In tax feud with Himachal, ACC seeks HC review

After HP High Court dismissed its appeal against recovery of Rs 64 crore by state's sales tax authorities, ACC moved SC with a SLP

The tax dispute between ACC (formerly the Associated Cement Companies) and tax authorities of the Himachal Pradesh (HP) government over the company’s second manufacturing unit at Gagal in Mandi district is likely to intensify.

The state’s tax department had collected Rs 64 crore from ACC, against which the company moved the Himachal Pradesh High Court. After the HC dismissed ACC’s plea, the firm moved the Supreme Court with a special leave petition (SLP). Meanwhile, the cement maker has also filed a review petition before the high court.

“An SLP was filed with the Supreme Court and was heard on April 1. The Supreme Court directed withdrawal of the SLP since our review petition with the Himachal Pradesh High Court was still pending hearing and directed that we approach the SC again only after the review petition is heard and disposed of,” a company's spokesperson told Business Standard.

The dispute is over ACC’s second manufacturing unit of one million tonne at Gagal. According to the company, it is eligible for sales tax incentives under the HP State Industrial Policy, 1991 and hence, the tax should not have been recovered from it.

“Gagal Unit II, a new unit, is eligible for incentives in line with the Industrial Policy. However, the excise and taxation department of Himachal Pradesh imposed certain restrictive conditions on eligibility,” added the spokesperson.

In its latest annual report, the company said, “The company had, as on December 31, 2011, claimed and accrued sales tax incentives aggregating to Rs 56 crore."

ACC contends that Gagal II is a new unit, as decided by the HP High Court and confirmed by the Supreme Court, while determining the eligibility for transport subsidy, and hence such restrictions are not applicable to the (new) unit.

“The (tax) department had recovered Rs 64 crore (Rs 56 crore in tax plus Rs 7 crore as interest) and the same is accounted as an amount recoverable," the company said in the report.

Himachal Pradesh is among the top states having high resources of limestone. Attracted by the state's tax incentives, several companies have set up their facilities there. Ambuja, ACC's sister-concern, too, has presence in the state.

ACC is holding its annual general meeting (AGM) this Friday. On the BSE, shares of the cement giant rose 1.4 per cent on Tuesday to Rs 1,176.40, up Rs 16.3.