlement, it is expected that the deadlock will be resolved and both the State Government and the IOCl will have a fresh look into the issue rather running to the Supreme Court for a solution.