Odisha Sun Times Bureau
Cuttack, Mar 16:

The High Court today directed the Odisha government to keep its demand note of Rs 1485 crore on Indian Oil Corporation Ltd (IOCL) towards pending taxes in abeyance and resolve the issue within two months.

The Court asked the state government to resolve the issue through a working group comprising of officials of IOCL, Petroleum and Natural Gas Ministry and Odisha government within two months.

Notably, the state government and IOCL had inked a memorandum of understanding (MoU) for the establishment of Paradip Refinery on February 16 in 2004.

According to the MoU, Odisha government had agreed for VAT deferment for 11 years on IOCL’s products sold inside the state from the date of commencement of commercial operations of the refinery.

Further, as per the agreement, IOCL would start repayment of the VAT from the 12th year from the date of commencement of commercial operations of the refinery albeit without interest. This would be considered as an interest-free loan to IOCL.

The tax concession was extended to IOCL considering its operational viability, local employment, and the region’s economic growth.

IOCL had collected Rs 1485 crore towards VAT from sales in Odisha since its launching of commercial operations till the end of December last year.

The state government on February 27 last served a demand note of Rs 1485 crore on IOCL towards pending VAT citing breach of the agreement.

IOCL had filed a petition in the High Court challenging the state government’s demand.