Indian Oil pays Rs 2,935 crore to Odisha govt to resolve tax issue
Odisha had on February 22 withdrawn the promised 11-year VAT deferment promised in 2004 and had IOC dragged the state government to court.india Updated: Sep 19, 2017 23:47 IST
State-owned Indian Oil Corp (IOC) on Tuesday said it has paid Rs 2,935 crore to the Odisha government as part of the settlement reached to get back part of the tax incentives for the Paradip refinery project in the state.
Last month, the state government agreed to give Rs 700 crore per annum of interest-free loan for 15 years to IOC to make up for the withdrawn incentive of 11-year deferment on payment of sales tax (VAT) on Paradip refinery products sold in the state.
This essentially meant IOC would pay VAT on fuel sold in the state and in return would get an interest-free loan.
In keeping with the scheme, “IOC has paid Rs 2,935 crore to the Government of Odisha today towards VAT payment for the period November 2015 to July 2017,” the company said in a statement here.
“This marks the resolution of the issue of VAT deferment for Indian Oil’s Paradip Refinery in Odisha,” the company tweeted separately.
The 15 million tonnes a year Paradip refinery commenced commercial operations in November 2015.
Odisha had on February 22 withdrawn the promised 11-year VAT or sales tax deferment promised in 2004. IOC dragged the state government to the court for going back on its promise.
In the negotiations that followed, the viability gap funding for Paradip refinery project was revised to Rs 700 crore per annum payable in four equal instalments in each quarter in the form of interest-free loan for 15 years starting from financial year 2016-17.
“It was agreed that the Odisha government will henceforth receive regular VAT/GST revenue from IOC, out of which Rs 700 crore per annum will be given as interest-free loan to IOC for 15 years,” the statement said.
IOC said its investment of over Rs 40,000 crore in Paradip refinery and allied facilities is the single largest investment by a corporate in Odisha.
“Further investments are in the offing, including expansion of refining capacity, and downstream petrochemical options like polypropylene, mono ethylene glycol, paraxylene, petcoke gasification, etc, which will go a long way in the development of Odisha as a petrochemicals hub,” it said.
Oil Minister Dharmendra Pradhan has asked the state government to facilitate IOC’s expansion plans in order to create downstream petrochemical and allied industries in Odisha.